Is Virgin Atlantic on the verge of extinction?

Courtesy Virgin Atlantic

Courtesy Virgin Atlantic

RIVALS Virgin Atlantic and British Airways have never been the best of friends. The long-running feud between the two airlines is taking on a new confrontation since the `dirty tricks” campaign in the early 1990s when Virgin chief Richard Branson successfully sued BA for  poaching Virgin passengers and staff and for scandalizing his name.

The two airlines have long been engaged in fierce tussles over landing slots at London Heathrow.  Sir Richard has expressed dissatisfaction with the advantage held by BA, enhanced by IAG’s acquisition of British Midland International and BA’s alliance with American Airlines.

In the latest bout, Sir Richard said he would bet £1m that Virgin would still exist in five years, following an alleged comment by BA and International Airlines Group (IAG) chief Willie Walsh that the Virgin brand would soon disappear. IAG, a British-Spanish holding company, owns BA and Iberia Air and has minor stakes in smaller operators that include Flybe, Royal Air Maroc and Air Mauritius. The winner of the bet will distribute the money to the respective airline’s staff.

Courtesy time.com

Courtesy time.com

Sir Branson, who founded Virgin 28 years ago, insisted: “We have no plans to disappear.”

Doubt over Virgin’s future took root in Delta’s interest in acquiring more than the 49-per-cent stake that Singapore Airlines owns in Virgin. (See Singapore Airlines in discussion to sell Virgin stake to Delta, Dec 4, 2012). Since European Union (EU) regulations do not permit majority ownership by a foreign carrier, rumours had it that Delta’s partners in the EU – Air France-KLM – would then acquire part of Virgin’s 51-per-cent stake. This would expand Delta’s cross-Atlantic operations and secure it slots at London Heathrow, fanning suspicion that it might well mean the end of the Virgin brand.

Courtesy news.delta.com

Courtesy news.delta.com

Sir Branson had said it was time that Virgin form alliances to ensure its survival.

Five years is not a long time but anything can happen in the volatile airline business. Admired as a shrewd entrepreneur and respected for his management expertise, Sir Richard is an industry enigma. Even as he reduces his stake in his “baby”, there are ways to retain the Virgin identity – at least for five years. New majority owners may want to retain Virgin brand loyalty and continue to ride on Virgin’s popularity.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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