coa747
Posts: 380
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The Virgin Group

Thu Oct 13, 2005 4:40 am

I don’t think Virgin USA will ever get off the ground. Even if it does US regulators are going to keep an eye on Sir Richard. I don’t think the government is too keen on Virgin America after the whole Virgin Nigeria situation. The government knows the first thing Richard will try to do is closely align Virgin Atlantic with Virgin USA to get around the Bermuda II agreement and provide Virgin Atlantic a direct feed of US domestic traffic onto their north Atlantic route network specifically Heathrow. The fact that Virgin Nigeria is owned 49% by Virgin and Virgin Atlantic is leasing its own A340’s to Virgin Nigeria doesn’t smell right. Wonder what the lease rates were on those planes?
 
jorge1812
Posts: 2911
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RE: The Virgin Group

Thu Oct 13, 2005 5:36 am

Quoting Coa747 (Thread starter):
after the whole Virgin Nigeria situation

What is with Virgin Nigeria? Something wrong? Problems?

Quoting Coa747 (Thread starter):
The fact that Virgin Nigeria is owned 49% by Virgin and Virgin Atlantic is leasing its own A340�s to Virgin Nigeria doesn�t smell right. Wonder what the lease rates were on those planes?

Other Airlines do this also.

Georg.
 
coa747
Posts: 380
Joined: Wed Jul 13, 2005 3:11 pm

RE: The Virgin Group

Thu Oct 13, 2005 6:05 am

The problem becomes that you have a vertical integration of companies that can lead to unfair competition. Example the robber barons of the early 20th century like Vanderbilt, Rockefeller and Carnegie had vertically integrated companies. John D. Rockefeller’s standard oil is a good example of this. He controlled every aspect of oil production from the time it came out of the well to the time it was delivered to the consumer. He owned the oil fields, refineries, distributors and so could control the price of gas and decided what it should sell for. For this reason the US government outlawed this type of vertical corporate integration. This is the same practice that Richard Branson is employing all be it on a much smaller scale. Virgin Nigeria’s startup financing came from the Virgin Group, the fleet didn’t have to be purchased or leased from a company like ILFC. But instead were aquired through a lease arrangement with Virgin Atlantic also owned by the Virgin group. End result Virgin Nigeria secured cheap aircraft from a wholly owned subsidiary. Think about it no money really changed hands it just moved from one subsidiary to another. Virgin Nigeria can now funnel passengers into and out of Heathrow therefore providing an additional revenue stream for Virgin Atlantic through potential code sharing agreements. Virgin USA will serve much the same purpose. To provide a US domestic pipeline for Virgin Atlantic to feed traffic onto their north Atlantic operations and Heathrow through a code share arrangement which would bypass Bermuda II indirectly and hurt airlines like Northwest, Continental and US Airways who don’t have access to Heathrow.
 
cloudyapple
Posts: 1261
Joined: Sun Jul 24, 2005 7:01 am

RE: The Virgin Group

Thu Oct 13, 2005 6:24 am

Did you know Virgin group only hold 25% of Virgin America while the rest is American owned? The US government can do nothing about it.

I do not believe there is a competition issue as most of the ailing majors operate large feeds to longhauls.

If vertical integration is an issue, GE should be broken up first.
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Leezyjet
Posts: 3541
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RE: The Virgin Group

Thu Oct 13, 2005 6:34 am

Quoting Coa747 (Reply 2):
But instead were aquired through a lease arrangement with Virgin Atlantic also owned by the Virgin group

What about the 2x A320's that were leased from Balkan ?. That had nothing to do with Virgin Atlantic.

Basically it seems to me that you just don't want Virgin USA to start up at all because it will hurt the likes of DL/CO/NW and the rest. Well tough sh!t if it does, thats business.

Your beloved USofA is the home of greed and capitalism, but all too often (each week infact) when the Virgin USA thread comes up, all we here are a load of Yanks whining about how it's going to hurt them despite the fact that it will be bringing much needed jobs into a crippled industry and how they couldn't possibly have an airline run by anyone who isn't a US citizen. Get over it, and accept reality like in the rest of the world, many many businesses are now owned by foreign companies and the world just keeps ticking along just fine.

 Smile
"She Rolls, 45 knots, 90, 135, nose comes up to 20 degrees, she's airborne - She flies, Concorde Flies"
 
MarshalN
Posts: 1474
Joined: Sat Sep 03, 2005 9:39 am

RE: The Virgin Group

Thu Oct 13, 2005 6:56 am

Quoting Leezyjet (Reply 4):
Your beloved USofA is the home of greed and capitalism, but all too often (each week infact) when the Virgin USA thread comes up, all we here are a load of Yanks whining about how it's going to hurt them despite the fact that it will be bringing much needed jobs into a crippled industry and how they couldn't possibly have an airline run by anyone who isn't a US citizen. Get over it, and accept reality like in the rest of the world, many many businesses are now owned by foreign companies and the world just keeps ticking along just fine.

That's a bit harsh  Smile

But I agree in principle -- there's nothing wrong with vertical integration in this case, regardless of what they're doing. Virgin is small fish in the airline world, really. Only BA and AA will have problems with regulators. Virgin? How many people can they be feeding compared to the giants like LH+UA, KLM+NW, etc.
 
airways45
Posts: 282
Joined: Wed May 10, 2000 1:26 am

RE: The Virgin Group

Thu Oct 13, 2005 7:08 am

Virgin Nigeria is only 49% owned by Virgin Atlantic. 51% of the shares are owned by Nigerian institutional investors. When it was starting up it raised N3.57bn (US$26.9m) from Nigerian companies and Virgin contibuted N3.43bn.

So, to answer the first point, money did change hands and less than half came from Virgin.

Airways45
 
airways45
Posts: 282
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RE: The Virgin Group

Thu Oct 13, 2005 7:16 am

Quoting Coa747 (Thread starter):
The government knows the first thing Richard will try to do is closely align Virgin Atlantic with Virgin USA to get around the Bermuda II agreement and provide Virgin Atlantic a direct feed of US domestic traffic onto their north Atlantic route network specifically Heathrow.

Isn't this what UAL and AA do every minute of the day? What's wrong with anyone else doing it?

Plus, isn't that what global alliances are for? AA and BA sharing, UAL and BMI working together?

Can't see the issue myself.

Airways45
 
coa747
Posts: 380
Joined: Wed Jul 13, 2005 3:11 pm

RE: The Virgin Group

Thu Oct 13, 2005 7:18 am

Virgin USA isn't needed at all! There is too much capacity as it is. The US domestic market has too many players already, just ask Independence Air. The airlines are pricing themselves into bankruptcy. Airfares continue to fall despite record high fuel prices. Sir Richard is welcome to start up here in the US. I have no issue with that. But after watching Virgin Nigeria I have no doubt that he will in time try to link together Virgin USA with Virgin Atlantic and that is the problem I have. I believe that is the same concern that the US government has. I have been hearing rumors of Virgin USA for years and nothing has happened. There isn’t a viable market for them and any market they try to enter they will be confronted by Southwest, Frontier, jetBlue and all the majors. DFW has a lot of empty space wonder why there are no takers? Because American has crushed everyone at DFW including Delta like a bug the same will hold true at any other hub airport. All the prime secondary airports have been picked over there is no fertile ground for Virgin to go after. Good luck to Virgin USA they are going to need it.

You say that I am just another pissed of Yank then why hasn’t Virgin USA gotten off paper in the last three years because the US government doesn’t want any part of Virgin USA! It is a very political issue and won’t be resolved until some form of open skies agreement is passed between the US and UK. That is reality not opinion and Virgin Nigeria isn’t helping Virgin USA’s cause either.
 
airways45
Posts: 282
Joined: Wed May 10, 2000 1:26 am

RE: The Virgin Group

Thu Oct 13, 2005 7:37 am

Ok, time to dispell a few myths I think...


1) Here's the best bit everyone, I'm guessing that Coa747 works for or likes Continental. Here's the root of this post. Continental wanted to fly to Lagos but abandoned the Newark - Lagos plan citing 'hurdles'. The insider view is that because the USA wouldn't recognise Virgin Nigeria, the Nigerian Govt blocked the Continental route authorization. So, COA are angry (and Coa747 is one of many trying to scupper Virgin America plans in retaliation).

2) Virgin Nigeria want's to fly to the USA, but the USA doesn't recognise Virgin Nigeria as the national airline of Nigeria even though the USA and Nigeria have open skies! Indeed, the USA position is against their own stated position of creating 'safe skies for Africa' which seeks the establishment of secure new African airlines. The only way this can be secured is by bringing in expertise from outside, UK, USA or wherever. Go figure...


3) Virgin USA has been delayed, not becaues of the US government inteference as is has been suggested, but rather because of financing problems. In addition, Branson has to give control of the Virgin brand to investors - he can only have 25%. Controlling stake of the Virgin America airline will only be given to people he can trust. It's taken him a while to find such people.

4) The airline requires $150m in funding and the Virgin Group claim they will announce shortly who their investors are.


5) Virgin America is planning on launching in 2006, though Branson has said he will be distressed if it doesn't happen by the end of 2006.

6) The airline is supposed to base itself at SFO. This is not served by a LCC - nearby Oakland has Southwest, but SFO is in need of increased services after a spell of trouble (weather doesn't help).

Airways45
 
coa747
Posts: 380
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RE: The Virgin Group

Thu Oct 13, 2005 8:56 am

I don't work for CO or any other airline. I'm not talking about CO's Lagos route. The oposition to Virgin Nigeria is not just as stated but there is a real feeling here that Virgin USA and Virgin Atlantic, Nigeria, or plug in whatever Virgin airline you want that they are just ways to grow the Virgin empire and feed Virgin Atlantic. That is not just my opinion. The feeling in Washington from people I have talked to is that they haven't and are going to continue to make life difficult for any Virgin incarnation here in the US because bottom line is Richard is British and the UK is still screwing us when it comes to Heathrow and they don't care if he only owned 1% he still isn't going to make any friends here with Virgin America. It is going to be ugly for Virgin America, AA, CO and friends will ensure that. San Francsico is perhaps the worst place to pick as a hub. High costs, constant delays due to weather and the runway alignment really hampers operations. That is why Southwest pulled out of SFO. Surely Mr Branson is smarter than that. Oh by the way SFO is one of United's hubs so good luck with that.
 
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mariner
Posts: 18182
Joined: Fri Nov 23, 2001 7:29 am

RE: The Virgin Group

Thu Oct 13, 2005 9:09 am

Quoting Coa747 (Reply 10):
The feeling in Washington from people I have talked to is that they haven't and are going to continue to make life difficult for any Virgin incarnation here in the US because bottom line is Richard is British and the UK is still screwing us when it comes to Heathrow and they don't care if he only owned 1% he still isn't going to make any friends here with Virgin America.

So, in review: if everything SRB does is legal under American law, he'll still be screwed up the butt without any lube just because he is British?

Gee, interesting concept.

cheers

mariner
aeternum nauta
 
NKMCO
Posts: 72
Joined: Thu Oct 13, 2005 8:23 am

RE: The Virgin Group

Thu Oct 13, 2005 9:13 am

Quoting Coa747 (Reply 10):
...ways to grow the Virgin empire and feed Virgin Atlantic

...and what's so wrong with that? Creating airlines with Virgin brand to create a global Virgin network... sounds like good franchising to me. The bottom point is Branson will make money and pax will profit form it as well. Airline industry is cut throat and from consumer perspective there is no such thing as "we don't need another airline." The downside is that with more and more airlines and more and more pax flying the airline industry is getting closer to a "Greyhound" type of industry but that's how it works.

Quoting Coa747 (Reply 8):
The US domestic market has too many players already, just ask Independence Air

...taking Flyi for example is not really the best option - they just changed the name and kept all the costs.
 
airways45
Posts: 282
Joined: Wed May 10, 2000 1:26 am

RE: The Virgin Group

Thu Oct 13, 2005 9:42 am

Quoting Coa747 (Reply 10):
bottom line is Richard is British and the UK is still screwing us when it comes to Heathrow

So, presumably you wouldn't mind if a German was behind a US start-up? The problem is that he is British.

And, if LHR was opened up, you would be all for a UK airline operating domestic flights in the US? Are you all for scrapping the 25% restriction then? I guess your Washington buddies that are making life difficult (in your words) for Virgin are ready to make it easier by allowing full US access.... Oh, I've just seen a pig fly across the window. It had 4 engines!!!

Airways45
 
A330
Posts: 688
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RE: The Virgin Group

Thu Oct 13, 2005 5:23 pm

Coa747,

Whahahahahaha! You are such a comedian. Really mate, have you ever been outside the good old US of A? The Virgin group is nothing compared with the monopolistic cravings of the Coca Cola Company, which is... American!
Airways45 has hit the nail in his last post.

Virgin Nigeria is the first airline in West/Central Africa that is professional, safe and with the conviction and possibilities to become the best airline in Africa, and one of the worlds leading ICAO carriers.
They have just acquired 7 B737EFIS for their African Network, more A340's will join too.
Shiek!
 
dolphinflyer
Posts: 187
Joined: Sun May 08, 2005 9:57 pm

RE: The Virgin Group

Thu Oct 13, 2005 6:31 pm

Quoting Coa747 (Reply 10):
The feeling in Washington from people I have talked to is that they haven't and are going to continue to make life difficult for any Virgin incarnation here in the US because bottom line is Richard is British and the UK is still screwing us when it comes to Heathrow and they don't care if he only owned 1% he still isn't going to make any friends here with Virgin America.

I for one, am someone who lives in Washington, DC and am supportive of Virgin America's efforts to get off the ground.

And as for the screwing at LHR, it's rather obvious that BA, VS, AA and UA are all interested in continuing to milk that lucrative, limited-entry market. Do you think that AA or UA are interested in seeing a DL, CO, NW, etc. plane at LHR? No way! It's not such a clear, black-and-white issue as you'd like to make it out to be.
 
airchabum
Posts: 754
Joined: Sat Oct 20, 2001 8:21 am

RE: The Virgin Group

Thu Oct 13, 2005 8:25 pm

Dear Coa747

From memory, so aplogies if any are incorrect......
VS is 49% owned by Singapore Airlines.
Ryanair (the largest LCC based in the UK) is Irish.
easyJet (2nd largest LCC) was set up and owned initially by a Greek bloke.
BMI is (majority?) owned by Lufthansa/SAS.
Air UK has all but disappeared into KLM.
Britannia/Thomsonfly is owned by the German TUI Group.
Excel Airways is owned by Air Atlanta (Icelandic), and I'm sure there are more examples.
Also Harrods is owned by an Egyptian and Manchester United is owned by Yanks!

So please don't expect us Brits to feel sorry for you when you complain about a new airline because it isn't 100% American owned. Most Brits will buy/use products made by Coca-Cola, McDonalds, Kellogs, Heinz, Ford, GM, Colgate-Palmolive, etc, etc every day. It would appear that the free market is ok so long as no one wants to try it in your own back yard!

Also the situation with LHR is that it is FULL! Until they build any more runways (10 years at least...) the only way to get an arrival/departure slot is for someone else to give up theirs, which is why smaller airlines have been selling their slots for £millions and moving services to LGW/STN.

Cheers
Biggidy biggidy bong
 
cloudyapple
Posts: 1261
Joined: Sun Jul 24, 2005 7:01 am

RE: The Virgin Group

Fri Oct 14, 2005 1:48 am

Quoting Airchabum (Reply 16):

That sums it up~ There are a lot of people with double standards.
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