Well someone has finally admitted what the rest of us known for quite some time – that Virgin will have trouble competing if the BA/AA tie up goes ahead, and they’ll have to seek a partner.
FlightGlobal and ATI have published an interview with the Bearded one during the inaugural flight from Heathrow to Accra, Ghana.
And here’s the the choice quote
“Ultimately we may have to [consolidate],” said Branson during Virgin Atlantic’s inaugural flight between London Heathrow and the Ghanaian capital Accra
“If the playing field is so tipped against us that it is almost impossible to be an independent airline, we may come to a position where we have to consolidate. But this is not something we want.”
Of course, Virgin is trying to keep its cards to its chest – it’s pretty darn obvious who Virgin want to tie up with – and that’s Lufthansa “English Patient” – BMI.
Again to quote the Bearded One
“There is a lot of logic in the two of us tying up,” says Branson. “I don’t think BMI has a future as a standalone airline so I think, at some stage, something will happen there. I think the two of us will be stronger together, rather than separate.”
So looking at BMI, there’s one thing that Virgin is eyeing up, and that’s the slot BMI pool has, that Lufthansa Group isn’t leaveraging well and instead is just putting on filler short haul services.
As Virgin is having to close routes to open new routes (whilst the older route might be loosing money, but that’s by-the-by), it’s using up its entire slot allocation at Heathrow, forcing expansion through Gatwick with leisure routes – a notoriously fickle market.
One of Virgin’s motivators for courting BMI is the airline’s slot pool at London Heathrow. This need has recently been intensified, as the new UK Government has blocked a third Heathrow runway.
Virgin is using all its Heathrow slots and cannot obtain fresh ones – so to begin a new route, Virgin has to close another. Its new Accra route came at the expense of its Mauritius service. In addition, Virgin is leasing slots with United – and it is rumoured United will want them back sooner rather than later, and thus not extend the lease.
Well, some sense may be coming to Virginland. However, the lack of a Global Alliance partner could really hurt Virgin going forward. Buying BMI is a shortcut to Star Alliance membership….
