Virgin Atlantic CEO at WTM 2014

Virgin Atlantic CEO, Craig Kreeger, said that the airline is withdrawing from Cape Town, Tokyo, Mumbai and Vancouver because the routes are not profitable.

There has been a lot of speculation that Virgin was pressured to add more US routes because of the Delta joint venture or because they need Heathrow to add another runway.

But Mr Kreeger was very clear that it was a straight financial decision.

Which clearly is a bonus to the argument that Heathrow should not expand.

Highlights from a wide-ranging interview at the World Travel Market 2014 with the Virgin CEO:

the Virgin / Delta joint venture is going really well but they have no plans to combine frequent flier schemes
they may eventually join SkyTeam but the value of that pales against the Delta venture
the routes to Cape Town, Tokyo, Mumbai and Vancouver are being closed as they are not profitable
the Little Red UK route closures are because of the lack of passengers connecting to Virgin long haul
the Manchester slots belong to Virgin and they can use them for their own purposes
the Edinburgh and Aberdeen slots could go back to BA
Virgin will offer less capacity at Heathrow in future as it replaces its 747s and A340 aircraft with the smaller 787
not sure if any Heathrow new runway would be good for Virgin
the Gatwick 747 fleet makes good money and there is no real rush to replace them but they could make that decision in the next five to nine months
Virgin has options on the A380 but are unlikely to take them up

Virgin / Delta

Virgin is happy with the progress of the joint venture.

Mr. Kreeger said the two airlines might consider a joint frequent flyer program, though he added no plans exist to do so and that each carrier’s loyalty scheme is quite different.

A decision on alliance membership is still years away, they may eventually join SkyTeam but the value of that pales against the Delta venture

Route closures

The routes to Cape Town, Tokyo, Mumbai and Vancouver are being closed as they are not profitable. And the US market is ready for add more services.

But the airline may launch new long-haul routes next March when the carrier can use the three slots that will become available when Virgin abandons its Little Red Manchester flights in early 2015. The carrier is ditching the Manchester service after only two years and will stop flying to Aberdeen and Edinburgh in September 2015.

Virgin launched the connecting services after being awarded ‘remedy’ slots following the sale of Bmi, which used to operate the routes, to British Airways. However, of the 12 slots, the three used for the Manchester service were already owned by Virgin and will be retained by them.

“The three Manchester are our own and will be returned to us to use on long-haul if we wish,” Kreeger said, adding: “We have not yet made any definitive decision on how we use them.”

Kreeger said he “would love” to offer new routes to places like Beijing or Sao Paulo, but that Virgin was more likely to use the slots to increase frequencies on existing routes or for more flights to Delta’s hubs.

He added that connectivity to Manchester was not as vital now that Virgin and Delta had increased their presence at the airport, operating to Orlando, Las Vegas, Atlanta and JFK from 2015.

Fleet structure

Virgin Atlantic will replace its entire Heathrow fleet of 747s and A340 with twenty-one 787s-9 aircraft in the next four years.

But the 787 is smaller that both the 747 and A340, meaning less capacity than currently available.

Mr Kreeger was really enthusiastic about the 787 which Virgin only started flying a few days ago. He said that the 787-9 is benefiting from the experience gained from the introduction into airline service (not Virgin) of the original 787-8. The aircraft will deliver 30% fuel savings over the A340 and as fuel is the one of the biggest cost or an airline it is a substantial saving.

Virgin operates seven 747 aircraft at Gatwick. The leases on those start to end in 2019. So Virgin could decide in five to nine months how to replace those.

Candidates are the Boeing 787 or the larger 777 as well as the Airbus A350. Virgin has options on the A380 but is unlikely to take those up.

Heathrow third runway

Mr Kreeger does favour a large hub but did not specifically say he wants a third runway at Heathrow. He did say that he was not sure if it would even be good for Virgin as he didn’t know how slots etc would be allocated.

The Virgin founder and still majority owner, Richard Branson, wants a third and fourth runway at Heathrow.

But Richard Branson is a billionaire who lives on a private island in the Caribbean!

Virgin and British Airways (or Branson and Walsh)

Mr Kreeger repeated what most in the industry have always known (except perhaps Willie Walsh) that Virgin Atlantic is a passion for Richard Branson and that Virgin Atlantic will still be around for a while.

No matter what Mr Walsh thinks.