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TC957
Posts: 3811
Joined: Wed May 23, 2012 1:12 pm

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 9:06 am

Aviation in general - not just VS or BA - should be supported by central govt as it forms the very backbone of the economic recovery after this pandemic is over. Not just flying business passengers about but think of all the goods they carry in & out as cargo.
 
bennett123
Posts: 9732
Joined: Sun Aug 15, 2004 12:49 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 10:33 am

Unless the Govt can support every company, choices have to be made.

If they give to VS, then they have to say ‘no’ to someone else.

The question is ‘can VS find funds elsewhere’. If not, will any loan be repaid within a reasonable timescale.

VS has two main markets, TATL and Caribbean. The first Business/Leisure, the second more Leisure than Business.

How soon will these markets come back and make money. Bear in mind that initially fares will be low to stimulate any demand at all.
 
caaardiff
Posts: 203
Joined: Sat Jul 15, 2006 3:14 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 11:25 am

bennett123 wrote:
Unless the Govt can support every company, choices have to be made.

If they give to VS, then they have to say ‘no’ to someone else.

The question is ‘can VS find funds elsewhere’. If not, will any loan be repaid within a reasonable timescale.

VS has two main markets, TATL and Caribbean. The first Business/Leisure, the second more Leisure than Business.

How soon will these markets come back and make money. Bear in mind that initially fares will be low to stimulate any demand at all.


You bring up a good point that few posters seem to recognise here. VS is a business & leisure (holiday) Airline. Virgin Holidays is also heavily involved in this whole process. If VS go under, Virgin Holidays will likely go under. Who else could they use? TUI won't have the capacity with VS and TCX gone. BA? Would Virgin Holidays really use BA flights?

Given the unprecedented situation the country and industry is facing, could the government step in and protect the Airlines in a different way? Could they limits the amount of foreign carriers on the main routes, therefore giving home Airlines more chance of survival? Think how many flights there are a day to New York as an example. If the government can manipulate competition in a way that BA and VS can benefit equally whilst also allowing foreign Airlines some access to the UK, it could be avoid having to plough money into Airlines in state aid/loans. That could simply be almost forcing Delta passengers to use VS, and American Airlines passengers to use BA. Ticket sales will still happen, just not on American owned Airlines metal. With government involvement it could get around any union issues in the US.
 
jomur
Posts: 353
Joined: Sun Jun 19, 2016 6:36 pm

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 11:33 am

caaardiff wrote:
bennett123 wrote:
Unless the Govt can support every company, choices have to be made.

If they give to VS, then they have to say ‘no’ to someone else.

The question is ‘can VS find funds elsewhere’. If not, will any loan be repaid within a reasonable timescale.

VS has two main markets, TATL and Caribbean. The first Business/Leisure, the second more Leisure than Business.

How soon will these markets come back and make money. Bear in mind that initially fares will be low to stimulate any demand at all.


You bring up a good point that few posters seem to recognise here. VS is a business & leisure (holiday) Airline. Virgin Holidays is also heavily involved in this whole process. If VS go under, Virgin Holidays will likely go under. Who else could they use? TUI won't have the capacity with VS and TCX gone. BA? Would Virgin Holidays really use BA flights?

Given the unprecedented situation the country and industry is facing, could the government step in and protect the Airlines in a different way? Could they limits the amount of foreign carriers on the main routes, therefore giving home Airlines more chance of survival? Think how many flights there are a day to New York as an example. If the government can manipulate competition in a way that BA and VS can benefit equally whilst also allowing foreign Airlines some access to the UK, it could be avoid having to plough money into Airlines in state aid/loans. That could simply be almost forcing Delta passengers to use VS, and American Airlines passengers to use BA. Ticket sales will still happen, just not on American owned Airlines metal. With government involvement it could get around any union issues in the US.


Virgin holidays already use BA flights. I have had several quotes from them in the past and they all involved flights on BA long haul aircraft, so that's not an issue.
 
tphuang
Posts: 5201
Joined: Tue Mar 14, 2017 2:04 pm

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 11:39 am

VS11 wrote:
skipness1E wrote:
Airlines SHOULD be getting special treatment as profitable viable employers are now closing because of government decisions.

That’s “special treatment” required. I must say I am alarmed by the cold and callous attitude of many, especially US posters on this thread. This is not survival of the fittest capitalist style, this is an economic calamity, and thinking that allowing VS to fail and throwing 8000 people onto Universal Credit in many cases, will somehow balance things out cos Branson is a bit of a tit, is plain armchair quater-backing of the lobotomised variety!

There’s a time to be a fan boy and there’s a time to be a real human being.


I am just going to add that many posters have never worked for an airline and have no idea what it takes to get a single flight off the ground, let alone a fleet. It is the valuable expertise of people like GDB which will be lost if the sector is not supported.


The problem with this kind of statement is that there are many people unemployed right now that needs to be helped. America has 20% unemployment with the recent filings. Most of this is due to gov't staty at home orders. So at the end of the day, gov't can't rescue everyone. VS was not profitable before this and it definitely won't be profitable after this.

Big businesess have access to liquidity sources that small businesses simply don't have access to. Do you have an idea how many small businesses will close down because this has forced the acceleration of amazon and costco taking over the entire retail space? We cannot save every business. The treasury has to judge which businesses have the ability to pay back the loans. And at present time, the chanceller has been unimpressed with VS's business case to return to profitability in the current aviation environment.

Should British gov't keep throwing money at a business that's flawed or does it make loans to airlines who can pay it back. And when the demand comes back, these businesses will hire all the people that got laid off.

Remember, even if VS got rescued, there will be massive amount of furloughing among airlines. These jobs come back will come back based on demand, not how many airlines are around. I guess there will be fewer back office jobs and managerial jobs when there is one few airline, but those are not the people we are worried about here, is it?

bennett123 wrote:
Unless the Govt can support every company, choices have to be made.

If they give to VS, then they have to say ‘no’ to someone else.

The question is ‘can VS find funds elsewhere’. If not, will any loan be repaid within a reasonable timescale.

VS has two main markets, TATL and Caribbean. The first Business/Leisure, the second more Leisure than Business.

How soon will these markets come back and make money. Bear in mind that initially fares will be low to stimulate any demand at all.

so maybe they should've re-oriented themselves as a leisure airline in their business proposal to gov't.
 
VS11
Posts: 1661
Joined: Mon Jul 02, 2001 6:34 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 11:42 am

bennett123 wrote:
Unless the Govt can support every company, choices have to be made.


Actually, there already is a solution which was used by the UK 100 years ago and even further - issuing a consol - a perpetual bond. In essence, the government can support the entire economy by making sure money flows and everybody gets paid even if less than what they used to. There will be losses but they can be spread over a long period of time. The consols were used to pay for WWI and were paid off 6 years ago...Here is more:

UK bonds that financed first world war to be redeemed 100 years later
https://www.theguardian.com/business/20 ... s-redeemed
 
sevenheavy
Posts: 969
Joined: Tue Mar 23, 2004 3:30 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 11:59 am

jomur wrote:
caaardiff wrote:
bennett123 wrote:
Unless the Govt can support every company, choices have to be made.

If they give to VS, then they have to say ‘no’ to someone else.

The question is ‘can VS find funds elsewhere’. If not, will any loan be repaid within a reasonable timescale.

VS has two main markets, TATL and Caribbean. The first Business/Leisure, the second more Leisure than Business.

How soon will these markets come back and make money. Bear in mind that initially fares will be low to stimulate any demand at all.


You bring up a good point that few posters seem to recognise here. VS is a business & leisure (holiday) Airline. Virgin Holidays is also heavily involved in this whole process. If VS go under, Virgin Holidays will likely go under. Who else could they use? TUI won't have the capacity with VS and TCX gone. BA? Would Virgin Holidays really use BA flights?

Given the unprecedented situation the country and industry is facing, could the government step in and protect the Airlines in a different way? Could they limits the amount of foreign carriers on the main routes, therefore giving home Airlines more chance of survival? Think how many flights there are a day to New York as an example. If the government can manipulate competition in a way that BA and VS can benefit equally whilst also allowing foreign Airlines some access to the UK, it could be avoid having to plough money into Airlines in state aid/loans. That could simply be almost forcing Delta passengers to use VS, and American Airlines passengers to use BA. Ticket sales will still happen, just not on American owned Airlines metal. With government involvement it could get around any union issues in the US.


Virgin holidays already use BA flights. I have had several quotes from them in the past and they all involved flights on BA long haul aircraft, so that's not an issue.


On the contrary, It would be a huge issue for most of the main VHOLS markets. Where were you going? VHOLS do use many other carriers but well over 80% of their flying is on VS.

Take MCO as (admittedly the other end of the spectrum) an example. At peak, VS would send in 6 B744 daily! That’s 2700 seats. They send even more via ATL and other US airports. No one else comes even remotely close. They have a huge presence in other markets as well and can’t simply transfer to other airlines. Granted there won’t be that kind of demand for a while but longer term, their market share is huge in certain markets.

skipness1E wrote:
Airlines SHOULD be getting special treatment as profitable viable employers are now closing because of government decisions.

That’s “special treatment” required. I must say I am alarmed by the cold and callous attitude of many, especially US posters on this thread. This is not survival of the fittest capitalist style, this is an economic calamity, and thinking that allowing VS to fail and throwing 8000 people onto Universal Credit in many cases, will somehow balance things out cos Branson is a bit of a tit, is plain armchair quater-backing of the lobotomised variety!

There’s a time to be a fan boy and there’s a time to be a real human being.


Precisely. There are many people who visit these forums who are employed by many airlines, and who are usually happy to share their experience and knowledge. On this forum, they get to read that the company they work for (And rely on) is ‘done’ or ‘toast’. This isn’t necessarily specific to VS. The same goes for a couple of other threads. Ironically, it seems that the worlds awareness of mental health and being kind to each other doesn’t apply right when it’s needed the most.

Now we see that even BA are not immune to the pain this unprecedented event is causing. These are not normal times and they shouldn’t be judged as such.

I wish everyone who is, or has been impacted by this terrible pandemic a speedy recovery and a return to a normal life, whatever that looks like.
So long 701, it was nice knowing you.
 
User avatar
flee
Posts: 1280
Joined: Mon Oct 12, 2009 8:14 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 12:00 pm

I think the UK government were not pleased with VS's lack of effort to raise the finance themselves.

Look at SQ - they issued more equity (shareholders have to come up with the money) as well as debt (bond holders will have to assess the risks and decide if they wish to subscribe). Yes, SQ's majority shareholders are the nation's sovereign wealth fund but it is still a public company listed in the Singapore Exchange (SGX) - so some money will still be from private sources.

What has VS done to raise additional capital? They should only go to the the government as a last resort - when all else has failed, or after it has failed to raise the full amount needed.
 
VS11
Posts: 1661
Joined: Mon Jul 02, 2001 6:34 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 12:13 pm

flee wrote:
What has VS done to raise additional capital? They should only go to the the government as a last resort - when all else has failed, or after it has failed to raise the full amount needed.


They hired investment bank Houlihan Lokey to reach out to private investors - which is what they were asked to do.
 
tphuang
Posts: 5201
Joined: Tue Mar 14, 2017 2:04 pm

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 12:31 pm

sevenheavy wrote:

Precisely. There are many people who visit these forums who are employed by many airlines, and who are usually happy to share their experience and knowledge. On this forum, they get to read that the company they work for (And rely on) is ‘done’ or ‘toast’. This isn’t necessarily specific to VS. The same goes for a couple of other threads. Ironically, it seems that the worlds awareness of mental health and being kind to each other doesn’t apply right when it’s needed the most.


Do you have any evidence the number of front line aviation related jobs is proportional to the number of airlines? It seems to me that the number of such jobs is proportional to the capacity level or the number of flight hours. Given that number of flight hours over time should be directly related to the demand. I don't see why 1 fewer airline would result in fewer jobs. If you have more airlines, those same jobs will just be spread thinner among the airlines.
 
Westerwaelder
Posts: 240
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 1:02 pm

DobboDobbo wrote:
Westerwaelder wrote:
DobboDobbo wrote:

The issue is that where a large number of jobs (or certain types of particularly skilled jobs) are lost en masse, those skills are often lost to the industry for good, and they take time to recreate. This means that the recession cuts deeper, recovery takes longer, and the prospect of permanent economic damage takes longer.

In the case of aviation , which is a significant driver for a wide range of economic activity, when the effects are extrapolated up and down the supply chain (ground handlers, airport staff, engine and aircraft manufacturers, lessors, financiers, tourism industry, commerce) the effects can reverberate far wider than just an airline and for a considerable period of time.

People will inevitably loose their jobs. Hopefully it will be much less than not 100% of VS employees or 33% of BA. If this is the commercial reality (perhaps driven by BA’s willingness to accept deep cuts to its employment base instead of state support if it means it drives VS out of business) perhaps a period of nationalisation would be in the best interests of the UK.


Nationalisation is a very thorny issue for a Conservative government. But it's certainly possible as we have seen with steel and some rail franchises. I am not sure it will serve much purpose as there are well run (under normal circumstances) airlines that can handle all of the demand in the foreseeable future. Given the enormous amounts of money needed in the entire economy, it makes no sense propping up businesses that were loss making before Covid or are not adding benefits to the country. Jobs will be lost inevitably and propping up weak companies only prolongues the pain for all involved.


As far as I am aware, immediately before the Covid crisis all UK based airlines were viable businesses, adding benefits to the UK, and were well run.

I don’t know how all the airlines will make it through this crisis, but the government picking favourites is a recipe for long term grievance. Just look at some of the posts on this thread.

I don’t accept helping otherwise viable businesses chart a path through the Covid crisis prolongs the economic pain. I think if the economy is in a position where otherwise viable businesses have been allowed to fail and must start or restart from scratch (which obviously takes time) is what will cause the most damage.

Helping these types of businesses through (they will obviously have to emerge differently to how they went in) provides that springboard for rapid economic growth when we are out of the other side. If the government are unable or unwilling to do this, that is where I think the economic hardship will cut deeper and longer.

It’s a tricky question and we are obviously in uncharted territory. But there has clearly been a lot of hubris and partisan opportunism driving many of the comments in relation to VS (not yours I don’t think) and I think that is a complete misreading if the situation the aviation sector is in if the government does nothing.


That is exactly the question: what do we consider to be a viable business? One with more losses than profits (over a period of 10 years) with absolutely no assets left to back up a loan with? A business that loses money in the biggest boom time for airlines in recent memory? An airline that can't make money when flights are full? If VS had been a profitable business before Covid I would agree. Despite this thread having gone for ages, not one person can show how Virgin Atlantic was viable. Not only that, but its owners seem oblivious to it. "About to turn a corner" and such are not a sign of a viable business.
 
DobboDobbo
Posts: 1127
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 1:05 pm

flee wrote:
I think the UK government were not pleased with VS's lack of effort to raise the finance themselves.

Look at SQ - they issued more equity (shareholders have to come up with the money) as well as debt (bond holders will have to assess the risks and decide if they wish to subscribe). Yes, SQ's majority shareholders are the nation's sovereign wealth fund but it is still a public company listed in the Singapore Exchange (SGX) - so some money will still be from private sources.

What has VS done to raise additional capital? They should only go to the the government as a last resort - when all else has failed, or after it has failed to raise the full amount needed.


I think the point you’ve made is a good one - VS probably should do more to raise more capital and I hope they can manage that and then receive government support to help them through this if required.

However - I’m not sure SQ is the best comparison! It’s much easier to raise capital from your shareholders if the majority is owned by the government and you are a key plank is the state’s economic model!
 
DobboDobbo
Posts: 1127
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 1:09 pm

Westerwaelder wrote:
DobboDobbo wrote:
Westerwaelder wrote:

Nationalisation is a very thorny issue for a Conservative government. But it's certainly possible as we have seen with steel and some rail franchises. I am not sure it will serve much purpose as there are well run (under normal circumstances) airlines that can handle all of the demand in the foreseeable future. Given the enormous amounts of money needed in the entire economy, it makes no sense propping up businesses that were loss making before Covid or are not adding benefits to the country. Jobs will be lost inevitably and propping up weak companies only prolongues the pain for all involved.


As far as I am aware, immediately before the Covid crisis all UK based airlines were viable businesses, adding benefits to the UK, and were well run.

I don’t know how all the airlines will make it through this crisis, but the government picking favourites is a recipe for long term grievance. Just look at some of the posts on this thread.

I don’t accept helping otherwise viable businesses chart a path through the Covid crisis prolongs the economic pain. I think if the economy is in a position where otherwise viable businesses have been allowed to fail and must start or restart from scratch (which obviously takes time) is what will cause the most damage.

Helping these types of businesses through (they will obviously have to emerge differently to how they went in) provides that springboard for rapid economic growth when we are out of the other side. If the government are unable or unwilling to do this, that is where I think the economic hardship will cut deeper and longer.

It’s a tricky question and we are obviously in uncharted territory. But there has clearly been a lot of hubris and partisan opportunism driving many of the comments in relation to VS (not yours I don’t think) and I think that is a complete misreading if the situation the aviation sector is in if the government does nothing.


That is exactly the question: what do we consider to be a viable business? One with more losses than profits (over a period of 10 years) with absolutely no assets left to back up a loan with? A business that loses money in the biggest boom time for airlines in recent memory? An airline that can't make money when flights are full? If VS had been a profitable business before Covid I would agree. Despite this thread having gone for ages, not one person can show how Virgin Atlantic was viable. Not only that, but its owners seem oblivious to it. "About to turn a corner" and such are not a sign of a viable business.


Profitability does not equal viability.

No one knows what the future holds, but 40 odd years of continued operations and as far as I’m aware no going concern warnings in its accounts is pretty strong prima facie evidence of viability in my eyes.
 
Westerwaelder
Posts: 240
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 1:20 pm

DobboDobbo wrote:
Westerwaelder wrote:
DobboDobbo wrote:

As far as I am aware, immediately before the Covid crisis all UK based airlines were viable businesses, adding benefits to the UK, and were well run.

I don’t know how all the airlines will make it through this crisis, but the government picking favourites is a recipe for long term grievance. Just look at some of the posts on this thread.

I don’t accept helping otherwise viable businesses chart a path through the Covid crisis prolongs the economic pain. I think if the economy is in a position where otherwise viable businesses have been allowed to fail and must start or restart from scratch (which obviously takes time) is what will cause the most damage.

Helping these types of businesses through (they will obviously have to emerge differently to how they went in) provides that springboard for rapid economic growth when we are out of the other side. If the government are unable or unwilling to do this, that is where I think the economic hardship will cut deeper and longer.

It’s a tricky question and we are obviously in uncharted territory. But there has clearly been a lot of hubris and partisan opportunism driving many of the comments in relation to VS (not yours I don’t think) and I think that is a complete misreading if the situation the aviation sector is in if the government does nothing.


That is exactly the question: what do we consider to be a viable business? One with more losses than profits (over a period of 10 years) with absolutely no assets left to back up a loan with? A business that loses money in the biggest boom time for airlines in recent memory? An airline that can't make money when flights are full? If VS had been a profitable business before Covid I would agree. Despite this thread having gone for ages, not one person can show how Virgin Atlantic was viable. Not only that, but its owners seem oblivious to it. "About to turn a corner" and such are not a sign of a viable business.


Profitability does not equal viability.

No one knows what the future holds, but 40 odd years of continued operations and as far as I’m aware no going concern warnings in its accounts is pretty strong prima facie evidence of viability in my eyes.


Without profitability no viability. The case here seems slightly distorted as it looks like the owners still make money from VS regardless. But that can only go so long and as long as you can get fresh credit. That Avenue is now closing and from what I can tell, Covid is only an accelerator.

BA are seemingly taking tough decisions right now (understandably many see ulterior motives here but ultimately these decisions will have to be taken before too much cash is being burned) and I would like to see others making similar efforts. It's inevitable that airlines shrink their businesses. LH, SK and BA seem to grasp the nettle. Others are hanging back.
 
DobboDobbo
Posts: 1127
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 2:00 pm

Westerwaelder wrote:
DobboDobbo wrote:
Westerwaelder wrote:

That is exactly the question: what do we consider to be a viable business? One with more losses than profits (over a period of 10 years) with absolutely no assets left to back up a loan with? A business that loses money in the biggest boom time for airlines in recent memory? An airline that can't make money when flights are full? If VS had been a profitable business before Covid I would agree. Despite this thread having gone for ages, not one person can show how Virgin Atlantic was viable. Not only that, but its owners seem oblivious to it. "About to turn a corner" and such are not a sign of a viable business.


Profitability does not equal viability.

No one knows what the future holds, but 40 odd years of continued operations and as far as I’m aware no going concern warnings in its accounts is pretty strong prima facie evidence of viability in my eyes.


Without profitability no viability. The case here seems slightly distorted as it looks like the owners still make money from VS regardless. But that can only go so long and as long as you can get fresh credit. That Avenue is now closing and from what I can tell, Covid is only an accelerator.


I’ve said profitability does not equal viability. It does not even necessarily mean that the business spends more than it earns.

Arguing that a marginal or slightly loss making business is an unviable business is a non sequitur.
 
Cedar
Posts: 76
Joined: Mon Dec 25, 2017 1:07 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 3:30 pm

Don't mean to get off topic too much, but this has to do with profitability:
Have a look: Does anyone not see something wrong here?
For an airline of this size - this seems like mismanagement. Costs are too high for a number of reasons.below.

VS have:
1.) 42 Aircraftt
2.) 4 fleet types - I can understand 2 types for leisure & business
3.) 2 engine manufacturers
4.) 3 seat manufacturers
5.) 3 different IFE types
6.) 30 destinations
7.) 8500 direct staff & thousands of outsurced staff.

I am certain Morgan Stanley is looking at stuff like this.
To make this profitable - there needs to be some major trimming here.

Cedar
 
Boeing74741R
Posts: 1400
Joined: Tue Apr 17, 2007 5:44 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 4:01 pm

Cedar wrote:
Don't mean to get off topic too much, but this has to do with profitability:
Have a look: Does anyone not see something wrong here?
For an airline of this size - this seems like mismanagement. Costs are too high for a number of reasons.below.

VS have:
1.) 42 Aircraftt
2.) 4 fleet types - I can understand 2 types for leisure & business
3.) 2 engine manufacturers
4.) 3 seat manufacturers
5.) 3 different IFE types
6.) 30 destinations
7.) 8500 direct staff & thousands of outsurced staff.

I am certain Morgan Stanley is looking at stuff like this.
To make this profitable - there needs to be some major trimming here.

Cedar


4 fleet types: that will be down to three once the 747's and A330ceo's leave, leaving A330neo's, A350's and 787's. When the 747 fleet was larger they were in 2 different configs (LHR-based had a high Upper mix and less Y/PE seats, the remaining ones that are still in the fleet and known as 'leisure' fleet have just 14 Upper seats, 66 PE and 375 Y seats), but the 787's and A330's have one config per aircraft. The A350's due to be delivered later will have a different config to the A350's in the fleet because they're intended to replace the 747's.

An argument could be made that VS should have ordered more 787's instead of the A330neo. We don't know what deal Airbus offered compared to Boeing, however I suspect two things that swung it are firstly the A330neo's capability to serve all of the VS network and secondly the fact that already have a pool of A330 type rated pilots and cabin crew. I don't know how much training they need to do when switching from the ceo to the neo, but it would be relevant if those pilots needed to convert from A330 to 787.

I also have no idea what config the A330neo's will have, though for what it's worth the existing A330's are the only aircraft in the VS fleet that can be seen operating out of every UK airport they serve. The initial claim that the -200's will be dedicated to MAN was superseded in reality relatively quickly once they started being allocated to LGW flights. I believe they've turned up at LHR a few times.

If there are substantial cuts to be made, at least one of these fleets are vulnerable.

Engine manufacturers: it's actually 3. VS have gone for Rolls-Royce engines on the A330-300's and 787's and A350's (the latter they had no choice on to be fair) and obviously the A330neo's will be RR (again, they had no choice), but the outgoing 747-400's have always been fitted with GE CF6's. The A330-200's acquired on 4 year leases to cover for the 787's have Pratt & Whitney engines, but to be fair their hand was forced and they just happened to be available following the Air Berlin collapse (in an ideal world they would have probably acquired -300's with RR engines if there were any suitable frames available at the time). Once the 747's and A330-200's leave, they will be down to an all RR-powered fleet.

Historically, the A340-300's had CFM engines that was the only type on offer, but the -600's were RR. The 747 Classics were all second-hand and a mixture of RR and PW engines.

IFE: I believe is the same type across the fleet now the A340's have gone and G-VBIG has gone, though in Upper on the A332's and A350's they have larger screens.
 
DobboDobbo
Posts: 1127
Joined: Thu Mar 03, 2016 1:02 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 4:09 pm

Westerwaelder wrote:
DobboDobbo wrote:
Westerwaelder wrote:

I'm with you on that one. I am a bit lost what viability is if not the ability to pay your way (which by the way you don't if your debt increases until they are about to exceed your assets) - that is the very definition of viability for me


The difference you’ve picked up on is between cash flow and balance sheet.

I cannot pretend to know the ins and out of all of this, but in insolvency terms (which I think / hope illustrates the point) cash flow is the ability to pay your debts as they fall due, balance sheet is total assets vs total liabilities. Profit and loss interplay’s with each of these.

It is possible in any given accounting period to have net cash inflow (eg receiving more in sales than spent on costs) but make a paper loss due to say a devaluation of assets on your balance sheet.

In that very basic scenario you are still able to trade because you are bringing more money in than you are spending, but the accounts would record a loss.

It’s obviously more complex than this, and I’m sure other posters could provide more detail, but for the purpose of illustrating the point I hope this assists.


The accounts show a loss and that is fine - up to the point where you need more money and no one is prepared to lend to you because all of your assets have already been pledged against previous loans. What you describe above only goes for a limited period of time. If you make an operational loss, you spend more than you take in. That money needs to come from somewhere. Are you saying that VS is cashflow positive then?


I’ve explained the principle - if you want to learn more about how a business can make a loss, continue to trade, continue to be viable, and pay debts as they fall due there is plenty of information available on the web.
 
SueD
Posts: 260
Joined: Sat Jul 27, 2019 11:35 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 4:18 pm

Cedar wrote:
Don't mean to get off topic too much, but this has to do with profitability:
Have a look: Does anyone not see something wrong here?
For an airline of this size - this seems like mismanagement. Costs are too high for a number of reasons.below.

VS have:
1.) 42 Aircraftt
2.) 4 fleet types - I can understand 2 types for leisure & business
3.) 2 engine manufacturers
4.) 3 seat manufacturers
5.) 3 different IFE types
6.) 30 destinations
7.) 8500 direct staff & thousands of outsurced staff.

I am certain Morgan Stanley is looking at stuff like this.
To make this profitable - there needs to be some major trimming here.


Cedar


Whilst valid points lets go through a few through

1). Virgin fleet size - Pretty small for network of operations (in normal conditions)

2) Aircraft types scheduled to transition to 3 primary types in the next 12/18 months - 747s will be gone as will some of the leased in A332s
Each type serves the network fit pretty well A333 and future A333NEO East Coast USA
A35J - there are scheduled to be two interiors one replacing 747 and the current 4 for New York in multi-class layout (Also Heathrow - Lagos)
B789 - West Coast , Shanghai,Hong Kong , South Africa and would have been a little expansion - Problems with RR Engines known aside

3) Engine manufacturer not so much of an issue these days few carriers manage these internally and many are costed on power by hour Plus MX basis

4) Seat manufactures meh Really not a day to day issue . Fleet consistencies more relevant and again the scheduled rationalisation is already under way

5) IFE see point 4 and more a marketing thing to be honest - Can’t get much worse than the crap aboard some of the elderly ladies of a certain other carrier

6) Network again undergoing significant remodelling - Much of the loss making Asia and African even Dubai binned
Very much a TALC co-host of Delta even Tel -Aviv and the Indian routes taking DL passengers onwards
Plans for a regional semi hub were in the works - Pity thats almost certainly in the waste bin now

7) Staff numbers are they really over staffed I admit don’t know for sure.
 
SueD
Posts: 260
Joined: Sat Jul 27, 2019 11:35 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 4:30 pm

DobboDobbo wrote:
Westerwaelder wrote:
DobboDobbo wrote:

The difference you’ve picked up on is between cash flow and balance sheet.

I cannot pretend to know the ins and out of all of this, but in insolvency terms (which I think / hope illustrates the point) cash flow is the ability to pay your debts as they fall due, balance sheet is total assets vs total liabilities. Profit and loss interplay’s with each of these.

It is possible in any given accounting period to have net cash inflow (eg receiving more in sales than spent on costs) but make a paper loss due to say a devaluation of assets on your balance sheet.

In that very basic scenario you are still able to trade because you are bringing more money in than you are spending, but the accounts would record a loss.

It’s obviously more complex than this, and I’m sure other posters could provide more detail, but for the purpose of illustrating the point I hope this assists.


The accounts show a loss and that is fine - up to the point where you need more money and no one is prepared to lend to you because all of your assets have already been pledged against previous loans. What you describe above only goes for a limited period of time. If you make an operational loss, you spend more than you take in. That money needs to come from somewhere. Are you saying that VS is cashflow positive then?


I’ve explained the principle - if you want to learn more about how a business can make a loss, continue to trade, continue to be viable, and pay debts as they fall due there is plenty of information available on the web.


People including one very rude American are deliberately ignoring the fact the Virgin Group, Virgin Atlantic, Virgin Atlantic International and Virgin Holidays remain privately owned unlisted and non traded organisations.

As such your points are quite valid with internal billings cross codes , franchise payments and operating charges from Virgin Group plus the Delta bill it very easy to book a loss when the actual business centre more than pays it way.

We have seen the repercussions of internal charges on departmental operations in the regions first hand once before however lets not open than wound right now especially with the news permeating out of Madrid
 
Westerwaelder
Posts: 240
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 4:44 pm

SueD wrote:
DobboDobbo wrote:
Westerwaelder wrote:

The accounts show a loss and that is fine - up to the point where you need more money and no one is prepared to lend to you because all of your assets have already been pledged against previous loans. What you describe above only goes for a limited period of time. If you make an operational loss, you spend more than you take in. That money needs to come from somewhere. Are you saying that VS is cashflow positive then?


I’ve explained the principle - if you want to learn more about how a business can make a loss, continue to trade, continue to be viable, and pay debts as they fall due there is plenty of information available on the web.


People including one very rude American are deliberately ignoring the fact the Virgin Group, Virgin Atlantic, Virgin Atlantic International and Virgin Holidays remain privately owned unlisted and non traded organisations.

As such your points are quite valid with internal billings cross codes , franchise payments and operating charges from Virgin Group plus the Delta bill it very easy to book a loss when the actual business centre more than pays it way.

We have seen the repercussions of internal charges on departmental operations in the regions first hand once before however lets not open than wound right now especially with the news permeating out of Madrid


As a responsible owner, would you let your business get to a point where everything it owns is used as collateral? Yes if you don't care as long as you get paid or as long as you can provide support when hitting a stumbling block. Where are the organisations that have been paid to the extent that the business at the centre is up against it? Viable? By some loose definition perhaps. Responsible ownership? By your definition may be even that, who knows. I see an airline that has paid its owners to an extend that has left it high and dry at the first sign of trouble and unable to shore up it's own finances. Weird way of looking at it but if you say so...
 
bennett123
Posts: 9732
Joined: Sun Aug 15, 2004 12:49 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 4:47 pm

Not at all clear how a business can be making losses most years and still be viable.

Unless people are saying that it is making profits that we cannot see.
 
SueD
Posts: 260
Joined: Sat Jul 27, 2019 11:35 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 5:03 pm

bennett123 wrote:
Not at all clear how a business can be making losses most years and still be viable.

Unless people are saying that it is making profits that we cannot see.


Second point !

Yes the money pot moves quite obscurely and intentionally so !

Westerwaelder the structures are legally sound if more the a bit a moral - close but certainly not quite embezzlement !
 
Cedar
Posts: 76
Joined: Mon Dec 25, 2017 1:07 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 5:17 pm

SueD wrote:
Cedar wrote:
Don't mean to get off topic too much, but this has to do with profitability:
Have a look: Does anyone not see something wrong here?
For an airline of this size - this seems like mismanagement. Costs are too high for a number of reasons.below.

VS have:
1.) 42 Aircraftt
2.) 4 fleet types - I can understand 2 types for leisure & business
3.) 2 engine manufacturers
4.) 3 seat manufacturers
5.) 3 different IFE types
6.) 30 destinations
7.) 8500 direct staff & thousands of outsurced staff.

I am certain Morgan Stanley is looking at stuff like this.
To make this profitable - there needs to be some major trimming here.


Cedar


Whilst valid points lets go through a few through

1). Virgin fleet size - Pretty small for network of operations (in normal conditions)

2) Aircraft types scheduled to transition to 3 primary types in the next 12/18 months - 747s will be gone as will some of the leased in A332s
Each type serves the network fit pretty well A333 and future A333NEO East Coast USA
A35J - there are scheduled to be two interiors one replacing 747 and the current 4 for New York in multi-class layout (Also Heathrow - Lagos)
B789 - West Coast , Shanghai,Hong Kong , South Africa and would have been a little expansion - Problems with RR Engines known aside

3) Engine manufacturer not so much of an issue these days few carriers manage these internally and many are costed on power by hour Plus MX basis

4) Seat manufactures meh Really not a day to day issue . Fleet consistencies more relevant and again the scheduled rationalisation is already under way

5) IFE see point 4 and more a marketing thing to be honest - Can’t get much worse than the crap aboard some of the elderly ladies of a certain other carrier

6) Network again undergoing significant remodelling - Much of the loss making Asia and African even Dubai binned
Very much a TALC co-host of Delta even Tel -Aviv and the Indian routes taking DL passengers onwards
Plans for a regional semi hub were in the works - Pity thats almost certainly in the waste bin now

7) Staff numbers are they really over staffed I admit don’t know for sure.



Let's not forget that having different IFE, Seat Types, Engines all require separate maintenance & servicing contracts. Whether it be for parts or servicing.
Can't really take advantage of economies of scale - each supplier maintains a limited amount of hardware.

I get that they are retiring old aircraft & incoming new aircraft - but it's still 3 different types. For an airline the size of VS, this can be simplified alot more.
2 types, 2 configs, would work just fine.

It seems to me that the management can't make up their mind, looking at short term costs rather than longer term
Perfect example - they changed the airline logo 10 years ago. It took them 8 years to complete the entire fleet. I'm not including the the A346 - which they decided 2 years ago they would retire.

While I'm not on the executive team - a simple look at their overall operation, destinations, fleet, etc. indicates this can be simplified.

Cedar
 
3AWM
Posts: 231
Joined: Sat Jul 23, 2016 1:01 pm

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 5:24 pm

VS definitely have too many types. But fleet decisions take a long time to play out. If they are looking to re-structure now through administration they could lose the 747s and the 787 and have a fleet of just A330/A350 which would have benefits.
 
SueD
Posts: 260
Joined: Sat Jul 27, 2019 11:35 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 5:43 pm

Cedar wrote:
SueD wrote:
Cedar wrote:
Don't mean to get off topic too much, but this has to do with profitability:
Have a look: Does anyone not see something wrong here?
For an airline of this size - this seems like mismanagement. Costs are too high for a number of reasons.below.

VS have:
1.) 42 Aircraftt
2.) 4 fleet types - I can understand 2 types for leisure & business
3.) 2 engine manufacturers
4.) 3 seat manufacturers
5.) 3 different IFE types
6.) 30 destinations
7.) 8500 direct staff & thousands of outsurced staff.

I am certain Morgan Stanley is looking at stuff like this.
To make this profitable - there needs to be some major trimming here.


Cedar


Whilst valid points lets go through a few through

1). Virgin fleet size - Pretty small for network of operations (in normal conditions)

2) Aircraft types scheduled to transition to 3 primary types in the next 12/18 months - 747s will be gone as will some of the leased in A332s
Each type serves the network fit pretty well A333 and future A333NEO East Coast USA
A35J - there are scheduled to be two interiors one replacing 747 and the current 4 for New York in multi-class layout (Also Heathrow - Lagos)
B789 - West Coast , Shanghai,Hong Kong , South Africa and would have been a little expansion - Problems with RR Engines known aside

3) Engine manufacturer not so much of an issue these days few carriers manage these internally and many are costed on power by hour Plus MX basis

4) Seat manufactures meh Really not a day to day issue . Fleet consistencies more relevant and again the scheduled rationalisation is already under way

5) IFE see point 4 and more a marketing thing to be honest - Can’t get much worse than the crap aboard some of the elderly ladies of a certain other carrier

6) Network again undergoing significant remodelling - Much of the loss making Asia and African even Dubai binned
Very much a TALC co-host of Delta even Tel -Aviv and the Indian routes taking DL passengers onwards
Plans for a regional semi hub were in the works - Pity thats almost certainly in the waste bin now

7) Staff numbers are they really over staffed I admit don’t know for sure.



Let's not forget that having different IFE, Seat Types, Engines all require separate maintenance & servicing contracts. Whether it be for parts or servicing.
Can't really take advantage of economies of scale - each supplier maintains a limited amount of hardware.

I get that they are retiring old aircraft & incoming new aircraft - but it's still 3 different types. For an airline the size of VS, this can be simplified alot more.
2 types, 2 configs, would work just fine.

It seems to me that the management can't make up their mind, looking at short term costs rather than longer term
Perfect example - they changed the airline logo 10 years ago. It took them 8 years to complete the entire fleet. I'm not including the the A346 - which they decided 2 years ago they would retire.

While I'm not on the executive team - a simple look at their overall operation, destinations, fleet, etc. indicates this can be simplified.

Cedar


Don’t forget Boeing and Rolls Royce are largely responsible for inducting the TEN A333 frames in the first place .

Right now through I agree the Dreamliner could be the most superfluous to be honest and an all Airbus fleet the more economical option going forward
 
Boeing74741R
Posts: 1400
Joined: Tue Apr 17, 2007 5:44 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 6:27 pm

Cedar wrote:
Perfect example - they changed the airline logo 10 years ago. It took them 8 years to complete the entire fleet. I'm not including the the A346 - which they decided 2 years ago they would retire.


Why paint aircraft unless you have to?

You make some points about costs due to their operation, but it costs money to stop an aircraft for a repaint. Besides the image advantage of a uniform livery across the entire fleet, I can understand why repaints into the new livery were only done once an aircraft became due.

By the way, there’s still 2 747’s in the 2006 livery, though they’re due for withdrawal within the next couple of years so it probably wouldn’t make sense to paint them unless they have to.
 
Cedar
Posts: 76
Joined: Mon Dec 25, 2017 1:07 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 8:56 pm

Boeing74741R wrote:
Cedar wrote:
Perfect example - they changed the airline logo 10 years ago. It took them 8 years to complete the entire fleet. I'm not including the the A346 - which they decided 2 years ago they would retire.


Why paint aircraft unless you have to?

You make some points about costs due to their operation, but it costs money to stop an aircraft for a repaint. Besides the image advantage of a uniform livery across the entire fleet, I can understand why repaints into the new livery were only done once an aircraft became due.

By the way, there’s still 2 747’s in the 2006 livery, though they’re due for withdrawal within the next couple of years so it probably wouldn’t make sense to paint them unless they have to.


I get it, but some of those A/C did become due in that time. I'm just trying to make a point.
While they were innovators before, they are very slow to keep up & evolve with the times. They do punch above their weight, but an airlie of this size should be extremely nimble and able to adapt.
They have implemented plans and made some changes to fix that in the very recent past, but still lots to do & I'm not sure they got it right.

But I digress.

Cedar
 
Dmoney
Posts: 134
Joined: Tue Mar 17, 2020 9:53 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 9:31 pm

skipness1E wrote:
Airlines SHOULD be getting special treatment as profitable viable employers are now closing because of government decisions.

That’s “special treatment” required. I must say I am alarmed by the cold and callous attitude of many, especially US posters on this thread. This is not survival of the fittest capitalist style, this is an economic calamity, and thinking that allowing VS to fail and tkhrowing 8000 people onto Universal Credit in many cases, will somehow balance things out cos Branson is a bit of a tit, is plain armchair quater-backing of the lobotomised variety!

There’s a time to be a fan boy and there’s a time to be a real human being.



Then why are you asking for something immoral?

Virgin isn't profitable or viable.
 
Dmoney
Posts: 134
Joined: Tue Mar 17, 2020 9:53 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 9:33 pm

DobboDobbo wrote:
Westerwaelder wrote:
DobboDobbo wrote:

The issue is that where a large number of jobs (or certain types of particularly skilled jobs) are lost en masse, those skills are often lost to the industry for good, and they take time to recreate. This means that the recession cuts deeper, recovery takes longer, and the prospect of permanent economic damage takes longer.

In the case of aviation , which is a significant driver for a wide range of economic activity, when the effects are extrapolated up and down the supply chain (ground handlers, airport staff, engine and aircraft manufacturers, lessors, financiers, tourism industry, commerce) the effects can reverberate far wider than just an airline and for a considerable period of time.

People will inevitably loose their jobs. Hopefully it will be much less than not 100% of VS employees or 33% of BA. If this is the commercial reality (perhaps driven by BA’s willingness to accept deep cuts to its employment base instead of state support if it means it drives VS out of business) perhaps a period of nationalisation would be in the best interests of the UK.


Nationalisation is a very thorny issue for a Conservative government. But it's certainly possible as we have seen with steel and some rail franchises. I am not sure it will serve much purpose as there are well run (under normal circumstances) airlines that can handle all of the demand in the foreseeable future. Given the enormous amounts of money needed in the entire economy, it makes no sense propping up businesses that were loss making before Covid or are not adding benefits to the country. Jobs will be lost inevitably and propping up weak companies only prolongues the pain for all involved.


As far as I am aware, immediately before the Covid crisis all UK based airlines were viable businesses, adding benefits to the UK, and were well run.

I don’t know how all the airlines will make it through this crisis, but the government picking favourites is a recipe for long term grievance. Just look at some of the posts on this thread.

I don’t accept helping otherwise viable businesses chart a path through the Covid crisis prolongs the economic pain. I think if the economy is in a position where otherwise viable businesses have been allowed to fail and must start or restart from scratch (which obviously takes time) is what will cause the most damage.

Helping these types of businesses through (they will obviously have to emerge differently to how they went in) provides that springboard for rapid economic growth when we are out of the other side. If the government are unable or unwilling to do this, that is where I think the economic hardship will cut deeper and longer.

It’s a tricky question and we are obviously in uncharted territory. But there has clearly been a lot of hubris and partisan opportunism driving many of the comments in relation to VS (not yours I don’t think) and I think that is a complete misreading if the situation the aviation sector is in if the government does nothing.



You don't understand economics or finance so you shouldn't comment. Virgin was not viable. If you can't make a profit when borrowing is nearly free and ten years into a growth cycle then you aren't a viable business.
 
Dmoney
Posts: 134
Joined: Tue Mar 17, 2020 9:53 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 9:35 pm

TC957 wrote:
Aviation in general - not just VS or BA - should be supported by central govt as it forms the very backbone of the economic recovery after this pandemic is over. Not just flying business passengers about but think of all the goods they carry in & out as cargo.



It's hard to argue with posts this ignorant. The assets don't vaporize if one airline goes under. There is excess capacity. There will never be a shortage of capacity to bring things in and out.
 
Dmoney
Posts: 134
Joined: Tue Mar 17, 2020 9:53 am

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 9:40 pm

DobboDobbo wrote:
Westerwaelder wrote:
DobboDobbo wrote:

Profitability does not equal viability.

No one knows what the future holds, but 40 odd years of continued operations and as far as I’m aware no going concern warnings in its accounts is pretty strong prima facie evidence of viability in my eyes.


Without profitability no viability. The case here seems slightly distorted as it looks like the owners still make money from VS regardless. But that can only go so long and as long as you can get fresh credit. That Avenue is now closing and from what I can tell, Covid is only an accelerator.


I’ve said profitability does not equal viability. It does not even necessarily mean that the business spends more than it earns.

Arguing that a marginal or slightly loss making business is an unviable business is a non sequitur.



Profitability equals viability. End of. There is no discussion here.

Companies have to eventually meet their cost of capital. They need to provide a return on equity to their shareholders who generously provide the funds they need to function. If they can't do that then they stop existing.

You can make huge losses for years if you have a plausible growth or recovery story but eventually everyone must cover their cost of capital.

VS require more equity. Would you put up additional equity? Their shareholders won't and they know the company better than anyone
 
airhansa
Posts: 380
Joined: Wed Jan 08, 2020 3:18 pm

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 11:02 pm

Virgin Atlantic should be allowed to collapse. It's owned by a billionaire and the market is too crowded as it is. The gaps left over by Virgin can be easily filled by the likes of KLM. Theoretically, Air Lingus had the opportunity to merge with Virgin Atlantic and create two competing secure full service airlines in the UK, but now of course that's owned by IAG.
 
Arion640
Posts: 3061
Joined: Fri Mar 31, 2017 5:15 pm

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 11:13 pm

airhansa wrote:
Virgin Atlantic should be allowed to collapse. It's owned by a billionaire and the market is too crowded as it is. The gaps left over by Virgin can be easily filled by the likes of KLM. Theoretically, Air Lingus had the opportunity to merge with Virgin Atlantic and create two competing secure full service airlines in the UK, but now of course that's owned by IAG.


No thanks. I like my £300 return airfares to New York.
 
airhansa
Posts: 380
Joined: Wed Jan 08, 2020 3:18 pm

Re: Virgin Atlantic needs government support?

Wed Apr 29, 2020 11:25 pm

Arion640 wrote:
airhansa wrote:
Virgin Atlantic should be allowed to collapse. It's owned by a billionaire and the market is too crowded as it is. The gaps left over by Virgin can be easily filled by the likes of KLM. Theoretically, Air Lingus had the opportunity to merge with Virgin Atlantic and create two competing secure full service airlines in the UK, but now of course that's owned by IAG.


No thanks. I like my £300 return airfares to New York.


300? Are you talking about Norwegian or Air Lingus? EI has $500 return to NY.
 
GDB
Posts: 13756
Joined: Wed May 23, 2001 6:25 pm

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 12:06 am

Arion640 wrote:
airhansa wrote:
Virgin Atlantic should be allowed to collapse. It's owned by a billionaire and the market is too crowded as it is. The gaps left over by Virgin can be easily filled by the likes of KLM. Theoretically, Air Lingus had the opportunity to merge with Virgin Atlantic and create two competing secure full service airlines in the UK, but now of course that's owned by IAG.


No thanks. I like my £300 return airfares to New York.


Frankly, you can forget about that, this is nothing to do with VS, or IAG group airlines, or LCC's like Norwegian, if they survive.
Air travel is going to get more expensive. Unless a 100% or near vaccine comes available in the near future, unlikely.
Fewer will be flying, flying less, in cabins likely to have some kind of distancing, full cleans after every flight.
Like I mentioned further up, the future is 50 years ago, just in modern aircraft.

Not only that, those who are advocating from an environmental standpoint, their influence was already growing way beyond one precious Swedish schoolgirl before Covid.
(I have always argued that modern aircraft are so much more efficient and therefore less polluting, however I also know that this has been offset by massive growth this century. Look at the sheer numbers ordered for Far Eastern LCC's for example. Trust me, this is going to be pounced on and is not going away. So many are working from home, hitting the main revenue stream with business travelers for full service carriers, Some, maybe a lot of that will become the norm.).

Then very rich, as so often, may escape this with more biz jet use. More pressure on an already damaged industry.
 
Westerwaelder
Posts: 240
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 1:07 am

Arion640 wrote:
airhansa wrote:
Virgin Atlantic should be allowed to collapse. It's owned by a billionaire and the market is too crowded as it is. The gaps left over by Virgin can be easily filled by the likes of KLM. Theoretically, Air Lingus had the opportunity to merge with Virgin Atlantic and create two competing secure full service airlines in the UK, but now of course that's owned by IAG.


No thanks. I like my £300 return airfares to New York.


It doesn't exactly need a VS to keep fares that low. DL and UA combined with Norwegian and one stop connections have taken care of that in the past.
 
airhansa
Posts: 380
Joined: Wed Jan 08, 2020 3:18 pm

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 1:38 am

GDB wrote:
Arion640 wrote:
airhansa wrote:
Virgin Atlantic should be allowed to collapse. It's owned by a billionaire and the market is too crowded as it is. The gaps left over by Virgin can be easily filled by the likes of KLM. Theoretically, Air Lingus had the opportunity to merge with Virgin Atlantic and create two competing secure full service airlines in the UK, but now of course that's owned by IAG.


No thanks. I like my £300 return airfares to New York.


Frankly, you can forget about that, this is nothing to do with VS, or IAG group airlines, or LCC's like Norwegian, if they survive.
Air travel is going to get more expensive. Unless a 100% or near vaccine comes available in the near future, unlikely.
Fewer will be flying, flying less, in cabins likely to have some kind of distancing, full cleans after every flight.
Like I mentioned further up, the future is 50 years ago, just in modern aircraft.

Not only that, those who are advocating from an environmental standpoint, their influence was already growing way beyond one precious Swedish schoolgirl before Covid.
(I have always argued that modern aircraft are so much more efficient and therefore less polluting, however I also know that this has been offset by massive growth this century. Look at the sheer numbers ordered for Far Eastern LCC's for example. Trust me, this is going to be pounced on and is not going away. So many are working from home, hitting the main revenue stream with business travelers for full service carriers, Some, maybe a lot of that will become the norm.).

Then very rich, as so often, may escape this with more biz jet use. More pressure on an already damaged industry.


A silver lining might be that the coronavirus pandemic seems to be a primarily western problem, or at least mostly spread after the coronavirus hit Southern Europe, in that air travel in East Asia might rebound due to the history of SARS. Westerners tend to be more distrusting of norms in East Asia, but that doesn't mean East Asians will be distrusting. Furthermore, Indian domestic travel doesn't seem to be too hampered.
 
GDB
Posts: 13756
Joined: Wed May 23, 2001 6:25 pm

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 5:13 am

airhansa wrote:
GDB wrote:
Arion640 wrote:

No thanks. I like my £300 return airfares to New York.


Frankly, you can forget about that, this is nothing to do with VS, or IAG group airlines, or LCC's like Norwegian, if they survive.
Air travel is going to get more expensive. Unless a 100% or near vaccine comes available in the near future, unlikely.
Fewer will be flying, flying less, in cabins likely to have some kind of distancing, full cleans after every flight.
Like I mentioned further up, the future is 50 years ago, just in modern aircraft.

Not only that, those who are advocating from an environmental standpoint, their influence was already growing way beyond one precious Swedish schoolgirl before Covid.
(I have always argued that modern aircraft are so much more efficient and therefore less polluting, however I also know that this has been offset by massive growth this century. Look at the sheer numbers ordered for Far Eastern LCC's for example. Trust me, this is going to be pounced on and is not going away. So many are working from home, hitting the main revenue stream with business travelers for full service carriers, Some, maybe a lot of that will become the norm.).

Then very rich, as so often, may escape this with more biz jet use. More pressure on an already damaged industry.


A silver lining might be that the coronavirus pandemic seems to be a primarily western problem, or at least mostly spread after the coronavirus hit Southern Europe, in that air travel in East Asia might rebound due to the history of SARS. Westerners tend to be more distrusting of norms in East Asia, but that doesn't mean East Asians will be distrusting. Furthermore, Indian domestic travel doesn't seem to be too hampered.


You might be right, however I would say to your final two points......yet.
Speaking in broad economic terms, early hopes of a 'V' shaped recovery are no longer being talked about.
 
Arion640
Posts: 3061
Joined: Fri Mar 31, 2017 5:15 pm

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 9:04 am

Westerwaelder wrote:
Arion640 wrote:
airhansa wrote:
Virgin Atlantic should be allowed to collapse. It's owned by a billionaire and the market is too crowded as it is. The gaps left over by Virgin can be easily filled by the likes of KLM. Theoretically, Air Lingus had the opportunity to merge with Virgin Atlantic and create two competing secure full service airlines in the UK, but now of course that's owned by IAG.


No thanks. I like my £300 return airfares to New York.


It doesn't exactly need a VS to keep fares that low. DL and UA combined with Norwegian and one stop connections have taken care of that in the past.


Norwegian won’t be around if VS isn’t.
 
Arion640
Posts: 3061
Joined: Fri Mar 31, 2017 5:15 pm

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 9:05 am

airhansa wrote:
Arion640 wrote:
airhansa wrote:
Virgin Atlantic should be allowed to collapse. It's owned by a billionaire and the market is too crowded as it is. The gaps left over by Virgin can be easily filled by the likes of KLM. Theoretically, Air Lingus had the opportunity to merge with Virgin Atlantic and create two competing secure full service airlines in the UK, but now of course that's owned by IAG.


No thanks. I like my £300 return airfares to New York.


300? Are you talking about Norwegian or Air Lingus? EI has $500 return to NY.


BA usually hover at about £300 return from heathrow but have seen it as low as £240 return.
 
Westerwaelder
Posts: 240
Joined: Fri Apr 03, 2020 12:27 pm

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 11:02 am

Arion640 wrote:
Westerwaelder wrote:
Arion640 wrote:

No thanks. I like my £300 return airfares to New York.


It doesn't exactly need a VS to keep fares that low. DL and UA combined with Norwegian and one stop connections have taken care of that in the past.


Norwegian won’t be around if VS isn’t.


Maybe, maybe not. Do you already know the results of the vote on the 4th?
 
BealineV953
Posts: 187
Joined: Fri Jul 26, 2019 10:00 am

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 11:09 am

VS11 wrote:
BealineV953 wrote:
VS11 wrote:

Alliances and JV's are different. But you can take BOS-LHR. AA/BA and VS/DL are the only options. In terms of operating carriers, AA is not even operating it, it is just BA. So even during Bermuda II, there were 4 operating carriers, even UA flew BOS-LHR until 2002 or so, and now the choice is even less....you can expand to BOS-LON, and you get only one extra carrier - Norwegian.
So that's what it means - consumers have fewer options and eventually pay higher prices.


Yes, I am well aware that there is a difference between an alliance and a JV.

Airlines do not enter into alliances to enable them to operate parallel services (eg AA and BA both flying LON-DFW). Rather, airlines want access to the behind point cities their partner serves that they do not. A key benefit of an alliance is to give customers seemless access to a partner’s network. Interline and behind point code-share agreements achieve much of that.

Airlines request anti-trust immunity so that they can work with a partner to offer consumers multiple routing, timing and fare options. The success of alliances, with passengers connecting to and from hubs and pushing up demand, has allowed frequency and capacity to increase. Where anti-trust immunity is approved, a joint venture agreement describes how revenue will be shared and other commercial issues.

Given that airlines do not set up alliances, seek anti-trust immunity and create joint ventures to operate parallel services, your LON-BOS example is not helpful.

However, I will say that the smaller number of operators in point to point markets today is absolutely not because of JVs. It is because the industry has rationalised. We no longer have Northwest, TWA and others competing with American, Delta and United. The big three US carriers have concentrated their international services at their hubs. United could fly BOS-LON but choose not to, presumably because they prefer to focus their efforts on ORD, IAD and EWR. Virgin could fly LON-PHX, but choose not to.

In the UK market, roughly a third of the UK population live within a two-hour surface journey of Heathrow. The other two thirds have a choice of either making a long surface journey to Heathrow, or starting their air journey at a local airport (MAN, NCL, EDI etc.). Where there is no direct service to their destination, they may travel via LHR, but also have the option of connecting via AMS, FRA, PAR or wherever.

So, the UK-US direct operators, BA & AA, DL & VS and UA & NZ, compete directly with each other, and all must be mindful of the indirect competition via AMS, FRA and other cities. This keeps prices in check.

Going back to my example of travel ex-BER, but taking BOS as the destination if you prefer. There is no direct service, so, all passengers will connect somewhere.
Take a look at Skyscanner for the options. For a date in mid-September, taking the lowest available prices:
Oneworld offers 8 timing / routing / price options over LON, MAD and DUB.
Skyteam offers 10 timing / routing / price options over AMS, PAR and ROM.
Star offers 18 timing / routing / price options over FRA, MUC, ZRH and EWR.
So, all three alliances (or JVs if you prefer) are competing for customers in the BER-BOS market and offer multiple schedule and fare options.
For Star, if the LH flights ex-FRA to BOS are becoming full and the prices for that routing go up, it could be that routings via BRU, ZRH and EWR are still relatively cheap.

So, I do not accept your assertion that “consumers have fewer options and eventually pay higher prices.” Alliances have greatly increased consumer choice, and have not reduced competition.


Lengthy post to demonstrate you are missing key points. The purpose of the JV is to share cost and profit and coordinate schedules, i.e. ACT AS ONE COMPANY! If they were not anti-competitive, they would NOT have needed anti-trust immunity. Spend a minute to comprehend what this means - they are already breaking the anti-trust laws hence why they need a waiver. If it was just about the network, a code-share and an alliance would work. People were able to connect through multiple airports long before code-shares existed.

And for the record, you should look at the UK-US market, not EU-US. Berlin last time I checked was in Germany, no? If I live in Boston and I need to go to London, it is of little interest to me what a person in Berlin can do.


I worked on a number of airline alliances and Joint Ventures.

Yes, the purpose of seeking anti-trust immunity and setting up a joint venture is to act as one company.

The EU, UK and US DoT are pro-consumer and pro-competition. Where those and other regulators have granted anti-trust immunity it is because they believe it is in the consumer’s interest, and has NOT been found to be anti-competitive.
In granting anti-trust immunity, Regulators may impose conditions designed to maintain competition. For example, when the AA, BA, IB, AY joint venture was approved, BA had to give up slots at Heathrow to enable other airlines to compete on specified routes.
Once the joint venture is in place, it is subject to competition law. For the EU, Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) prohibit anti-competitive behaviour. EU competition law prohibits, amongst other things, ‘Abuse of a dominant market position’. This prohibits businesses with significant market power unfairly exploiting their strong market positions. To be in a position of dominance, a business must have the ability to act independently of its customers, competitors and consumers.

Alliances: The primary purpose of the alliances I worked on was to give customers access to the partner’s network, offering multiple routing and timing options. Much of this could be achieved through interline agreements and beyond / behind point code-share arrangements.
Anti-trust immunity: The purpose of seeking anti-trust immunity was primarily to align pricing, giving customers multiple routing, timing and price options. Aligning fares (price and rule) goes beyond interline. For example, typically promotional fares are not fully interline-able. However, with fares fully aligned (price, rules, routings, mileage etc.) across the partners, consumers are able to use flights operated by any combination of the partners.
Joint venture: The airlines I worked with used ‘joint venture’ to describe the business to business commercial agreement. The key feature was how revenue was shared, which related closely to the capacity the partners operated on the JV routes.

For two of the alliances / joint ventures I worked on the co-ordination of schedules was not an objective. Some fine tuning may have been done where the partners flew wingtip to wingtip on the same routes, but that was it.
Having said that, for another joint venture the schedules on parallel routes were completely re-designed.

Airlines have not formed global alliances to offer increased frequency on routes they and their partners fly. They did it to offer access to the cities they do not fly to.
There may be fewer competitors on BOS-LON, but as I said that is because the industry has rationalized and the big three US carriers have concentrated their international services at their hubs.
Alliances enable resources to be used more efficiently. As well as point to point demand, customers from beyond and behind points add to passenger numbers, pushing up load factors. This in turn leads to more frequency and capacity, giving consumers ever more choice.

My BER-BOS example was carefully chosen. If you live in Boston and need to go to Berlin, you will have an interest in what AA, BA, IB and AY together offer; you’ll see multiple schedule and fare options. And you can try DL, KL, AF, or UA, LH, LX, SN, OS. The many options you’ll see show that the airline industry is highly competitive, and demonstrates what airline alliances are really all about.

The purpose of the JV you may be familiar with might have been to share cost and profit and to coordinate schedules. I imagine that defining ‘cost’ and ‘profit’ is challenging.

Approval of anti-trust immunity demonstrates that the regulators believe that the arrangement is in the consumer’s interest. Spend a minute to comprehend what means.

PS –
Berlin, last time you checked was in Germany?
Yep, Berlin is in Germany, but be careful not to confuse it with Berlin New Hampshire.
Ever since childhood, when I lived within sight of London Airport, I have seldom seen a plane go by and not wished I was on it.”
With apologies to Paul Theroux - ‘The Great Railway Bazaar’
 
anstar
Posts: 3276
Joined: Sun Nov 23, 2003 3:49 am

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 11:19 am

caaardiff wrote:

You bring up a good point that few posters seem to recognise here. VS is a business & leisure (holiday) Airline. Virgin Holidays is also heavily involved in this whole process. If VS go under, Virgin Holidays will likely go under. Who else could they use? TUI won't have the capacity with VS and TCX gone. BA? Would Virgin Holidays really use BA flights?

.


Unlikely demand will be the same in the next 12-24 months given the unemployment levels and lack of discretionary spend for leisure travel.

Westerwaelder wrote:
Arion640 wrote:
airhansa wrote:
Virgin Atlantic should be allowed to collapse. It's owned by a billionaire and the market is too crowded as it is. The gaps left over by Virgin can be easily filled by the likes of KLM. Theoretically, Air Lingus had the opportunity to merge with Virgin Atlantic and create two competing secure full service airlines in the UK, but now of course that's owned by IAG.


No thanks. I like my £300 return airfares to New York.


It doesn't exactly need a VS to keep fares that low. DL and UA combined with Norwegian and one stop connections have taken care of that in the past.


VS is not the cheapest in market - on the contrary they are usually the more expensive option.
 
BealineV953
Posts: 187
Joined: Fri Jul 26, 2019 10:00 am

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 11:34 am

caaardiff wrote:
bennett123 wrote:
Unless the Govt can support every company, choices have to be made.

If they give to VS, then they have to say ‘no’ to someone else.

The question is ‘can VS find funds elsewhere’. If not, will any loan be repaid within a reasonable timescale.

VS has two main markets, TATL and Caribbean. The first Business/Leisure, the second more Leisure than Business.

How soon will these markets come back and make money. Bear in mind that initially fares will be low to stimulate any demand at all.


VS is a business & leisure (holiday) Airline. Virgin Holidays is also heavily involved in this whole process.
If VS go under, Virgin Holidays will likely go under. Who else could they use? TUI won't have the capacity with VS and TCX gone. BA? Would Virgin Holidays really use BA flights?



Virgin Holidays already use many other airlines. See:

https://www.virginholidays.co.uk/flight ... r-airlines

About ten years ago Virgin Holidays adopted a growth strategy. It started to offer an increasing number of destinations not served by Virgin Atlantic, with travel on other airlines.
BA is not on the current list, but I think they've used BA in the past to places like the Seychelles.
Ever since childhood, when I lived within sight of London Airport, I have seldom seen a plane go by and not wished I was on it.”
With apologies to Paul Theroux - ‘The Great Railway Bazaar’
 
tphuang
Posts: 5201
Joined: Tue Mar 14, 2017 2:04 pm

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 11:37 am

Arion640 wrote:
airhansa wrote:
Arion640 wrote:

No thanks. I like my £300 return airfares to New York.


300? Are you talking about Norwegian or Air Lingus? EI has $500 return to NY.


BA usually hover at about £300 return from heathrow but have seen it as low as £240 return.


You are far more likely to see lower fares if those LHR slots go to someone else. There is a long list on the LHR slot waiting list who are willing to come in and lower the fares.
 
GDB
Posts: 13756
Joined: Wed May 23, 2001 6:25 pm

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 11:53 am

tphuang wrote:
Arion640 wrote:
airhansa wrote:

300? Are you talking about Norwegian or Air Lingus? EI has $500 return to NY.


BA usually hover at about £300 return from heathrow but have seen it as low as £240 return.


You are far more likely to see lower fares if those LHR slots go to someone else. There is a long list on the LHR slot waiting list who are willing to come in and lower the fares.


Who though? Airlines, that even survive, are going to be doing one thing, contracting.
When VS are on the brink of going under, when the consistently profitable BA are contemplating losing 12000 of 42000 staff, I have to ask, do you quite understand what is happening?

Do you really think some new entrant is going to get into this business in the near to medium term, what's that saying about the best way to lost money, start an airline. That. On Crack.

Because those of us, whoever we work for, with this Sword Of Damocles above our heads, do get it.
I don't want to come over old git who has seen it all, however I have not, no one of this site who has been in the industry has either, since it is unprecedented.
 
tphuang
Posts: 5201
Joined: Tue Mar 14, 2017 2:04 pm

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 12:13 pm

GDB wrote:
tphuang wrote:
Arion640 wrote:

BA usually hover at about £300 return from heathrow but have seen it as low as £240 return.


You are far more likely to see lower fares if those LHR slots go to someone else. There is a long list on the LHR slot waiting list who are willing to come in and lower the fares.


Who though? Airlines, that even survive, are going to be doing one thing, contracting.
When VS are on the brink of going under, when the consistently profitable BA are contemplating losing 12000 of 42000 staff, I have to ask, do you quite understand what is happening?

Do you really think some new entrant is going to get into this business in the near to medium term, what's that saying about the best way to lost money, start an airline. That. On Crack.

Because those of us, whoever we work for, with this Sword Of Damocles above our heads, do get it.
I don't want to come over old git who has seen it all, however I have not, no one of this site who has been in the industry has either, since it is unprecedented.


Easyjet has said they wanted to get into LHR. They could definitely lower fares on intra-Europe travel. JetBlue would lower the fares on JFK/BOS-LHR market far more than VS. Chinese airlines would love to have more LHR slots.

VS provides very little in terms of lowering fares out of LHR since its JV partner is still going to be around regardless. I'm sure DL will get a few of VS slots out of this.

As I said before, the number of front line aviation jobs is proportional to capacity, not on the number of airlines. When demand comes back, those aviation jobs will come back.

Sure, the next 2 or 3 years will be tough, but they will be tough regardless of whether VS is around or not. How many of VS's front line workers are getting paid right now? So if having VS around operating a bare bone schedule is not employing anyone, what's the basis of this employment argument?

The number of front line aviation jobs with full salary will be about the same a year from now regardless of whether or not VS is around. The only question is the breakdown between the airlines. Having VS around would just mean more cuts at other airlines.
 
Boeing74741R
Posts: 1400
Joined: Tue Apr 17, 2007 5:44 am

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 12:18 pm

tphuang wrote:
Arion640 wrote:
airhansa wrote:

300? Are you talking about Norwegian or Air Lingus? EI has $500 return to NY.


BA usually hover at about £300 return from heathrow but have seen it as low as £240 return.


You are far more likely to see lower fares if those LHR slots go to someone else. There is a long list on the LHR slot waiting list who are willing to come in and lower the fares.


Specifically for London-New York? Unlikely to be significantly cheaper than that I'd say, especially as APD would be reflected in the cost of the final ticket. Currently APD is £80 for Y passengers (as well as VS PE passengers) and £176 for business class or higher (or basically anything with legroom at 40" or greater). Add on top that whatever LHR's fees are which are reportedly not cheap and the cost of buying LHR slots to begin with, I'm not sure fares can go any lower to a point where it's possible to make money. Also if an airline can get away with charging more or whatever the market will bear, you bet they will.

£240 return is great if you can snag it, but I bet most of the costs on that flight would have already been earned in First/Club World so they can afford to sell Y seats cheaply as it's just profit. I've even had BA employees tell me up front is where their money is made and the back is where they just make extra profit. Compare that to an alternate airline of your choice such as a LCC who need the Y fares to cover more of the costs.

GDB wrote:
Who though? Airlines, that even survive, are going to be doing one thing, contracting.


I recall tphuang mentioning JetBlue in this thread a few times in the past. Besides the fact they don't yet have the aircraft to do the flight and having little-to-no brand awareness this side of the Atlantic Ocean, it wouldn't surprise me if COVID-19 delays their TATL aspirations for a few years. Additionally, I still think JetBlue would be better off serving another London airport initially to test the market. Those who've been seeking very low TATL fares haven't grumbled at going to LGW for Norwegian or STN when Primera were still in business.

BealineV953 wrote:
Virgin Holidays already use many other airlines. See:

https://www.virginholidays.co.uk/flight ... r-airlines

About ten years ago Virgin Holidays adopted a growth strategy. It started to offer an increasing number of destinations not served by Virgin Atlantic, with travel on other airlines.
BA is not on the current list, but I think they've used BA in the past to places like the Seychelles.


Indeed. We've been looking at Virgin Holidays for a prospective trip to the South East Asia area next year and where we're looking at is almost certainly not going to involve a VS flight irrespective of their fate. They've also been opening up shops in towns and cities across the UK and used to have concessions in Debenhams, Tesco etc., however they did make the decision a few years ago to move to direct sales and not use third party travel agents such as the indies or the other chains.
 
VS11
Posts: 1661
Joined: Mon Jul 02, 2001 6:34 am

Re: Virgin Atlantic needs government support?

Thu Apr 30, 2020 12:22 pm

BealineV953 wrote:
VS11 wrote:
BealineV953 wrote:

Yes, I am well aware that there is a difference between an alliance and a JV.

Airlines do not enter into alliances to enable them to operate parallel services (eg AA and BA both flying LON-DFW). Rather, airlines want access to the behind point cities their partner serves that they do not. A key benefit of an alliance is to give customers seemless access to a partner’s network. Interline and behind point code-share agreements achieve much of that.

Airlines request anti-trust immunity so that they can work with a partner to offer consumers multiple routing, timing and fare options. The success of alliances, with passengers connecting to and from hubs and pushing up demand, has allowed frequency and capacity to increase. Where anti-trust immunity is approved, a joint venture agreement describes how revenue will be shared and other commercial issues.

Given that airlines do not set up alliances, seek anti-trust immunity and create joint ventures to operate parallel services, your LON-BOS example is not helpful.

However, I will say that the smaller number of operators in point to point markets today is absolutely not because of JVs. It is because the industry has rationalised. We no longer have Northwest, TWA and others competing with American, Delta and United. The big three US carriers have concentrated their international services at their hubs. United could fly BOS-LON but choose not to, presumably because they prefer to focus their efforts on ORD, IAD and EWR. Virgin could fly LON-PHX, but choose not to.

In the UK market, roughly a third of the UK population live within a two-hour surface journey of Heathrow. The other two thirds have a choice of either making a long surface journey to Heathrow, or starting their air journey at a local airport (MAN, NCL, EDI etc.). Where there is no direct service to their destination, they may travel via LHR, but also have the option of connecting via AMS, FRA, PAR or wherever.

So, the UK-US direct operators, BA & AA, DL & VS and UA & NZ, compete directly with each other, and all must be mindful of the indirect competition via AMS, FRA and other cities. This keeps prices in check.

Going back to my example of travel ex-BER, but taking BOS as the destination if you prefer. There is no direct service, so, all passengers will connect somewhere.
Take a look at Skyscanner for the options. For a date in mid-September, taking the lowest available prices:
Oneworld offers 8 timing / routing / price options over LON, MAD and DUB.
Skyteam offers 10 timing / routing / price options over AMS, PAR and ROM.
Star offers 18 timing / routing / price options over FRA, MUC, ZRH and EWR.
So, all three alliances (or JVs if you prefer) are competing for customers in the BER-BOS market and offer multiple schedule and fare options.
For Star, if the LH flights ex-FRA to BOS are becoming full and the prices for that routing go up, it could be that routings via BRU, ZRH and EWR are still relatively cheap.

So, I do not accept your assertion that “consumers have fewer options and eventually pay higher prices.” Alliances have greatly increased consumer choice, and have not reduced competition.


Lengthy post to demonstrate you are missing key points. The purpose of the JV is to share cost and profit and coordinate schedules, i.e. ACT AS ONE COMPANY! If they were not anti-competitive, they would NOT have needed anti-trust immunity. Spend a minute to comprehend what this means - they are already breaking the anti-trust laws hence why they need a waiver. If it was just about the network, a code-share and an alliance would work. People were able to connect through multiple airports long before code-shares existed.

And for the record, you should look at the UK-US market, not EU-US. Berlin last time I checked was in Germany, no? If I live in Boston and I need to go to London, it is of little interest to me what a person in Berlin can do.


I worked on a number of airline alliances and Joint Ventures.

Yes, the purpose of seeking anti-trust immunity and setting up a joint venture is to act as one company.

The EU, UK and US DoT are pro-consumer and pro-competition. Where those and other regulators have granted anti-trust immunity it is because they believe it is in the consumer’s interest, and has NOT been found to be anti-competitive.
In granting anti-trust immunity, Regulators may impose conditions designed to maintain competition. For example, when the AA, BA, IB, AY joint venture was approved, BA had to give up slots at Heathrow to enable other airlines to compete on specified routes.
Once the joint venture is in place, it is subject to competition law. For the EU, Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) prohibit anti-competitive behaviour. EU competition law prohibits, amongst other things, ‘Abuse of a dominant market position’. This prohibits businesses with significant market power unfairly exploiting their strong market positions. To be in a position of dominance, a business must have the ability to act independently of its customers, competitors and consumers.

Alliances: The primary purpose of the alliances I worked on was to give customers access to the partner’s network, offering multiple routing and timing options. Much of this could be achieved through interline agreements and beyond / behind point code-share arrangements.
Anti-trust immunity: The purpose of seeking anti-trust immunity was primarily to align pricing, giving customers multiple routing, timing and price options. Aligning fares (price and rule) goes beyond interline. For example, typically promotional fares are not fully interline-able. However, with fares fully aligned (price, rules, routings, mileage etc.) across the partners, consumers are able to use flights operated by any combination of the partners.
Joint venture: The airlines I worked with used ‘joint venture’ to describe the business to business commercial agreement. The key feature was how revenue was shared, which related closely to the capacity the partners operated on the JV routes.

For two of the alliances / joint ventures I worked on the co-ordination of schedules was not an objective. Some fine tuning may have been done where the partners flew wingtip to wingtip on the same routes, but that was it.
Having said that, for another joint venture the schedules on parallel routes were completely re-designed.

Airlines have not formed global alliances to offer increased frequency on routes they and their partners fly. They did it to offer access to the cities they do not fly to.
There may be fewer competitors on BOS-LON, but as I said that is because the industry has rationalized and the big three US carriers have concentrated their international services at their hubs.
Alliances enable resources to be used more efficiently. As well as point to point demand, customers from beyond and behind points add to passenger numbers, pushing up load factors. This in turn leads to more frequency and capacity, giving consumers ever more choice.

My BER-BOS example was carefully chosen. If you live in Boston and need to go to Berlin, you will have an interest in what AA, BA, IB and AY together offer; you’ll see multiple schedule and fare options. And you can try DL, KL, AF, or UA, LH, LX, SN, OS. The many options you’ll see show that the airline industry is highly competitive, and demonstrates what airline alliances are really all about.

The purpose of the JV you may be familiar with might have been to share cost and profit and to coordinate schedules. I imagine that defining ‘cost’ and ‘profit’ is challenging.

Approval of anti-trust immunity demonstrates that the regulators believe that the arrangement is in the consumer’s interest. Spend a minute to comprehend what means.

PS –
Berlin, last time you checked was in Germany?
Yep, Berlin is in Germany, but be careful not to confuse it with Berlin New Hampshire.


The results are in and the number of carriers on routes from LHR to the US has decreased. That means less competition so the effect of the JVs is anti-competitive. You can spin it as you wish but the numbers don’t lie.

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