Virgin Atlantic announced an expansion plan to become Britain’s second flag carrier, adding 84 new routes. They’d fly to 12 domestic destinations in the U.K., 37 European routes, and add 35 long haul routes to places like Delhi, Havana, and Jakarta.
There is absolutely no chance of their announced growth plan happening. It simply isn’t real. It’s pure posturing to bolster their case for government handouts. In fairness, they’re correct that the handouts shouldn’t all go to British Airways – but they shouldn’t be given to Virgin, either.
Heathrow slot pairs have sold for over $70 million each (at favorable times). Virgin wants the British government to give them 150 new slot pairs at London Heathrow.
- British Airways is the dominant carrier at London Heathrow, with 370 of the current 650 slot pairs (takeoffs and landings).
- A new third runway – which BA opposes – will bring about new competition. An additional 350 slot pairs are expected to be distributed.
- It’s expected that slots will be handed out proportionately to incumbents, with BA getting 200 slots of the 350 slots.
- Virgin Atlantic, together with its owners Delta and Air France KLM, control about 10% of current slots. They want an outsized grant of slots.
Copyright: boarding1now / 123RF Stock Photo
British Airways would prefer there be no new slots, but if there are new slots they want the lion’s share. Virgin wants new slots, and that an outsized portion go to them. So they’re now claiming they’re prepared to grow to become a global player. They aren’t. They’d likely lose money on many of the new routes. But a handout from the government worth billions of dollars is on the table, so this is part of their strategy to grab.
Of course, governments and the airline industry today think about slots all wrong.
- Giving slots to airlines at congested airports is a huge subsidy to incumbent airlines, each slot pair is worth tens of millions of dollars.
- Making those slots perpetual property rights of the airline that holds them is a barrier to competition.
Use of slots for a period of time should be auctioned. There’s no justification for inefficient flights, or ghost flights, that airlines operate just to ‘squat’ on slots, since they only way they can lose them is not to use them.
By the way slot controls, which are meant to reduce flight delays, don’t actually do that.