MIflyer12
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 2:18 pm

You can love VS but recognize it hasn't had a successful business model in a long time. SQ wanted out. Delta has deep pockets and wanted scale USA-London. Businesses that don't earn cost of capital over long periods of time get bought or get liquidated. Blame every route or airframe decision you dislike on Delta. Virgin didn't buy out SQ's stake to have full independence, did they?
 
skipness1E
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 2:27 pm

Channex757 wrote:
And therein lies the problem. Historically VS has been something of a BA parasite; just feeding off the prime routes where it could get the suckers in. They never got into the mindset of trying things out and getting out of their comfort zone. Even Little Red was a BA-clone, or more the ghost of BD rattling its chains up and down the country.

The biggest miss for which Sir Beard will win the Eternal Bell-End award is failing (at a much more opportune time) to join SkyTeam. In fact at one stage I'd have bet on Star Alliance being the likeliest destination for VS. But no, Beardy simpered and gurned and the time for VS to embed itself firmly into Europe's travel map has passed. Now it's just a brand for customers who don't want to use BA or AF/KL, and a Delta feeder (MAN-ATL a 333 daily, MAN-JFK a 744 this summer).

VS Gatwick is almost the red haired stepchild at this stage and I can see it being spun off before much longer.

A splendid analysis, if I may add some thoughts. SRB was a young entrepreneur long before he became an establishment billionaire, he had some remarkable success going into established BA markets and shaking them up. For me the purchase of so many A346s was the turning point, alongside fighting to keep BA/AA apart at the same time every other major carrier was doing the same, via STAR, Skyteam and Oneworld. He fought for an untenable status quo and as soon as LHR was opened up to more competition, with NW,US, DL and rest-of AA moving round from Gatters it was a game changer. SRB's stubborn reluctamce to work closely with Sir Michael Bishop condemned BMI to a lingering irrelevance and marginalised VS. With LHR-ORD/YYZ/YVR failing to replicate the previous success of the VS model, the only way forward was humble pie and a u-turn. As for the beach fleet, VS need to focus like a laser beam and stop having so many models and sub models in such a small fleet, DL UK in all but name gets my vote if it saves jobs and connections to the regions.
 
anstar
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 3:03 pm

axiom wrote:

Kidding aside, they've only had one year of losses out of the last 5, no? More break even than unprofitable.


They havent been that profitable.

https://www.statista.com/statistics/308 ... ng-profit/

Some horrendous losses since 2009/10 . (one was 169m! and another 125m)... and then some modest profits (between 8m and 20 something milliion) for 3 years and then a return to loss last year and predicted loss for this year.

Without the DL deal they would of been out of business now. Whats worrying is that even with the DL deal they can't sustain profit in a time that airlines are making money.

I guess in the next downturn once AFKL/DL have control and most of the flying is LHR-USA it will be easy enough to transfer that to DL and just get rid of VS. Time will tel but I don't see them being around in 10 years.
 
VSOrlando
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 3:59 pm

anstar wrote:
VSOrlando wrote:
chrisp390 wrote:
CUN was said to be profitable, and yet it was cut too. No idea why they would cut a strong VFR route like that.


CUN hasn't been cut though, and they have no plans on doing so to my knowledge.


CUN is being cut. Its down to once a week and will be going away at the beginning of 2019. Yet TUI seem to remain daily on the route.
https://www.virginholidays.co.uk/import ... el-updates


Well that sucks. Cancun is an extremely popular route, and like you mentioned TUI do daily flights. Looks like I'll be flying BA more often in the future.
 
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Channex757
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 4:13 pm

VSOrlando wrote:
anstar wrote:
VSOrlando wrote:

CUN hasn't been cut though, and they have no plans on doing so to my knowledge.


CUN is being cut. Its down to once a week and will be going away at the beginning of 2019. Yet TUI seem to remain daily on the route.
https://www.virginholidays.co.uk/import ... el-updates


Well that sucks. Cancun is an extremely popular route, and like you mentioned TUI do daily flights. Looks like I'll be flying BA more often in the future.

BY have been flying CUN as a 789 route almost exclusively to LGW and MAN, so give them a look. MT are around as well.

If you count value above trinkets it's a decent enough product compared to beach fleet BA.
 
SteelChair
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 4:35 pm

How much of the lack of profitability is due to the continuing RR engine problem?
 
SelseyBill
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 6:03 pm

Channex757 wrote:
.....the biggest miss for which Sir Beard will win the Eternal Bell-End award is failing (at a much more opportune time) to join SkyTeam....


....yes, but I would add to that the missed opportunity of Virgin joining forces with or even buying British Midland outright; but I understand SRB's ego was so inflated he couldn't even get his head through Sir Michael Bishops' office door frame.......
 
by738
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 6:12 pm

Id have been surprised if loss making British Midland could have propped up VS for long...
 
DobboDobbo
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 7:24 pm

In the short to mid term they may be best focusing on LGW as the Virgin Holidays base, LHR as the London O&D p2p flying and develop MAN as a hybrid of the two offering a secondary point of entry for the UK (via FlyBe and perhaps other future feeder services) and as the transfer point for USA-India flying (freeing up VS/Jet/DL LHR capacity for the more lucrative p2p market).
 
Atlwarrior
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 7:36 pm

This was a funny thread. Delta surely doesn’t no how to manage an airline. They have been one of the most profitable S&P 500 companies by mistake.
 
David_itl
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 7:41 pm

Jolly nice of this article to turn up today by Travel Weekly

"“We will have up to six flights a day to the US from Manchester. We see it as a huge opportunity. There is huge leisure traffic, but Manchester is also an opportunity for us in the SME [small and medium-enterprise business travel] space, to Boston in particular. There are differences between the Heathrow and Manchester markets.Manchester is predominantly a UK point-of-sale market. " 10% of passengers connecting onto Delta flights in the US.

http://www.travelweekly.co.uk/articles/307239/special-report-virgin-atlantic-ramps-up-us-services
 
jmscsc
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 7:53 pm

[quote="VSOrlando"] "Delta is ruining VA in my opinion"

Would you be so kind as to explain or offer concrete proof of that claim.
 
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Channex757
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 7:56 pm

SelseyBill wrote:
Channex757 wrote:
.....the biggest miss for which Sir Beard will win the Eternal Bell-End award is failing (at a much more opportune time) to join SkyTeam....


....yes, but I would add to that the missed opportunity of Virgin joining forces with or even buying British Midland outright; but I understand SRB's ego was so inflated he couldn't even get his head through Sir Michael Bishops' office door frame.......

Sir Michael was constantly enraged by what he saw as Branson's belittling of his airline.

There were a few proposals put forward, which would have left Bishop plus investors holding Virgin stock. Stock he could not sell as Virgin is not a public company. His only out would have been to find a buyer privately or sell to Branson at a discount.

Bishop and Lufthansa got out without the kind of beating SQ took. They invested £500m in VS and only got back £250m for their stock in the end when Delta bought it.

Branson always wanted to grab BD on the cheap. Bishop and Lufthansa had the sense to see right through him.
 
TC957
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 8:14 pm

VS downsizing is music to Norwegian ears. It should be VS starting SIN & EZE rather than DI - what's happened to the innovative Virgin from the past ? Now they are just DL's UK arm.
 
durangomac
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 10:59 pm

jmscsc wrote:
VSOrlando wrote:
"Delta is ruining VA in my opinion"

Would you be so kind as to explain or offer concrete proof of that claim.


Go look at the board of directors for the company. When the CEO and CRO of DL are listed kind of makes sound like DL is helping running the show. To that effect they even listed "alternate" directors if the CEO or CRO aren't available to go to a meeting. Even some of their reports have the VS's logo showing up next to DL's.
 
VSOrlando
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 11:26 pm

TC957 wrote:
VS downsizing is music to Norwegian ears. It should be VS starting SIN & EZE rather than DI - what's happened to the innovative Virgin from the past ? Now they are just DL's UK arm.


Exactly my point, Norwegian is constantly expanding its long haul network from Gatwick.
 
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Rajahdhani
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 11:36 pm

Atlwarrior wrote:
This was a funny thread. Delta surely doesn’t no how to manage an airline. They have been one of the most profitable S&P 500 companies by mistake.


I disagree that anyone, was that harsh in their critique. Based on VS's history of 'parenthood' it's important to get the message correctly - many dislike the 'changes' being made under DL's parenthood of the airline. The overwhelmingly intelligent opinions also astutely clarify that save for the DL intervention, VS have been worse-off.

I am not a vocal fan of DL, and have critiqued them in the past - that said, their strategy of 'international partnerships' is not only impressive, but a hallmark of their strategy - and it has been industry leading for enough time to be considered a distinct part of their airline's legacy. VS needs/needed vision, and stability - both of which DL, and by extension, the TATL-JV to achieve both of those, in their primary market. That said, these things take time. DL is not only assisting VS in this change, but also undertaking significant changes of their own - and we have yet to fully realize the potential of these synchronizations.

When that is capitalized upon, and some stability returns to those key services - then VS can focus on other markets. It is not that the 'beach fleet' and the Sun Destinations are any less important, or perhaps, in any less of a need of reform as well - it is simply that VS does not face the same level of competition. They can afford to neglect a response there, for now - only because the more competitive market is being eroded away, from both ends - fiercely.

To draw a practical example - VS has to complete on the London-US flights against AA/BA and the JVATL, IAG's IB, EI, and Level eating at lowering costs below the premium of AA/BA. That's not then adding Norweigan's Operations. With no U.S. partner - what would VS provide, that every other competitor did not best it? Strengthening the DL alliance, serving the DL hubs (having DL as a back-up for IRROPS et al), and watching as DL improves its premium services (those new DL uniforms would look just as fabulously on VS crews, and then...);

https://news.delta.com/delta-and-virgin-atlantic-update-network-between-us-and-uk
Delta Air Lines and Virgin Atlantic today announced updates to their respective summer 2018 schedules to optimize their joint network between the United States and the United Kingdom. The strong partnership between the two airlines is focused around offering customers more convenient travel options and the best travel experience across the Atlantic.
Effective March 24, 2018, Delta will introduce the Airbus A330 aircraft on its New York-JFK, Atlanta and Detroit routes to London-Heathrow. The A330 aircraft, which are equipped with Wi-Fi and feature 34 fully flat-bed seats in the Delta One cabin will bring Delta's onboard customer experience to a new level as well as increase the number of seats on these U.S. routes to London-Heathrow.


So, I think that VS will also be able to, eventually pivot to rationalizing (and, if they are smart enough with it, rationalize it along the A330 line) the Beach-Fleet as well, and perhaps then move towards Asia and other markets. I mean, if VS is going to right itself, and come to be known as the "DL-of-the-UK", then that's a good compliment. As is, we are arriving at the crest of the fleet issues, and we are moving towards a future (in short order) where VS will set the US destinations correctly, with DL's help for connections, and VS's previous operating experience - some markets will be shed, as VS realizes that it can make more money, and spend less, working closer with DL (where DL does best, on their home turf). A well operating "Western Theater" can then free them up to think about Eastern Operations.

With Brexit coming, new aircraft coming, orders for the A330 and the A350 lagging (which means that they can have a better bargain at Airbus if they want to update orders), and the A339 increasingly looking at if it could serve the vast majority of routes that they need it to work, increased capacity at LHR in the medium-term, and DL as a medium-long term partner in the U.S., and tip-toeing around SkyTeam membership (if necessary) would allow great access to many of the key markets that new SkyTeam 'partners' would add at LHR, and to a lesser extent MAN (and/or more importantly, for their business clientele on the partner's local end). It's not only rational, but intelligent that DL is 'leaning it out' and maximizing efficiencies now, and move on that strengthened platform. It means that VS can capitalize on 'small' steps - such as advantageously muscling in on what AA neglects as it 'decamps' some capacity from JFK to PHL.

What is less discussed is that, I would rather be the DL-of-the-UK, than BA, anyday - and that's saying alot as I am an AA fan boy. VS is smaller, but also easier to change. BA seems lost; too large to fail, too large to change. It has been, far too reactive. VS, whether by market position, or by good fortunes - has had to come to the realization of change, sooner. Having heard the call, the changes are in progress. BA, seems too brooding, ideas brewing - but will be left, last to change. When VS can, because of their size, nimbly 'trick' the public, with a DL press release - the cost of that coup was the lowest that it could have been, comparably - in the field. Those keys play well to business clients, and corporate contracts. What is the average perception of BA's Services? VS's? If VS makes the right moves now, it can cement a better structure, and grow upon it - in a way that BA cannot (and perhaps should not) but which would certainly be enviable, and viable in it's own right.
 
EddieDude
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Re: Virgin Atlantic network going downhill?

Mon Jul 09, 2018 11:38 pm

durangomac wrote:
Go look at the board of directors for the company. When the CEO and CRO of DL are listed kind of makes sound like DL is helping running the show. To that effect they even listed "alternate" directors if the CEO or CRO aren't available to go to a meeting. Even some of their reports have the VS's logo showing up next to DL's.

A basic principle of corporate governance in the western world is that a shareholder who owns a significant stake in a company gets to appoint one or more directors. Depending on the jurisdiction and type of entity, a 10% or 20% stake (in common stock) of a company will get an investor at least one director. As of the date of the 2017 Annual Report, the board was comprised by nine members, six of which are appointees of The Virgin Group (two executive directors and four non-executive directors) and three of which are appointees of Delta (all three are non-executive). As you can see, DL does not have a majority of the board members and its appointed directors are non-executive. None of the foregoing means or could be interpreted in the sense that DL controls VS.
Upcoming flights:
April/May: AM MEX-SCL 788 (J), AM EZE-MEX 789 (J).
 
Cointrin330
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 12:30 am

It seems that the smart, and perhaps only viable option was for VS to link to DL (or another US carrier, but the choices were slim post all the mergers) and optimize what VS has slot-wise at LHR and focus on markets where it can boost traffic by feeding into and drawing from the Delta network. You could argue that UA might have been a viable option from the point of view of network, given its large hubs in many of VS's traditional US markets (EWR, SFO, LAX), but UA would not have been a great fit from a strategic standpoint, as its management was too distracted by integration issues with CO and right-sizing the airline. Absent that, given Brexit, and the current state of the UK economy, it's hard to imagine that VS could continue as a going concern without a major capital investment from another source. As for VS's Gatwick operation, I think the future of it depends on what will happen to Norwegian. If Norwegian can survive rising fuel costs, seasonal drops in demand, the 787 engine debacle, its own financial issues, and can grow further at LGW, then Virgin may have to rethink its ops there. MAN has never worked for anyone as a hub for TATL. P2P yes. Hub no.
 
WPvsMW
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 12:56 am

@Rajahdhani... your post is a winner in the long post league .. substance and structure alpha to omega.
After VS leaves "rehab"... if they dropped the Virgin trademark, the substantial license fee would flow straight to the bottom line. I'm sure Ed and the gang would grant a royalty-free license of DELTA UK. ;)
 
VSOrlando
Topic Author
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 7:27 am

I disagree that anyone, was that harsh in their critique. Based on VS's history of 'parenthood' it's important to get the message correctly - many dislike the 'changes' being made under DL's parenthood of the airline. The overwhelmingly intelligent opinions also astutely clarify that save for the DL intervention, VS have been worse-off.

I am not a vocal fan of DL, and have critiqued them in the past - that said, their strategy of 'international partnerships' is not only impressive, but a hallmark of their strategy - and it has been industry leading for enough time to be considered a distinct part of their airline's legacy. VS needs/needed vision, and stability - both of which DL, and by extension, the TATL-JV to achieve both of those, in their primary market. That said, these things take time. DL is not only assisting VS in this change, but also undertaking significant changes of their own - and we have yet to fully realize the potential of these synchronizations.

When that is capitalized upon, and some stability returns to those key services - then VS can focus on other markets. It is not that the 'beach fleet' and the Sun Destinations are any less important, or perhaps, in any less of a need of reform as well - it is simply that VS does not face the same level of competition. They can afford to neglect a response there, for now - only because the more competitive market is being eroded away, from both ends - fiercely.

To draw a practical example - VS has to complete on the London-US flights against AA/BA and the JVATL, IAG's IB, EI, and Level eating at lowering costs below the premium of AA/BA. That's not then adding Norweigan's Operations. With no U.S. partner - what would VS provide, that every other competitor did not best it? Strengthening the DL alliance, serving the DL hubs (having DL as a back-up for IRROPS et al), and watching as DL improves its premium services (those new DL uniforms would look just as fabulously on VS crews, and then...);


I don't think anyone doubts that DL saved VS, and yes VS was in bad financial state. But people are more annoyed with the legacy of VS.
 
anstar
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 7:41 am

SteelChair wrote:
How much of the lack of profitability is due to the continuing RR engine problem?


I'd say its a part - but they will also be receiving compensation for this which would be included in their figures.

TC957 wrote:
VS downsizing is music to Norwegian ears. It should be VS starting SIN & EZE rather than DI - what's happened to the innovative Virgin from the past ? Now they are just DL's UK arm.


Except VS are reducing LGW flying at the same time BA are densifying their 777's and Norwegian are expanding. VD wouldn't SIN or EZE - any new routes now seem to be JV North American routes.
 
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neomax
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 7:43 am

santi319 wrote:
I mean lets not pretend anymore and talk about the pink elephant in the room...

VS is now literally Delta International Connection


And this is the real problem. For all intents and purposes of TATL flying, anything operated on VS metal across the Atlantic is basically interchangeable capacity for DL. The only actual flying VS does beyond TATL is LOS, JNB, DEL, PVG, and HKG which is useless. Delta already flies to three of those and bypasses VS altogether, and DEL is probably a stone's throw away from being added sometime in the next year if BOM is anything to go by. So basically, the only situation where DL would realistically prefer to put a pax on VS flight outside of the TATL market would be HKG which doesn't even account for the fact that 9 times out of 10, they'll probably end up on AF/KLM instead given that DL operates more flights to Amsterdam and Paris in a day than VS does in its entire network.

This is a literal case of having all your eggs in one basket. It's easy to say things are going great now, but VS is going under if anything happens to the US market or their relationship with DL. Without DL in the US, this airline has 5 routes in the entire world. You don't judge the success of a business by how they would do in good times, you judge it by what they would do in bad times. And by that metric, VS is really vulnerable and in for a world of trouble that makes Etihad look competent. Even Etihad did well at one time, but it didn't last forever. When their luck ran out, they had no plan and neither does VS.

A lot of people are saying that it is fine if VS only focuses on the US market. Yeah it's fine, but as several people have already pointed out, this airline is literally Delta UK, so what stops them from rebranding the whole company altogether? VS needs DL more than DL needs VS and with the stake DL has in VS, having the line between an independent and dependent company being blurred even further is not necessarily a good thing. If VS wants to be a relevant global airline, it needs to diversify in some way beyond where it is now. To be blunt, if they just want to focus on the Atlantic market, then there is no business case for it to exist and it is a paper airline operated by Delta at best. No business is immune from difficult times. I'm sure many people on here thought that given Etihad's government backing, they would never find themselves in a rough patch. They thought that any problem could go away if you threw enough money at it and they probably never imagined the current situation at all with that mentality. Sometimes, when you wear rose-colored glasses, it is difficult to see a world's true colors without them. With DL's 49% stake in VS, it is easy to think DL would never let go of VS. But businesses is a very fluid environment. Just because VS is profitable today on the TATL doesn't mean it will be forever even if that DL would like their management to believe. If 20 years down the road the TATL market weakens during the next downturn and LHR removes slots, what business case is there for VS? The stake is a management shakeup away from being sold by a new CEO who has a different plan and that leaves VS out in the wild to fend for itself.

Image
Last edited by neomax on Tue Jul 10, 2018 8:12 am, edited 2 times in total.
 
WPvsMW
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 7:47 am

TC957 wrote:
Now they are just DL's UK arm.


That's why VS is still in business. This way, VS will have another chance. Perhaps like UL survives out of CMB, surrounded by giants in SIN and HKG.
Last edited by WPvsMW on Tue Jul 10, 2018 7:49 am, edited 1 time in total.
 
Kato79
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 8:18 am

anstar wrote:
I'd say its a part - but they will also be receiving compensation for this which would be included in their figures.


No it won't be.

I asked the CFO that exact question at a conference after he said that the compensation figure would never be publicly disclosed.
Assuming he was telling the truth (which you never know in VS) he said the results did not & would not include any yet to be finalised compensation from RR for the aforementioned reason.
So who knows?!
 
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Richard28
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 8:22 am

neomax wrote:
This is a literal case of having all your eggs in one basket. It's easy to say things are going great now, but VS is going under if anything happens to the US market or their relationship with DL. Without DL in the US, this airline has 5 routes in the entire world. You don't judge the success of a business by how they would do in good times, you judge it by what they would do in bad times. And by that metric, VS is really vulnerable and in for a world of trouble that makes Etihad look competent.


I remember after 9/11 VS were able to adjust their capacity to the US quickly by reducing capacity flying West and increasing it flying East. You are right that with the current set up their options are much more limited in this regard should transatlantic demand take a hit.
 
theaviator380
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 9:26 am

Any reason why they struggling on LHR-BOM-LHR route?

I mean I am aware 9W and BA have 2 daily LHR-BOM flights but good few on BA fly onward to US, so any reason why BA route is still on demand but VS is not? VS has decent US network which is workable for BOM pax who are flying onward to US? I have been on BA but not on VS but I can't see huge difference between their soft and hard product. Yet people chose to fly BA not VS?

9W I am not putting in equation as lot of pax originating from BOM chose 9W for their soft product and network within Indian cities (domestic routes).

Any thoughts?
 
3AWM
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 9:37 am

I'm quite a regular flyer from UK to US, before the Delta buy-in I had never flown on Virgin.

You can look at the map from 20 years ago and say Virgin used to fly to more places but I don't see that because now I can fly to so many more places in the US than before, with a stop, and that makes it a realistic choice vs BA, particularly when the prices are lower. I now fly on Virgin reasonably regularly as an alternative to BA.

You can look at the financials for VS and say they don't make much money but the missing figures from that judgment are how many extra seats they sell on the Delta network. For the investment Delta made to buy 49% of Virgin, about $360m, the list price on an A350-1000 it must look pretty good on their balance sheet from a return on investment point of view, even if it doesn't make a profit, providing it doesn't lose too much money.

When people say why don't they just rebrand as Delta they totally miss the point, in the UK the Virgin brand is still really well known, it's on trains, cable TV financial services and loads of other services, no-one outside the av-geek community knows the Delta brand at all. It's actually a really good match up - in the UK the position is (Virgin - big brand, tiny airline, Delta - big airline - tiny brand).

Virgin Atlantic is basically a marketing asset for Delta's US network in the UK, I imagine that with the AF/KLM tie up they are looking to do something similar going east for their networks.
 
TC957
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 9:43 am

WPvsMW wrote:
TC957 wrote:
Now they are just DL's UK arm.


That's why VS is still in business. This way, VS will have another chance. Perhaps like UL survives out of CMB, surrounded by giants in SIN and HKG.

You can't say that for sure. VS survived - OK, maybe just about - SARS, 9/11, $140+ oil and the 2008 GFC to name a few and got through it without DL.
Now that air travel demand is growing to unprecedented levels, VS are shrinking. At least at LGW & LHR they are. But full credit to them to see MAN as an opportunity. BA never have.
 
ChrisKen
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 9:58 am

travelin man wrote:
There is no such thing as “slots” at LAX or ORD (not sure about JFK or EWR).

You may want to ask why the FAA allocates slots, twice annually for EWR, JFK, LAX, ORD and SFO then.

The FAA follows ICAO and WSG where it doesn't conflict with federal laws. DCA and LGA get continual allocation instead of the seasonal WSG


https://www.faa.gov/about/office_org/he ... n_process/
 
Kato79
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 10:32 am

3AWM wrote:
You can look at the financials for VS and say they don't make much money but the missing figures from that judgment are how many extra seats they sell on the Delta network. For the investment Delta made to buy 49% of Virgin, about $360m, the list price on an A350-1000 it must look pretty good on their balance sheet from a return on investment point of view, even if it doesn't make a profit, providing it doesn't lose too much money.


:checkmark:
Pretty much exactly what a DL manager told me in Atlanta last year.
VS as an individual entity making a profit to 'survive' just doesn't seem to be a priority anymore.
All that matters is what they bring to the table overall, as long as they don't lose too much of course....
 
Boeing74741R
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 11:46 am

skipness1E wrote:
For me the purchase of so many A346s was the turning point, alongside fighting to keep BA/AA apart at the same time every other major carrier was doing the same, via STAR, Skyteam and Oneworld.


With the A340-600's I suppose at the time it made sense to go with them considering they already had A340-300's and plugged a size gap with the 747's. Hindsight is a wonderful thing and it wouldn't surprise me if the aircraft order was different had it been known at the time how much fuel costs were going to increase by.

anstar wrote:
Some horrendous losses since 2009/10 . (one was 169m! and another 125m)... and then some modest profits (between 8m and 20 something milliion) for 3 years and then a return to loss last year and predicted loss for this year..


How much of the losses from the last 2 years is down to the poor GBP/USD exchange rate post-EU Referendum? I suspect it's a major factor (but not primary), combined with US ops forming a major part of its network thus increasing their exposure to the poor rate.

TC957 wrote:
VS downsizing is music to Norwegian ears. It should be VS starting SIN & EZE rather than DI - what's happened to the innovative Virgin from the past ? Now they are just DL's UK arm.


In the case of SIN, is it a good idea to be going up against BA, SQ and QF who between them have at least 5 flights a day direct from LHR on 777's and A380's (with SQ running a few extras per week) and a multitude of one-stop options with various Middle Eastern carriers such as EK? There's also no tie-up opportunities with VA at the SIN end for onward travel to Australia like there is a HKG. Virgin Atlantic Flying Club members are also able to earn miles on SQ, so there's an incentive for loyal VS flyers to avoid the likes of BA.

Richard28 wrote:
I remember after 9/11 VS were able to adjust their capacity to the US quickly by reducing capacity flying West and increasing it flying East. You are right that with the current set up their options are much more limited in this regard should transatlantic demand take a hit.


VS also withdrew their remaining 747-200's from their fleet (though 2 were sold to Air Atlanta Icelandic and leased back for MAN-MCO until the end of April 2005). BA also ditched their remaining 742's at around the same time.
 
AirbusA322
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 12:07 pm

Problem with the VA HKG Connection is there is a 6/7hr layover on the Aus-HKG-Lhr Leg. Return us very quick at 2-3hrs. But it’s too tight for Melbourne on the return with an hour.

There are faster options Aus to Europe.
 
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DL747400
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 1:24 pm

cedarjet wrote:
The problem is they’re not in an alliance. No serious road warrior is going to take VS because they don’t want to leave that many FF points on the table. I live in London and fly regularly to NY LA and SF and wouldn’t dream of flying VS unless it was a DL codeshare — so why not fly DL? Or BA AA UA, hell even AI are in *A and fly LHR EWR three times a week.


Alliance membership is not a requirement in order to earn miles, including MQMs. Even without VS membership in SkyTeam, you can still accrue miles and status, regardless of whether it is DL or VS operated:

https://www.delta.com/content/www/en_US ... tners.html
From First to Worst: The history of Airliners.net.

All posts reflect my opinions, not those of my employer or any other company.
 
CaliguyNYC
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 1:25 pm

I think we will definitely see VS add MAN-DEL route or split the MAN-BOM route with 9W. That will help funnel traffic to NA flights in MAN. I also think in a few years VS will launch LHR-BLR. 9W wants to make BLR a focus city and I think premium pax will like VS on the BLR-LHR route. While I understand people wanting VS to have a broad network out of LHR, it looks like VS could not make it work. DXB seemed to be cheap fares and vacation packages (why should VS keep that). At least the VS/DL US strategy makes sense if they can make it work. Also the VS/9W India strategy also seems to make sense. If in the end, VS is strong US-UK, UK-India (including the connecting pax to US) and some key O&D routes like LHR-HKG, JNB etc, isn't that better than scattered flights and always trying to struggle against others offering more frequencies or subsidized cheap seats? Now if VS could offer a new J seat where one can go from a bed to seat without flipping the dam seat, I would be a happy camper.
 
Andy33
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 1:56 pm

CaliguyNYC wrote:
DXB seemed to be cheap fares and vacation packages (why should VS keep that).

Virgin Atlantic has a subsidiary called Virgin Holidays whose sole purpose is selling vacation packages including VS flights (and nowadays DL flights and other codeshares).
Historically Virgin Holidays was the profitable part of the business, and the airline operations in general lost money more years than not. It looks like the Dubai packages aren't doing enough to cover the cost of operating the flights there.
But almost all the VS flights from LGW and GLA, and many of those from MAN, exist to service Virgin Holidays. No packages, no flights.
 
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PerfectGriffin
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 2:25 pm

Dropping DXB could be for a number of reasons,. DL might be considering the DXB route again or maybe it was more profitable to send the aircraft on another route. Whatever the reason may be, it does seem strange that they are dropping a route after so many years especially because the competition on LHR - DXB has dropped considerably in the last year (QF x2 A380, BI daily 787 are gone).
 
YYZflyboy
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 5:01 pm

Now that DL has eliminated HKG, can they not time their LHR flights to connect to VS 206? Then do the same for VS 300 (DEL).

And why the reluctance of VS to join Skyteam? If they do that, they can get other airlines in the same terminal at LHR!
 
Andy33
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 6:19 pm

YYZflyboy wrote:
And why the reluctance of VS to join Skyteam? If they do that, they can get other airlines in the same terminal at LHR!

LHR authorities designated T4 as Skyteam and unaligned airlines as part of the great shuffle round that started with the opening of the current T2. VS refused to move from T3, supposedly because of their investment in lounge facilities there. Cynics say that it was yet another Richard Branson shot at annoying BA since T3 is meant to be for Oneworld airlines, and for the BA overflow from T5. If VS cared two hoots about being in the same terminal as Skyteam they would have moved when the airport offered to pay for their removal costs.
 
ScottB
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 7:51 pm

ChrisKen wrote:
You may want to ask why the FAA allocates slots, twice annually for EWR, JFK, LAX, ORD and SFO then.


You may want to reread your source more carefully. FAA undertakes slot allocation and schedule facilitation twice annually for those airports. Slot allocation is done for the single airport in that list which is currently slot-restricted (JFK) while schedule facilitation happens for the others.

neomax wrote:
And this is the real problem. For all intents and purposes of TATL flying, anything operated on VS metal across the Atlantic is basically interchangeable capacity for DL. The only actual flying VS does beyond TATL is LOS, JNB, DEL, PVG, and HKG which is useless.


No, the real problem is that VS just didn't/doesn't make money on the non-transatlantic routes which have been or will be dropped. It would make little difference if they were to continue flying CPT/NBO/DXB/NRT simply because they still wouldn't be even remotely competitive from a network perspective with BA or TK or the ME carriers. They can't get bigger at LHR due to the slot restrictions and it's not as if they're profitable enough to subsidize money-losing routes just in case there's a shock in the transatlantic market (although there's a decent shot that non-transatlantic routes would take a hit as well).

neomax wrote:
This is a literal case of having all your eggs in one basket. It's easy to say things are going great now, but VS is going under if anything happens to the US market or their relationship with DL. Without DL in the US, this airline has 5 routes in the entire world. You don't judge the success of a business by how they would do in good times, you judge it by what they would do in bad times.


The alternative isn't any better. The other routes weren't making money. If there's a shock to the U.S. market the other flying likely continues to bleed money. With the joint venture, they have a partner sharing the risk. I agree it'd be nice if VS could diversify -- but they just don't have the key resource -- LHR slots -- which are the key requirement.

neomax wrote:
VS is really vulnerable and in for a world of trouble that makes Etihad look competent. Even Etihad did well at one time, but it didn't last forever. When their luck ran out, they had no plan and neither does VS.


There's basically no parallel with Etihad aside from both being enterprises which carry passengers in airliners. VS didn't have a sovereign which was willing to pump money into it in order to develop a local industry, and VS management didn't pursue a strategy of scattershot investment in troubled carriers with the added bonus of no ability to materially impact operations (apart from a route or two to AUH) due to ownership restrictions. If anything, VS's strategy since DL purchased SQ's stake is more akin to the road upon which EY is about to begin its next journey. VS is focusing its operations in markets where they can be profitable. Yes, that absolutely involves greater network cooperation with Delta; having access to the DL domestic network in the U.S. is a significant improvement.

EY's luck didn't "run out." Their investments in AZ and AB were dumb and eventually the sovereign took away the blank checkbook. Now they have to run more like a business rather than a vanity/economic development project.

neomax wrote:
VS needs DL more than DL needs VS and with the stake DL has in VS, having the line between an independent and dependent company being blurred even further is not necessarily a good thing.


In a global market where airline alliances increasingly drive purchasing decisions, VS is never going to be much more than a junior partner. They're just not big enough to have the same influence as DL, UA, AF, KL, NH, JL, SQ, KE, etc. (I leave out oneworld carriers due to AA/BA being in that alliance.) They have value in their transatlantic presence from the U.K. and they did better than BD in staying as an independent brand -- but there's no room for a second hub carrier at LHR absent some sort of slot redistribution or unequal award of new slots from a new runway.

neomax wrote:
With DL's 49% stake in VS, it is easy to think DL would never let go of VS. But businesses is a very fluid environment. Just because VS is profitable today on the TATL doesn't mean it will be forever even if that DL would like their management to believe. If 20 years down the road the TATL market weakens during the next downturn and LHR removes slots, what business case is there for VS? The stake is a management shakeup away from being sold by a new CEO who has a different plan and that leaves VS out in the wild to fend for itself.


DL's stake in VS didn't cost much more than a new A350 or two, so I think you're absolutely right in that DL could easily walk away. But to be perfectly frank, DL as part-owner has been a better partner to VS than SQ ever was.
 
Ryanair01
Posts: 456
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 9:54 pm

Andy33 wrote:
CaliguyNYC wrote:
DXB seemed to be cheap fares and vacation packages (why should VS keep that).

Virgin Atlantic has a subsidiary called Virgin Holidays whose sole purpose is selling vacation packages including VS flights (and nowadays DL flights and other codeshares).
Historically Virgin Holidays was the profitable part of the business, and the airline operations in general lost money more years than not. It looks like the Dubai packages aren't doing enough to cover the cost of operating the flights there.
But almost all the VS flights from LGW and GLA, and many of those from MAN, exist to service Virgin Holidays. No packages, no flights.


The research I've seen in a professional setting suggested that the Virgin brand has a very positive impact on leisure travel, both increasing demand and also yield. However the impact is negligible for premium travel.

I think what you see is VS almost splitting into two halves. First up at LGW, MAN, GLA etc VS are up against Thomas Cook and TUI, using their brand advantage in the leisure market, flying for Virgin Holidays.

Secondly there is the LHR business which I think is more complex. The transatlantic business is a JV, but because of DL's shares, in effect 74% of that JV sat under DL ownership. AA and UA were both established at LHR from Bermuda 2. DL didn't get access until open skies in 2008 and had to build a presence from scratch. For $360m the JV gave them in effect 74% ownership of VS' established LHR transatlantic operation overnight. Compare that to CO who paid $208m for just 4 slot pairs at LHR. As shareholders, Virgin Group make their money from licensing the brand. DL make money two ways, firstly from domestic feed as passengers transfer to DL. Secondly the half hourly co-ordinated JFK-LHR schedule is attractive to NYC corporate clients - where LHR is the second biggest corporate destination by revenue, gaining corporate contracts also adds revenue to DLs other NYC routes. Although the new AF-KL/ DL/ VS JV and shareholding change the numbers around a bit, the fundamental model still applies.

Looking at how VS' shareholders make money from the business, flying east from LHR doesn't support that. VS need to support their shareholders aims. The only flying east exception I can think of is if China Eastern (also part owned by DL, but a 10% shareholder in AF-KLM) uses VS to fly more China-UK routes to get around the Chinese government's one airline per long haul route practice.

I think ultimately being both a 'slightly' premium leisure airline and the UK arm of a fairly corporate focused JV is going to be a hard balancing act.
 
Breathe
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 10:30 pm

VSOrlando wrote:

Image

These were the glory days of Virgin Atlantic.

I don't think the MRU route lasted very long. I believe it started around Summer time in 2008 (just before the financial crisis) and got canned about a year later.

It was originally going to be an LGW route, then it got switched to LHR.
 
WPvsMW
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 11:25 pm

Ryanair01 wrote:
For $360m the JV gave them in effect 74% ownership of VS' established LHR transatlantic operation overnight.

Actually, AF/DL/KL's share of VS is 49% + 31% = 80%.
viewtopic.php?f=3&t=1369557&hilit=virgin
 
skipness1E
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Re: Virgin Atlantic network going downhill?

Tue Jul 10, 2018 11:55 pm

Do you add LGW-PHC to the route map? Virgin Nigeria was VS painted green for the first few years.
 
Boeing74741R
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Re: Virgin Atlantic network going downhill?

Wed Jul 11, 2018 11:46 am

skipness1E wrote:
Do you add LGW-PHC to the route map? Virgin Nigeria was VS painted green for the first few years.


Accra, Athens, Detroit, Dublin, Maastricht, Mumbai, Toronto and Vancouver are also missing, but then I'm not sure whether this map was representative of a particular point in time or meant to represent all the points VS have operated to. If the latter, then Belfast and Seattle are also missing.

I could be wrong, but I thought Montego Bay was a swap for Kingston?

At the end of the day, what's more important to VS is playing to its strengths and operating a profitable network. It doesn't have a network the scale of some of its rivals to be able to maintain unprofitable routes that are made up/effectively "subsidised" by other profitable routes to other places, but then it's those sort of routes that are vulnerable to be axed whenever there's a downturn or a big review is done such as the one a few years ago that led to a number of routes being axed.

TC957 wrote:
But full credit to them to see MAN as an opportunity. BA never have.


You mentioned Norwegian earlier. I do wonder whether they've missed the boat at MAN thanks to Thomas Cook or Virgin expanding their TATL network or they've gone after more lucrative opportunities elsewhere? As for BA, their reasons for withdrawal from long-haul at MAN is well-documented on here and elsewhere, but I do wonder how much share BA and AA combined have left from MAN going TATL (be it direct or via one of their hubs) since the only year-round route left is PHL with JFK gone and ORD seasonal.
 
LHR01
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Re: Virgin Atlantic network going downhill?

Wed Jul 11, 2018 2:35 pm

With the new Islamabad Airport opened and few days ago if I'm right they had the first A380 flight to ISB and it went very well.

Would Virgin and Pakistan really work?
 
skipness1E
Posts: 4627
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Re: Virgin Atlantic network going downhill?

Wed Jul 11, 2018 2:46 pm

LHR01 wrote:
With the new Islamabad Airport opened and few days ago if I'm right they had the first A380 flight to ISB and it went very well.
Would Virgin and Pakistan really work?

Does Pakistan really fit with the brand?
 
B-HOP
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Re: Virgin Atlantic network going downhill?

Wed Jul 11, 2018 4:14 pm

Sad to see VS increasing relying on US market but being able to access DL's frequent flyer would helped them (and bottom line) immensely, we use to see a different VS, Accra, Mauritius, Nairobi...... but time has moved on. One big mistake they made is not to make more effort when BD is in trouble and up for sale, allow a well cashed BA to buy BD for loose change, allow what happened to BCAL happened again, before that was BMed when they were sold to BMed, if it got their hands on any of those, it would allow them more slots to play with and hubbing flights together and find ways to connect with the regions and skeleton service to EU , I do hope VS would look East again at some point.
Live life to max!!!
 
CaliguyNYC
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Re: Virgin Atlantic network going downhill?

Wed Jul 11, 2018 5:33 pm

If MRU was even borderline, it should have been moved to LGW. That island is a tourist destination (or Virgin Holidays) and didn't need LHR's NA flight connections. So VS could add it back if it felt there was a need.
 
Planesmart
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Re: Virgin Atlantic network going downhill?

Wed Jul 11, 2018 7:10 pm

Kato79 wrote:
anstar wrote:
I'd say its a part - but they will also be receiving compensation for this which would be included in their figures.


No it won't be.

I asked the CFO that exact question at a conference after he said that the compensation figure would never be publicly disclosed.
Assuming he was telling the truth (which you never know in VS) he said the results did not & would not include any yet to be finalised compensation from RR for the aforementioned reason.
So who knows?!

Two levels. THE compensation including above and below the line, and then less compensation for customers that breach the confidentiality agreement.

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