Our monthly aviation leader discourse features Sir Richard Branson, who of course needs no introduction, the serial entrepreneur having founded Virgin Atlantic Airways in 1984. Today marks the completion of another ambition. A Virgin London - Sydney daily service. Let him explain his feelings.
”By the time Malcolm posts this article on ABTN I will have touched down in Hong Kong's wonderful new airport onboard one of Virgin Atlantic”s brand new Airbus A340-600s on the first leg of our historic inaugural flight to Sydney. It has been a long-held ambition of mine and everyone at Virgin Atlantic to fly to Australia so this is a dream come true for all of us. It is also a great day for the travelling public as Virgin Atlantic will bring much needed competition to this route, along with our award winning service and innovative products.
When we applied to the Hong Kong authorities to operate between Hong Kong and Sydney we said we thought we could turn Hong Kong into the most popular routing between the UK and Australia. Hong Kong is currently fourth behind Singapore, Kuala Lumpar and Dubai. With these new flights and Qantas” recent introduction of flights through Hong Kong it will quickly move into second place in the next year.
Following the recent CAA public enquiry regarding the allocation of extra flights to India we are delighted with the decision on Delhi but are disappointed and surprised that we have not been granted a daily service to Mumbai and will appeal to the Secretary of State for Transport against that element of the decision.
We will commence three of the Delhi services immediately and plan to launch daily services from 1 February 2005.
We will introduce our new three times a week service to and from Mumbai from 1 February (subject to Indian Government approval under their Open Skies deal). However this simply isn't enough ” BA utterly dominates, carrying 75% of first and business class passengers flying directly between the UK and India, and it needs competition on Mumbai on a daily basis from a world-class long haul airline with world-class products and services.
We're also disappointed to have been denied the chance to launch new services to Bangalore and will appeal to the Secretary on that decision too.
In any event in 2005 Virgin Atlantic will be launching new services to Cuba and The Bahamas and Virgin Atlantic will give birth to a new airline in Nigeria, called Virgin Nigeria, which will operate domestic, regional and long haul services.
Given the recent challenges in the aviation industry some might question whether this expansion can be justified or if we are suffering from the classic aviation investor”s condition of strategies based on hope triumphing over experience. It is certainly true that the last four years have been the most difficult and demanding that I have experienced in aviation and with fuel prices currently at punishingly high levels the pressure on our margins has never been more intense. So why, you might ask, are we planning to expand at a time when other airlines are going under, facing the very real threat of bankruptcy or being propped up by the indulgent and unfair protection of Chapter 11?
By nature I”m an optimist. I always view the glass as half full rather than half empty ” although if our planes were only half full we certainly wouldn”t be planning to expand! I have built Virgin Atlantic and the other Virgin businesses by taking calculated risks when others feared to move.
Assuming our industry is spared another tragic event like 9/11 and doesn”t have to face another unpredictably devastating phenomenon like Sars or the global instability triggered by major conflict the time is ripe for expansion. Virgin Atlantic will grow in a number of markets. From our very first flight between London and New York and the early development of our routes to Miami and Orlando the platform of our success has been our strong leisure traffic. Other airlines have in the past disparaged economy travellers and sought to concentrate on the business travel market. This is a mistake that Virgin Atlantic has never made and will never make.
In the dark days following September 11 when premium traffic and US originating traffic were significantly down the strength of our UK originating leisure traffic was one of the key reasons Virgin Atlantic survived. Over the years Virgin Holidays has become the biggest tour operator to Florida and in a few short years operating to the Caribbean is already closing in on the number one spot in that region as well. We are going to build on this success by significantly expanding our leisure routes out of Gatwick and Manchester adding a number of new destinations in a move that will see Virgin Holidays double in size.
Having said that I”ll never forget Freddie Laker”s advice not to build an airline on economy passengers. Accordingly we will be adding both capacity and new destinations out of Heathrow on key business routes.
Our recent order for up to 26 new Airbus A340-600s means that in total we have firm orders for 24 aircraft and options for a further 19 over the next few years.
Together with our existing fleet of 29 aircraft these aircraft will give us the potential to double the size of the airline over the next five years. Our wish list of new routes includes Melbourne, Dubai, Bangkok, Chicago, Toronto, Jamaica, Nairobi, and Rio.
As well as expanding to new markets our award winning Upper Class Suite is enabling us to grow our market share on our existing route network
The Upper Class Suite is now flying on 100% of the flights to New York, San Francisco and Tokyo and as each new destination receives the benefits of the Suites our sales teams are winning new contracts and travellers are voting with their feet by choosing us over our rivals.
Even if the market returns to the stormy conditions of the last few years the quality of our service will ensure we survive and thrive. The best companies in every field will always survive whether it be the best hotel, the best restaurant or, indeed, the best airline.
I know that Aussies always support the little guy taking on the big corporations. This route is a tough one to compete on due to the dominant position enjoyed by BA and Qantas through their Joint Services Agreement, which allows them to collude on fares and schedules between London and Australia. They currently account for around 70% of the business travel market. Meanwhile Qantas and its oneworld partner Cathay dominate on services between Hong Kong and Australia.
Geoff Dixon, chief executive of Qantas, said we would never fly to Australia and I am delighted to have proved him wrong! My only regret in my journey to Australia will be that Geoff Dixon did not take on my wager which would have meant that he would have joined us on this historic flight ” dressed as cabin crew for Virgin Atlantic!
Finally, my thoughts return again to Australia. It”s daily from now onwards!”