The Sage of Necker Island nails it

We have said several times that the proposal by IAG to buy Aer Lingus makes perfect sense for all parties. It is certainly the best available option for the Irish government to ensure the stability and growth of Aer Lingus and its employees. The idea that IAG just wanted Aer Lingus for its Heathrow slots was silly because part of the appeal for the company was the opportunity to carry large numbers of passengers to and from Ireland via its hubs – and they could not do that if that stopped flying to Ireland. Anyway, the Irish government has now agreed to sell its shares so that leaves IAG the job of doing a deal with the two minority shareholders, Ryanair and Etihad, who will have to decide whether they want cash or would prefer to remain passive investors.

Whilst logic pointed to the deal being good for all parties, anyone unconvinced only had to read a letter Richard Branson wrote to the Irish government asking them not to sell because, according to him, such a sale “would not be in the public interest”.

You can guarantee that whenever old Beardie uses that phrase, he means “not in the interest of Virgin”. He trots out the same old phrase every time he thinks the Virgin group’s franchise fees might be hit. In fact, on this occasion, it is quite hard to see Virgin Atlantic losing much, if anything from the deal – though that, of course is beside the point because in the Branson universe, any move by British Airways or its parent, is bound to be “against the public interest”.

Anyone who still had not made up their mind by this stage would surely have been swayed by another letter from that well known philanthropist, Donald Trump. Even he joined in the bandwagon by saying a sale would “not be in the public interest” because he was worried about the provision of air services for golfers at a new course he was developing. No doubt if golfers come to play in sufficient numbers at the new course, IAG will be only too delighted to fly them in.

With both Branson and Trump against the deal, IAG must have known the sale was as good as done.

What has gone wrong with Virgin Atlantic?

The water cannon salute is a traditional gesture made by airports to mark the first, or sometimes, last flight by an airline or a type of aircraft. It happens several times a month around the world without incident. Unfortunately, the most recent salute went wrong when fire crews welcoming a new Virgin service from Atlanta to Manchester (which replaces flights by their shareholder, Delta) pressed the wrong button and covered the aircraft in foam rather than water.

Cue much amusement around the world. 

True, the incident was not funny for the passengers hoping to travel on the aircraft who were delayed overnight but it is hard not to see the funny side. It is like watching a man drive his brand new Mercedes into a car wash and having it flooded because he had forgotten to close the windows. You really shouldn’t laugh but…

In the old days, Virgin Atlantic’s over-active PR people would have been sure to join in the fun. When everyone else is laughing at you, the only sensible option is to join in. We would have expected a few witty one-liners at the very least.

Instead, the most Virgin Atlantic could do was to dispute the fact that the flight was cancelled. According to them, it was merely delayed overnight for the operating crew to take the legal minimum rest. And that simply begs the question as to why they did not immediately replace the aircraft and crew with another aircraft and crew from Heathrow.

In the same circumstances, we imagine even the normally straight-laced US airlines would have found something amusing to say. But Virgin, once the airline that was so eager to put the “fun” back into flying is a very different airline today. 

Why isn’t Virgin flying England to the World Cup?

Last December the press were full of the story that British Airways had supposedly declined to take the England football team to the World Cup in Brazil. The airline claimed they did not have an aircraft available for the length of time required. I imagine the FA wanted the aircraft providing for next to nothing on the basis of the wonderful publicity it would offer and BA did not feel it was worth it.

Of course, when BA do something like this, you can rely on Richard Branson to step forward. “We would be proud to fly the England squad to the World Cup”, he told the London Evening Standard.

So why will the English team be travelling to Brazil on a rather old Boeing 767 from a small foreign charter airline? It is hard to imagine the FA declining Virgin’s kind offer, especially when they are obviously having to pay the full commercial rate for the aircraft they are using.

It is easy to make brash statements, months ahead and hope no one remembers.

Which Virgin?

There’ve been a number about for a few years now, but the proliferation of Virgins is now a source of potential confusion, particularly for travellers to Australia from the UK.

If you look on fare comparison sites, you may spot two different fares from Virgin. The UK-based Virgin Atlantic still flies from London to Hong Kong and on to Sydney, but Virgin Australia (which is now rather more loosely connected to the Virgin group) also flies from Australia to Abu Dhabi from where it codeshares with Etihad to the UK. Many of the flights sold from Australia to Abu Dhabi with Virgin Australia codes are actually operated by Etihad as well. Unless it is important to you to fly on one sector with Virgin Australia, you should also look at the fares being offered by Etihad since they may be different.

Virgin Atlantic playing games with Manchester

The rumoured announcement that Virgin Atlantic will start services between Heathrow and Manchester next Spring looks suspiciously like posturing ahead of the decision about who is to get the handful of ex-BMI slots that BA has to give up. Virgin wants to show that it is a credible shorthaul airline to convince the authorities they should get all the slots.

Shorthaul regional services into expensive slot-restricted airports normally lose money. Airlines make money on the longhaul services but need the connecting flights to grab enough passengers and hope the combination of the two will give them an overall profit. BMI, which, at its height, was a very efficient shorthaul airline, could not make money on these routes. Virgin Atlantic is not even making money on its longhaul services. Virgin has wisely avoided connecting services since its inception – why should we suddenly believe that it has now found the answer to making money? It is very hard to see the Manchester route as anything other than a political game

IAG approved to purchase British Midland

So, finally, the EU authorities have today agreed to IAG buying British Midland and saving the airline from the scrapheap. This is good news for the airline’s pilots and cabin crew, most of whom should transfer to BA without problems. Redundancies amongst office staff are likely but these would have happened with or without the involvement of BA or another airline.

To get the agreement, IAG had to offer to give back fourteen slots at Heathrow as opposed to the original ten that they said they would give up initially. Twelve of these are earmarked for domestic and European routes where BA would have a monopoly.

Since BA has also had to agree to specific terms to facilitate interlining of passengers from competing airlines to its domestic services, which was a major concern for Virgin, I wonder which airline is going to come forward and offer to start flying from Heathrow to Edinburgh or Glasgow.

BMI could not make a profit on those routes – even with the clout of Lufthansa and the Star Alliance behind them. I doubt that any airline would see much potential in such routes.

What about Virgin who claimed to be so concerned about the loss of the Scottish routes? Surely now is the time for Richard Branson to put his money where his mouth was…

 

Virgin and British Midland

In recent years, Virgin Atlantic has done very little to increase its business but has spent an inordinate amount of effort in attacking British Airways for its attempts to grow. The latest effort to try to block their takeover of British Midland is no different.

Over the years, Virgin have had ample opportunities to buy or merge with British Midland but have – probably very wisely – not gone ahead. Now they are upset about BA getting British Midland. They don’t really want it themselves but don’t want BA to have it.

The argument they are using to block the deal on competition grounds does seem to have some superficial logic. They say that concentrating domestic routes on BA will lead to reduced choice and higher fares.

Unfortunately, this is a complete misunderstanding of the situation.

British Midland thrived as a shorthaul competitor to BA – in much the same way as Virgin did quite well as their longhaul competitor – but the airline business has changed. British Midland lost their position to easyJet who now provide much more effective competition to BA on shorthaul than British Midland ever did. That is why British Midland is in such a financial mess.

EasyJet currently operate 13 flights a day between London and Glasgow. That is more than enough competition for BA. The only other thing that can destroy these domestic routes is the government’s determination to tax domestic air travel out of existence. If BA take British Midland, Virgin will lose the opportunity to sell domestic add-ons to their longhaul flights but that is their problem. It really is not an issue for the competition authorities.

However, I have a solution which, if Virgin are serious, should keep everyone happy.

British Airways should be allowed to take British Midland but give up enough slots at Heathrow to allow Virgin to operate four return flights each day between Heathrow and Glasgow and Edinburgh. In return, Virgin should sign an agreement that they will operate these flights for at least five years.

That would have Richard Branson running for cover to his Caribbean tax shelter faster than you can say Virgin Cross Country Trains.

In June’s Inside Traveller

The June edition of Inside Traveller is now available by mail and on-line. Amongst the subjects this month are:

• Virgin Atlantic and its new A330s. A story of ineptitude which shows just how desperately the airline needs new ownership and proper management.

• The secret behind the enormous success of the W hotel brand.

• More on the sorry story of von Essen Hotels.

• Is it worth a cuddle on Air New Zealand?

• Should you even think of flying with Tiger in Australia?

• Have Wizzair trumped the rest of the budget airline industry with their new product?

• How to stop the loss of a passport becoming a financial nightmare.

• Is there any point in using www.cheapflights.co.uk?

• Another stunning own-goal from easyJet. Do they really have a clue what they are doing?

If you are not already a subscriber, visit insidetraveller.co.uk.

Virgin and Punctuality

Flightontime has just published its annual review of airline punctuality for 2010. As with all statistics, you really have to look behind the bare figures to get a proper understanding of what is happening. It is pretty silly to single out BMI Regional as the country’s most punctual airline – the airline flies to and from uncongested regional airports so it has none of the problems most other airlines have to face. Similarly, we think it rather unfair to pick on Jet2 as the least punctual. It is easy for some shorthaul airlines (especially budget carriers) to massage their figures because they simply cancel flights when they are faced with a delay. Jet2 makes a serious effort to carry passengers to their destination. What would you rather have – a delay of two hours on your flight from Newcastle to Murcia or an offer of a refund and a flight next Tuesday?

However, there are some pretty obvious trends you can pick out of the tables and we are surprised no one has picked up on the very poor timekeeping by Virgin Atlantic.

They come in at 26 out of 30 at Heathrow ahead of Air India and Turkish Airlines. At Manchester, they are number 30 out of 35 and 28th out of 30 at Gatwick just ahead of Libya’s Afriqiyah Airways. These figures are fractionally worse than last year but Virgin were fairly low then as well. To be fair, a delay of 45 minutes or so on a ten-hour flight might not be the end of the world but, other carriers can leave on time so why not Virgin?

Virgin Atlantic’s “Special” Offers

Airlines are always anxious to add to their profits by selling extra services. There is no harm in that – provided the customer gets a fair deal but not all airlines are as honest or scrupulous as they should be.

Virgin promote a deal for advance booking for the Gatwick Express - they claim the offer is a for a “special 5% discount”.

That is certainly a special offer because tickets are sold on the Gatwick Express website at a standard discount of 10%.

Could Virgin be so tight that they are doing this deliberately – trying to screw an extra couple of pounds out of their passengers? Or have they simply not kept a proper check on the links and deals they offer? Neither possibility reflects well on the airline.

This is not new and we have pointed it out in Inside Traveller before.

By the way, members of Quidco get a £3 affiliate rebate for each booking made on the Gatwick Express. Virgin are presumably making more than that – plus the extra 5%.

PS

We just received this remarkable reply from Virgin Atlantic. “It is not our intention to mislead people. We offer a 5% discount and if Gatwick Express sell it at a 10% discount, then that is up to them.”

Just so we are clear – the price for booking a day ahead of travel on the internet is 10% less than paying at the station on the day. If you book through Virgin, you pay 5% extra – and get told it is a special deal.

No, of course Virgin are not misleading anyone…