Little Red rides into BA’s hood; how will she fare?

April 4, 2013

Ambiance, Services

Virgin small Little Red rides into BAs hood; how will she fare? Virgin Atlantic’s new short-haul service “Little Red” may be separated by an ocean from its American cousin, but the two are united in a modern passenger experience – but also elusive profits that question business models.

Virgin Atlantic prides itself on doing things differently. At a time Europe’s major carriers are off-loading routes to a LCC subsidiary, Virgin launching a full-service short-haul carrier certainly goes against the flow.

Or is Virgin Atlantic maybe venturing down too far?

No, will say passengers welcoming Virgin’s 31 March service to Manchester, 5 April to Edinburgh and 9 April to Aberdeen, which will provide not only Virgin flair in the short-haul market but direct competition to BA, the sole carrier on the routes after it acquired bmi.

Little Red feels distinctly Virgin. Pop music emanates from speakers as purple mood lighting seeps out on the sidewalls and ceilings of the A320s wet-leased from Aer Lingus but in Virgin livery and with Virgin cabin crew. The all-economy 174 seats, six short of the maximum certification, have adjustable headrests and leather seat covers that vary between chocolate brown and purple depending how the lights hit.

Service was simple with a full bar offering. A giant chocolate chip cookie was the only food option. In comparison BA has a snack basket with a few choices. The service ended with a small pack of Love Heart lollies.

Unlike Virgin America or Virgin Atlantic long-haul, there are no personal TVs or in-flight connectivity, but with much shorter flights, use would be limited. There is also no premium seating – not even middle seats that fold down to be a workspace, as on BA – and it remains to be seen how Virgin’s Upper Class passengers respond to this when they connect. Little Red is not radicalising the passenger experience – and forcing change from competitors – the way Virgin America and Virgin Australia did. (The latter has done so profitably while Virgin America’s profits have been very limited.)

On day four of the operation, so still new, I was one of 21 passengers – including one uniformed employee deadheading – on Little Red to Manchester, equating to a 12% load factor. This despite my flight being the first of the day, leaving Heathrow at 9:30 in the morning, allowing for ample connections as Virgin’s first wave of long-haul flights arrive by then.

The operation was not smooth. Virgin’s long-haul flights leave Heathrow from terminal three but short-haul is out of terminal one. Connecting passengers have to use an airside bus transfer. Virgin’s IT at the gate was down, requiring agents to write down our seat numbers as we boarded. Whatever the objective, it failed: we were asked to reproduce our boarding passes once seated while they wrote down our seat numbers again. Agents disagreed if they should take the stub or larger portion of the ticket, so in the end took neither. We arrived 15 minutes late – this on a 35 minute flight.

Can Virgin scale the operation up? History does not provide a kind precedent.

Lufthansa sold short-haul-focused bmi because it was unprofitable yet Virgin reckons it can create value on routes where bmi could not. (BA’s plan for bmi is to shift slots to long-haul services while others bolster its greater network.)

Virgin is using three of its own daily Heathrow slots for the Manchester services, meaning it is sacrificing long-haul opportunities, whereas the Heathrow slots for Virgin’s Aberdeen and Edinburgh are remedy slots, and can only be used to those and four other cities – none prime long-haul routes.

Some argue that without Little Red Virgin would have no domestic feed, but Virgin received interline traffic from BA before the bmi acquisition, and BA as a condition of the acquisition agreed to effectively keep bmi’s interlines intact.

A few carriers codeshare on Little Red, but its main target is putting additional passengers onto its long-haul network. But that incremental revenue may not offset Little Red’s cost. At a 12% load factor obviously not, but even if Little Red achieved the 70% or 80% short-haul load factors of Europe’s major carriers, short-haul for them is still loss-making to feed (often) profitable long-haul. But now they are no longer willing to sustain short-haul losses, hence Iberia Express and greater roles for Germanwings and Transavia.

I agree with those who see Little Red as symptomatic of strategic challenges at Virgin, which seemed to assume it could acquire bmi without having a Plan B. Some reckon, and I concur, that the Virgin ethos passengers like so much inhibited the ability of the carrier to realise and respond to the changing world around it; Virgin drank too much of its own corporate Kool-Aid.

Since Little Red was announced Virgin has a new CEO as Delta’s ownership and pending joint-venture, so there are opportunities for someone to pressure, even rescind, Little Red.

This is the crux of the passenger experience. Passengers want it to be good, but to last it must be sustainable.

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About Will Horton

Originally from New York City - now lives in Hong Kong. An active follower of the air transport industry interested in how the Asia-Pacific region's emerging airlines are addressing the passenger experience given their high-fuelled growth. Will also writes for the Centre for Aviation. He previously worked for Flightglobal.

View all posts by Will Horton
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One Response to “Little Red rides into BA’s hood; how will she fare?”

  1. Headancer Says:

    In the North Of England business and indeed tourists vote with their feet. Flying via London ia an anathema to most who prefer direct flights OR one stop using airlines who have supported Manchester !

    Emirates , Etihad and QATAR, flying via London is outdated !

    Reply

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