Virgin Atlantic will be ending domestic UK flights after Little Red has proven itself unprofitable and unable to compete with much larger and the more frequent service offerings by British Airways on flights between London Heathrow and Manchester, Edinburgh and Aberdeen. With load factors peaking at only around 40%, Little Red is not able to be sustained if Virgin Atlantic wants to be a profitable airline, so instead Virgin Atlantic is calling it quits just two years after their initial launch, ending the Manchester route two years to the date of its launch in March 2015 and the two Scottish routes in September 2015.
Virgin Atlantic chief Craig Kreeger says the “time lag” between BA’s acquisition of BMI – which created the opportunity to launch Little Red – and the first flights meant that the new airline “faced an uphill battle” to convert customers.
He adds that the number of slots made available to Little Red was “totally inadequate” to challenge the might of BA.
“While this challenged environment meant Little Red ultimately did not deliver the results we had hoped, this certainly will not dampen our enthusiasm to try new things in the future,” says Kreeger.
Little Red used a small fleet of Airbus A320s from Aer Lingus to operate its routes. The Manchester service will be closed in March 2015 while the two Scottish routes will be continued until September 2015.
Virgin Atlantic says the demand for Little Red services has been mainly from point-to-point rather than connecting passengers – whereas the company had hoped for a high level of connections to Virgin Atlantic’s long-haul network.
Although Virgin Atlantic is “on track” to return to profit by the end of this year, the company says, Little Red has “not been able to make a positive contribution”.
Virgin Atlantic president Sir Richard Branson says the “odds were stacked against us” and the carrier failed to attract sufficient corporate custom. But the long-haul operation is intending to recruit a number of cabin crew from Little Red once the airline closes.
Virgin Atlantic gave domestic flying a go, and failed. Yet with BA and many other LCC flying domestically, Virgin had little chance of securing the marketshare they wanted and their flight loads of around 40% fell far below the industry average of 70-80% for domestic UK routes.
What Virgin will do with the slots is still unknown as the three slots pairs are not fully owned by Virgin and are instead remedial slots released from IAG as part of its BMI takeover and such slots have specific constraints set by the European commission which requires them to be used to serve London to Aberdeen, Edinburgh, Nice, Cairo, Moscow or Riyadh. All destinations are currently not served by Virgin, but also not likely destinations for Virgin either, especially with each market already flooded by a slew of airlines. Cairo, Moscow, or Riyadh all could be served on a daily bases with Virgin’s current fleet, yet each destination would also require an uphill battle against an already flooded market place with tough economic conditions in each location. Moscow and Riyadh, may be the best served by Virgin, but Riyadh would also primarily be a seasonal route and Moscow would have to be approved by the Russian government, which is also unlikely after they denied Easyjet the right after the collapse of BMI.
Either way, the announcement of the end of Little Red is bad news for fliers, competition, and award redemptions. For free flights within the UK using miles, those of us playing the points game will have to rely primarily on Avios awards and their partners as Skymiles resumptions will be impossible once Litte Red is defunct come 2015. Thankfully, a number of LCC still fly domestically and easy connections via other major hubs such as Frankfurt, Paris, and Amsterdam will still be available to the UK via Skyteam and Star Alliance partners.