The leisure market has stayed strong despite a weaker pound and the so-called Trump effect. Lee Hayhurst spoke to Emma Jones of Virgin Atlantic
Virgin Atlantic says a focus on living up to its reputation while operating more efficiently has ensured it remains profitable in a challenging market.
Emma Jones, vice-president for sales operations, said factors that made 2016 challenging, such as Brexit, consumer uncertainty and security concerns, have continued this year.
However, the airline recorded a third successive year of profitability in 2016 when it saw a 2.2% or £500,000 improvement to £23 million.
Jones said: “We achieved another profitable year, but it was a very challenging and unpredictable macroeconomic environment.
“We grew market share and load factors, despite seeing capacity increase in the market with long‑haul low‑cost carriers like Norwegian.
“We had headwinds around the value of sterling, Brexit, consumer uncertainty and security events that have happened in Europe and the UK, and that has continued into 2017.
“So there continues to be a real focus on our internal plans to take costs out of our business, being really disciplined and really focused on new ways of growing our revenues.
“Those headwinds are not fully in our control, so we have to continue to operate as we have always done, while focusing on driving as much value to the customer as possible.”
Fleet expansion
Since 2015, Virgin Atlantic has had an internal cost management exercise in place called ‘fit.nimble’ to reduce costs while continuing to prioritise investing in the product.
This has seen the first of 15 new 787 Dreamliners added to the fleet, while 12 next-generation A350s will start to be delivered from 2019 after a $4.4 billion deal was agreed with Airbus.
The carrier’s A330s are being redesigned to introduce some of the popular 787 Upper Class features like fully-flat seats, larger overhead lockers and mood lighting.
Half of the airline’s fleet will be replaced over the next six years, meaning Virgin will be operating one of the youngest fleets in the world, according to the carrier.
This summer Virgin will become the first in Europe to operate a fully Wi-Fi-enabled fleet and, with joint-venture partner Delta Air Lines, will become the first transatlantic partnership with Wi‑Fi on all services.
Fleet improvements are being complemented by upgrades of facilities on the ground including at Gatwick where Virgin has moved to the North Terminal and created a new Clubhouse.
The airline is in the fourth year of its joint venture with Delta, a partnership that has seen the benefits of scale, and established shared facilities at hub airports such as Heathrow and Los Angeles.
At Heathrow’s Terminal 3 the Virgin Clubhouse is undergoing a refurbishment and facilities are being shared with Delta customers as the two airlines work more collaboratively.
Regional flights
Virgin works closely with codeshare partner Flybe on connections to Heathrow and Gatwick and will strengthen this partnership, but it is also ramping up direct US services from regional UK airports.
This summer an extra 65,000 seats will be on offer between Manchester and the US with the launch of three routes, to New York JFK, Boston and San Francisco.
Capacity between Glasgow and Orlando has been increased by 20% and direct flights from
Belfast will increase by a third in summer 2018.
So far this year, Virgin has launched two new flights from London with daily links serving Seattle from Heathrow and a weekly Gatwick service to Varadero in Cuba.
“We are flying to more US destinations than ever and with the Delta joint venture we are connecting to more than 200 destinations through our gateways. That makes us a big player for our partners,” Jones said.
The good news for Virgin’s trade and corporate partners is that two-thirds of the carrier’s revenue comes from its B2B partnerships.
US visitors
Jones said the transatlantic market for both leisure and corporate bookers remains resilient, and Virgin has not seen signs of a so‑called ‘Trump effect’ with people opting to boycott the US.
The challenge of the weaker value of sterling has had a flipside by making it more attractive for US customers visiting the UK.
“We will be looking closely at who’s coming inbound to London and Manchester and how we can connect those people around the UK with our association with Flybe,” said Jones.
“In a market that is often seen as being dominated by price, the Virgin Atlantic experience continues to drive brand loyalty.
“We have done a lot of activity driving additional value to the customer, not just focusing on price.
“Under the Delta joint venture we are absolutely aligned that we put the customer at the heart of everything we do. We really want to be a truly consumer-centric organisation – that’s absolutely the focus for us.”
Virgin Atlantic: Facts and figures
• Virgin Atlantic and Delta Air Lines operate up to 39 daily flights across the Atlantic, serving 21 destinations.
• More than five million people flew with the Delta/Virgin Atlantic joint venture in 2016, including 47,000 customers a month connecting to 223 destinations.
• There will be an additional 65,000 seats on Virgin Atlantic flights from Manchester in summer 2017 compared with summer 2016.
• Virgin Atlantic launched the first connection between Manchester and San Francisco this spring, one of three new routes alongside Boston and New York JFK.
• Virgin Atlantic has added 20% more seats from Glasgow to Orlando this year and it will increase direct Belfast flights by a third in summer 2018.
• Virgin Atlantic will offer flights from Heathrow to Barbados this winter as well as four Las Vegas flights for the Consumer Electronics Show in January 2018.
• A refurbished larger Heathrow Virgin Clubhouse with extended brasserie is due to open at the end of the summer in Terminal 3.
• Other new 2017 routes include Heathrow-Seattle and Gatwick-Veradero (Cuba) with Virgin Atlantic, and Gatwick-New York JFK and Heathrow-Portland on Delta.
• Virgin Atlantic opened a new Clubhouse at Gatwick’s North Terminal in January (below).