Steve Ridgway Virgin Atlantic's boss talks about British Airways' dominance, the ash crisis and his airline's new brand
As I wait for Steve Ridgway outside Virgin Atlantic's temporary office in the George R Brown Convention Center in Houston, a strange energy seems to be emanating through the corridor. Only the fierce Texan heat stifles the buzz at the National Business Travel Association conference where we are scheduled to meet.
There is excitement on the faces of a dozen or so Virgin staff, all perched like porcelain dolls on stools in the communal work area. I'm hot and bothered, having ran the last 200m for fear of being late. Through a sweat-soaked brow I can't really work out what is going on. Suddenly, Sir Richard Branson - a man with surprisingly blond hair for someone just turned 60 - emerges from the room, links arms with a harem of stunning Virgin flight attendants, and marches off down the concourse from where I have just arrived like a portly Seb Coe.
Meeting me only minutes after his billionaire boss has left the room must be a sharp comedown for Ridgway, though he doesn't let it show. And just as I get my breath back, the chief executive has my heart pumping again as he launches immediately into a tirade about British Airways and the recent ash cloud crisis. Of the latter he fumes: "I'm so angry about this that I don't like speaking about it, really." But fortunately for me, he does.
I suggest that, perhaps, sympathy might be shown towards the government and Civil Aviation Authority, given the unprecedented nature of the situation. But this falls on deaf ears.
"They should not have grounded one single flight," he rages. "We fly around the world near active volcanoes and manage the safety risks perfectly well, just as we do with turbulence, ice and snow. There has never been a plane crash since the Wright brothers attributable to volcanic ash.
"We've even had instances where aircraft have flown directly through an ash plume and their engines have shut down, but they get them going again."
I attempt to interject, but the onslaught continues: "And the fact they shut airspace down and did all that damage to all those companies, including ourselves... and the other iniquitous thing for airlines was not only were we damaged commercially but we were then forced to pay compensation by legislation brought in by Europe. It was never designed for that."
As his temperature simmers, the CEO CBE (awarded in 2006) reflects that if anything good were to come of the crisis it would be that people would value the aviation sector's role in the economy more than ever.
Virgin, like all airlines, took a financial thumping during and after the debacle. But recent better-than-expected financial results have shown the airline is well positioned to come out of the recession.
For its financial year until February 28 2010, revenues decreased 8.6 per cent contributing to a group pre-tax operating loss of £132 million. But for its first quarter to May 31, total airline revenue was up 10 per cent year-on-year to £513m, passenger load factors up 5 per cent to an 82 per cent average while market share in the premium cabin increased 5 percentage points, with load factors up 15 percentage points in Upper Class.
Ridgway tells me there is optimism about the market, and like the airline's owner, thinks a double dip recession will be avoided. He puts Virgin's financial comeback down to a decision to act early.
"By the end of 2008 we were going into major uncharted territory. So we downsized the company and took capacity out. BA started doing that later and there's no doubt capacity rationalisation helped bring the market back into balance. So, load factors are improving and yields are recovering back to a point where airlines can become profitable again."
Moving on to the recent decisions by the US Department of Transportation (US DoT) and the European Union (EU) to grant anti-trust immunity (ATI) to the British Airways and American Airlines alliance was a sure-fire way to again increase the temperature of the conversation.
"What's your game plan?" I ask.
"We will be watching, as I believe the competitions authorities should be, like hawks. They [BA and AA] have not done this as part of a popularity contest. They have done it because the want to be stronger and more powerful and consumers need to be careful."
This time I suggest that, perhaps, the US DoT and the EU had their hands tied because Air France-KLM and Lufthansa had both previously been successful obtaining ATI.
"There was no precedent set," he insists. "BA on its own, before the [AA] alliance went through, was bigger than the whole of SkyTeam in Paris and the whole of Star Alliance in Frankfurt. And you've got this completely full airport."
"So is it unfair to make the comparison?" I ask, gingerly.
"It's a completely irrelevant comparison," he retorts. "We know the UK accounts for 34 per cent of all traffic between the 26 European countries and the US - that's 34 per cent - and Heathrow accounts for 25 per cent of that. So don't tell me that's not a dominant position."
Over the coming years Virgin will have to decide whether to enter the bidding war for valuable Heathrow slots that BA and AA are obliged to relinquish as part of their alliance. But, says Ridgway, "part of the problem is that there are so few slots and they are only leased. If you make big investments in the way of routes and assets, this can be a challenge. But we are considering it."
In spite of the rancor caused by BA, Ridgway is optimistic about the future. He recently unveiled a livery and brand redesign, and says this has already "reinvigorated" the business, staff and customers.
"We examined what kind of world we were going to emerge into [post-recession], so had a complete review of our brand and our brand values.
"We wanted to make sure they were appropriate for a world where excess, debt and credit were things of the past. It was also timely because we had aircraft scheduled for repainting, and more joining the fleet."
With my time allocated with the CEO fast approaching an end - he works to an extremely tight schedule - he revealed that Virgin continues to be courted by the major airline alliances, and that a deal to buy Bmi from Lufthansa was both "logical and possible", though no offer was yet on the table.
With my brow now dry, I exit the room. Sadly, there is no harem waiting for me.
- Steve Ridgway, who has an Economics BSc from Oxford Brookes University, joined Virgin Atlantic in 1989. He became a board director in 1994, managing director in 1998 and chief executive in 2001. He was awarded the CBE in the Queen's 2006 New Year's Honours List. His interests include motor sport, offshore power boating, sailing, fishing and property restoration.