Virgin scraps its unsuccessful, loss-making “Little Red” domestic services from 2015

Virgin Atlantic has announced plans to scrap its heavily loss-making domestic airline, Little Red, after just over 18 months. It has struggled to fill seats on its services linking Heathrow with Edinburgh, Aberdeen and Manchester, and finally admitted defeat after weeks of speculation. Virgin’s daily services to Manchester will end in March 2015, while the Scottish services will cease next September 2015. Little Red, which was operated by Aer Lingus for Virgin on a “wet lease”, ie with the Irish airline’s planes and crew in Virgin colours, could never make money. It was started in March 2013 after competition authorities made BA relinquish Heathrow slots for domestic flying, in the wake of BA’s takeover of bmi. Its aim was to feed in passengers from the regions, to make Virgin’s long haul Heathrow flights more profitable. However, instead most passengers were just on point-to-point flights. Richard Branson complains that the slots they had for Little Red were inadequate.  Its load factor was around 30 – 35%, which was about the lowest in the whole industry. Virgin Atlantic has made losses for years, requiring cuts in flights to (business?) destinations to focus on the profitable tourist ones to North America.

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Virgin Atlantic scraps Little Red domestic services

Daily services fron London to Edinburgh, Aberdeen and Manchester to cease in 2015
  • The Guardian,

    Virgin Atlantic has announced plans to scrap its domestic airline, Little Red, after just over 18 months in service.

    The airline has struggled to fill seats on its services linking London Heathrow with Edinburgh, Aberdeen and Manchester, and finally admitted defeat after weeks of speculation that the operation would be axed.

    Virgin’s daily services to Manchester will end in March 2015, while the Scottish services will cease next September.

    Sir Richard Branson, Virgin Atlantic’s president, claimed that Little Red, which was operated by Aer Lingus for Virgin on a “wet lease”, ie with the Irish airline’s planes and crew in Virgin colours, had benefited consumers but “the odds were stacked against us”.

    It came into being in March 2013 after competition authorities made British Airways relinquish Heathrow slots for domestic flying, in the wake of BA’s takeover of bmi.

    While over a million customers have so far flown on Little Red, Virgin admitted that demand has been predominantly from point-to-point customers rather than the connecting traffic it had hoped for, feeding more passengers on to its more profitable long haul routes.

    Virgin Atlantic chief executive Craig Kreeger said: “Little Red came about through an enduring passion at Virgin Atlantic to make a difference for our customers. We really wanted it to be a success and everyone involved worked extremely hard and has given it their best efforts.

    “It was always a huge challenge on behalf of the consumer, as the totally inadequate number of slots made available by the European Commission did not deliver close to BA’s network position, even when supplemented by our own slots to fly between Heathrow and Manchester. The time lag between the takeover of bmi and our entering the market also meant Little Red initially faced an uphill battle to win recognition and convert customers to its services.”

    Branson added: “When the competition authorities allowed British Airways to take over British Midland and all of its slots, we feared there was little we could do to challenge BA’s huge domestic and European network built through decades of dominance. To remedy this, we were offered a meagre package of slots with a number of constraints on how to use them and we decided to lease a few planes on a short term basis to give it our best shot. The odds were stacked against us and sadly we just couldn’t attract enough corporate business on these routes.”

    Virgin Atlantic said it remains committed to its longhaul operations in both Manchester and Scotland, from where it flies seasonal routes to American holiday destinations.

    The airline’s shorthaul carrier’s demise came after a major review of Virgin Atlantic’s wider network, which saw a number of routes including Mumbai and Tokyo axed as it focuses on transatlantic routes after its tie-up with Delta. The airline has made substantial losses over the last few years.

    http://www.theguardian.com/business/2014/oct/06/virgin-atlantic-scraps-little-red-service


    Losses narrowed in 2013, but that’s now four losses in five years

    22.5.2014 (CAPA)
    Virgin Atlantic Airways (VAA) Limited reported a pre-exceptional pre-tax loss of £74 million for the year ended 31-Dec-2013, according to its 2013 annual report filed at the UK’s Companies House.
    VAA changed its accounting year end from Feb to Dec and so its last two sets of statutory accounts are for the 12 months to Feb-2013 and the 10 months to Dec-2013, but it has provided proforma 12 month figures for the profit and loss account for the calendar years 2012 and 2013.
    The proforma 2013 pre-exceptional pre-tax loss compares with a loss of £105 million in 2012. The pre-exceptional operating loss narrowed to £76 million from £105 million in 2012. Revenues grew by 3.6% to £2,588 million.
    Note that these results differ from those of Virgin Atlantic Limited, which also includes Virgin Holidays and a brand licensing company in addition to the airline and whose summary results have been the subject of a press release from Virgin. Our analysis focuses solely on the results of Virgin Atlantic Airways Limited.
    …… more at

    http://centreforaviation.com/analysis/virgin-atlantic-airways-sees-more-than-a-little-red-but-things-were-much-simpler-30-years-ago-169385


     

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    Virgin Australia trebles its full year losses

    Last year, Singapore Airlines increased its stake in Virgin Australia to tap into the Australian market

    29 August 2014 (BBC)

    Virgin Australia Holdings has posted an after-tax loss of A$355.6m ($332.6m; £200.5m) for the full year ending in June.
    The result is more than triple the firm’s previous year’s loss of A$98.1m.
    The carrier blamed weak consumer sentiment, overcapacity in the market and carbon tax costs for the loss.
    Virgin also said on Friday that it would sell a 35% stake of its frequent flyer program to a private equity firm, valuing the program at A$960m.
    The carrier, which is Australia’s second largest behind Qantas, saidongoing uncertainty around the economy had also contributed to its full year loss and that it would not provide a forecast for the following financial year.
    Virgin’s underlying loss for the year of A$211.7m was in line with market expectations.
    ….. and it continues at http://www.bbc.co.uk/news/business-28977837

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     Earlier:

    Virgin domestic “Little Red” flights a ‘disaster’ at only 33% full, (probably less than that) as passengers stick with no-frills rivals

    11.10.2013Virgin Atlantic’s venture into domestic aviation, with its “Little Red” airline,  has proved financially disastrous. During the first 6 months flying from Heathrow to Aberdeen, Edinburgh and Manchester, the average flight has been only one-third full, [probably in fact much lower, as Virgin figures appear to be wrong] even though the Virgin plane is cheaper than a Virgin train (on the day fare £64, cf £76). “Little Red” flights from Heathrow to Manchester started in late March, and Heathrow to Scotland began early in April. Few passengers have been tempted so far.  The load factor of 33% contrasts to the industry standard of close to 80%, while low-cost carriers such as easyJet and Ryanair achieve around 90%. Virgin is prepared to sustain some losses on this route, as it feeds traffic to lucrative intercontinental flights. With so few seats filled, each passenger contributes disproportionately to noise and pollution. John Stewart of HACAN, said: “This confirms what many have suspected – that a big problem at Heathrow is that so many planes are far from full. Full planes may lessen the pressure for a third runway.”http://www.airportwatch.org.uk/?p=17846


     

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    “Little Red” airline had only 37.6% load factor in 2013 – lowest in industry

    8.6.2014Virgin Atlantic’s domestic airline, Little Red, has had poor ticket sales in the first year of its launch, in March 2013. Its planes have been on average less than 40% full (37.6%). The point of Little Red is to feed passengers from the north of England and Scotland into Virgin Atlantic’s long-haul network from Heathrow. Its low use has been public knowledge since its launch. The CAA’s airline data is now available for the year.  Little Red’s load factor is the lowest in the aviation industry – well behind rivals BA and easyJet, with load factors (proportion of seats filled) of 72.4% and 77.8% respectively for 2013.  In an interview with The Telegraph last month, Virgin Atlantic’s chief executive, Craig Kreeger, refused to reveal Little Red’s load factor, saying rumours of the service’s demise had been “greatly exaggerated”. Virgin claims its load factor will rise this year.  A shockingly high carbon way to travel, if the plane is largely empty. Virgin cuts its losses in 2013  to £51m from £102m.http://www.airportwatch.org.uk/?p=21758


     

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    Virgin to launch domestic UK sub-brand called “Little Red” at end of March to compete with BA

    1.3.2013

    Virgin Atlantic has unveiled details of its UK domestic service, which is being called,  Little Red. It will launch on 31st March in Manchester, 5th April in Edinburgh and 9th April in Aberdeen, with a total of 26 daily services to Heathrow.  Little Red will be Virgin’s first ever domestic flights in the UK.  Virgin won key Heathrow take-off and landing slots after Bmi was taken over by IAG last year.  Virgin hopes these domestic flights will  feed traffic onto its international service. Virgin says Little Red will compete with BA on domestic air routes.  BA operates around 52 daily flights between Heathrow and Aberdeen, Edinburgh and Glasgow. BA also runs services to Scotland from Gatwick and London City airports.Apparently Virgin has partnered with a number of brands “to offer exclusive products on board including Irn Bru on Scottish flights, plane shaped Tyrells crisps and Bacardi Martini miniatures. It will later offer Krispy Kreme doughnuts, yoghurts from The Collective Dairy and Rude Health granola” !  Why ?!

    http://www.airportwatch.org.uk/?p=494

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