Four years ago, I sat down with Virgin Atlantic SVP of North America, Chris Rossi during Brit Week, to talk about changes at the airline. Chris was back again for Brit Week earlier this year and I had the chance to sit with him again. My, how things have changed.
Last time, we talked about how Virgin Atlantic remained one of the last of the independents. Well, that’s no longer true now that Delta has bought a huge stake in the airline. When Delta stepped in, things changed very quickly and the two airlines became tightly connected with frequent flier tie-ups, codeshares, and a joint venture. We’ve seen Virgin Atlantic put its airplanes on Delta routes and vice versa, and I wanted to know how those decisions were being made. According to Chris,
It’s both product and capacity and where we can be most competitive. Look at Detroit [to London]. The Virgin A330 vs the Delta 767 offers a bit more capacity. And in Atlanta to Manchester, it’s the same thing. Also, the brand preference is for Virgin in the UK, so for UK point of sale like a Manchester-Atlanta flight, the Virgin product works well there.
Beyond the brand preference, there’s also Virgin’s premium economy which is very different from Delta’s Comfort+ extra legroom offering. According to Chris, that is important but they struggle with it because of technological limitations. Certainly that’s been an issue for people wanting to book Virgin Atlantic premium economy on a Delta-coded flight since Delta can only offer partial inventory.
I wanted to know if this deal with Delta was it or whether more partnering was coming. In particular, would Virgin Atlantic join SkyTeam?
We’re looking at it, so we haven’t ruled it out, but we’re so focused on the [joint venture with Delta].
Well, that doesn’t tell us much. Though to be fair, it really did seem like an afterthought when we discussed it. The focus is really about cozying up further with Delta over the North Atlantic. I was curious about the importance of other flights in the network, the ones that go east and south from London. We saw many of them dropped in favor of redeploying capacity over the Atlantic instead, but I figured connectivity to places further out would still be important. Did it matter?
Yeah it does. With the way our network is set up from London to the East, the key destinations from the US are Delhi and Johannesburg and Lagos to a degree. We do carry quite a bit of traffic, even Atlanta to India is a very big market, which I hadn’t realized.
Despite all these network changes, it seems that the biggest change has involved aircraft. This is a company that flew the 747 (currently with 367 seats on business routes) as its flagship. And it has plenty of A340-600s (with 316 seats) as well. These are all big airplanes, but in the next few years, they’ll be gone. As Chris noted, “the majority of the fleet will be 787s and A330s by 2018.” Those aircraft only hold 264-266 people, a huge reduction.
The same thing will happen over at Gatwick on Virgin’s leisure routes. Those 747s are much more dense, seating 455 people (smaller business class), but those will start to go away in the next 5 years. And it’s pretty much a given that the replacement will be smaller. After all, Virgin Atlantic has said clearly that it is unlikely to take delivery of the 6 A380s it has on order.
With these smaller airplanes, what will service patterns look like? We talked at great length about LAX as a prime example. This is a market that Virgin has somewhat regularly served with 2 daily flights. But that changes this year. With smaller aircraft, Virgin can fly three times in the summer (including the one flown by Delta) using smaller aircraft and only two times in the winter with its usual service pattern, better matching capacity to demand.
The service pattern is just a small part of what’s happening in LA though. There’s been a big investment in the passenger experience with the renovation of Terminal 2 and the addition of a Virgin Clubhouse lounge. Now that Air France/KLM and Air New Zealand have left for the renovated Bradley Terminal, there was room for Virgin Atlantic to do some good things in Terminal 2.
It took over the former Air NZ check in positions at the east end of the terminal. Now, premium passengers will check in on the side in a more exclusive area, sail through security, and then walk into the lounge (in the space where the former Air France/Northwest lounge was.) Once this work is all done, Terminal 2 will feel like a private terminal compared to the big Bradley Terminal most other international carriers are using.
Considering we had just talked about how quickly Delta and Virgin Atlantic had tightened the relationship, it still seemed strange to me that we were talking about Virgin Atlantic remaining in Terminal 2 on the opposite side of the airport from Delta. But Chris said that was something they discussed.
We looked at that and there simply wasn’t the real estate with the customer proposition we wanted to deliver. Once we knew that, it was, “ok, let’s do the best job we can in Terminal 2.”
And even though there is “quite a bit” of connecting traffic from London on to Hawai’i on Delta and a little bit up and down the coast, they don’t make connections easy. There are no behind security connections using buses or anything like that.
Overall, it’s hard to argue with what Virgin Atlantic and Delta are doing together. This is an airline that has lost money for several years, but all of a sudden, the connectivity with Delta has turned it into a profitable entity. That’s good news.