Virgin likely to be in the red again, and wants lower charges if Heathrow gets a 3rd runway
Virgin Atlantic wants Heathrow to reduce its passenger charges once (perhaps that should say IF) its 3rd runway opens. Virgin CEO Craig Kreeger said charges are already too high. Virgin, naturally, wants flying to be as cheap as possible – or growth in numbers is slower (less profit). Virgin is not doing very well at present. The Times reports that Virgin Atlantic’s pre-tax profit, excluding exceptional items, rose by 2.2% to £23 million last year – the 3rd successive year it has been in the black. However, it may make a loss this year, because it faces competition from British Airways and increasing capacity in the North Atlantic market. BA will start low cost transatlantic flights from £86 this summer, on a new airline called Level, from Barcelona.They also have to contend with lower air fares, rising fuel prices, fears of London terrorism and currency fluctuations that will hit profits. Virgin faces weak consumer confidence since the £’s fall against the US $, making trips from the UK to the US, its main route, more expensive. Virgin has to pay more for its fuel and new planes now, as these are bought in dollars. It is not yet known if many US tourists will be wary of coming to London, after the killings in Westminster. Virgin’s air cargo turnover fell 15.9%, due to weaker sterling and overcapacity in the market.
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Virgin calls for drop in charges after Heathrow expansion
28TH MARCH 2017 (Travel Mole)
from 2nd Feb 2017 ?
Virgin Atlantic is calling on Heathrow Airport to reduce its passenger charges once its extra runway opens.
Speaking as the Transport Secretary Chris Grayling unveiled his draft National Policy Statement on airports, outlining what Heathrow must do as part of its expansion, Virgin CEO Craig Kreeger said charges are already too high.
“We are pleased that the Government, the CAA and the airport are talking about the importance of affordability, but the devil will be in the detail and strict cost control is absolutely vital,” he said.
“With passenger charges at Heathrow already the highest in the world, it is simply untenable to increase them further to fund expansion.
“As tens of millions more passengers start using the airport when the runway opens, our customers would expect charges to fall over time to more internationally competitive levels.”
He added: “Expansion is an exciting, once in a generation opportunity to significantly increase airline competition at the UK’s hub airport.
“When one airline group has a stranglehold on almost 60% of the slots at the airport, it inevitably limits the amount of competition that Virgin Atlantic and other carriers can provide.
“If the full benefits of the new runway are to be realised, new capacity must be allocated in a way that brings more choice, lower fares and better service for customers.”
Meanwhile, Liverpool Airport CEO Andrew Cornish said he supported the call for Heathrow to add more domestic links as part of the expansion criteria.
“We have been a long-time supporter of Heathrow’s plans for a third runway and will respond to the Government’s consultation supporting the need to secure these new domestic links, knowing that regional airports such as Liverpool can benefit by the future opening up of access to the UK’s hub airport for improved worldwide connectivity,” he said.
http://www.travelmole.com/news_feature.php?news_id=2025763&c=setreg®ion=2
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Virgin faces turbulence from terror and sterling
By Alex Ralph (Times)
March 28 2017
The airline is also facing competition from British Airways and increasing capacity in the North Atlantic market. Group revenue dipped from £2.78 billion to £2.69 billion
Lower fares, rising fuel prices and currency fluctuations will push Virgin Atlantic back into the red this year.
The airline is facing weak consumer confidence since the pound’s fall against the dollar, making trips to the US, its main route, more expensive. Virgin Atlantic is also battling against rising costs because it buys fuel and aircraft in dollars and is suffering after terrorist attacks.
Craig Kreeger, chief executive, said that it was too early to tell how last week’s attack [in Westminster, people on Westminster Bridge killed by car and policeman stabbed to death near Parliament] would affect the number of tourists flying to the UK. “It’s a painful reminder of the new reality we live in,” he said.
The company is also facing competition and increasing capacity in the North Atlantic market, on which the airline has focused since going into a $360 million joint venture with Delta Air Lines in 2013.
It faces competition from British Airways, which has launched Level, a carrier offering transatlantic flights from £86 this summer, from Barcelona.
Virgin has opened its own new routes, including a daily service between Heathrow and Seattle and it plans to introduce wifi from June.
Group revenue dipped from £2.78 billion to £2.69 billion as cargo turnover fell 15.9%, despite increased volumes, because of weaker sterling and overcapacity in the market, and as the number of passengers carried fell by almost half a million to 5.44 million.
Airline unit passenger revenue, a proxy for average fares, fell 4.3 per cent on a constant currency basis, as Virgin cut prices.
The fall in revenue was also partly caused by a shift towards smaller Boeing 787-9 aircraft and away from Airbus A340-600s, which Mr Kreeger said had 70 to 80 fewer seats and were more fuel efficient and quieter. It helped, however, to boost its passenger load factor, a measure of how full its planes were, by 1.9 percentage points to 78.7 per cent.
A drive to strip out costs and a strong performance in its Virgin Holidays business, where underlying profits rose to £19.1 million, helped to support the bottom line.
Pre-tax profit, excluding exceptional items, rose by 2.2 per cent to £23 million last year. It is the third successive year that Virgin Atlantic has been in the black.
Savings also came from a £191 million reduction in fuel costs as the two-year rout in oil markets fed through. That was offset by £179 million of losses from hedges that the airline had put in place. Statutory profit before tax came in at £231.6 million.
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Virgin CEO says Heathrow expansion ‘must benefit passengers’
By Aaron Greenwood
6th February, 2017
The CEO of Virgin Atlantic has called on planners to ensure any expansion to Heathrow Airport primarily benefits passengers and generates increased competition among carriers.
Responding to the publication of the government’s National Policy Statement on airports to enable Heathrow expansion, Virgin Atlantic CEO Craig Kreeger commented: “We support Heathrow expansion provided that it delivers for passengers a transformative increase in airline competition and genuine value for money. We will study the Government’s National Policy Statement to ensure its provisions do just that.
“Expansion is an exciting, once in a generation opportunity to significantly increase airline competition at the UK’s hub airport. When one airline group has a stranglehold on almost 60% of the slots at the airport, it inevitably limits the amount of competition that Virgin Atlantic and other carriers can provide. If the full benefits of the new runway are to be realised, new capacity must be allocated in a way that brings more choice, lower fares and better service for customers.
“We are pleased that the Government, the CAA and the airport are talking about the importance of affordability, but the devil will be in the detail and strict cost control is absolutely vital. With passenger charges at Heathrow already the highest in the world, it is simply untenable to increase them further to fund expansion. As tens of millions more passengers start using the airport when the runway opens, our customers would expect charges to fall over time to more internationally competitive levels.”
http://www.traveldailymedia.com/246780/virgin-ceo-says-heathrow-expansion-must-benefit-passengers/
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