New U.S. based LCC starting soon

[CoopDog]

Looks like Branson is going to enter the LCC mix here in the U.S. soon. This should be interesting.





UK's Branson plans budget U.S. airline
Wednesday July 16, 8:08 am ET
By Daniel Morrissey


LONDON, July 16 (Reuters) - Virgin Group Chairman Richard Branson announced plans on Wednesday to set up a "quality low-cost" airline in the United States by the end of June 2004 to rival JetBlue (NasdaqNM:JBLU - News) and Southwest (NYSE:LUV - News).

"We are planning to get in there and make sure there is a third, very powerful low-cost airline in America," Branson said. Virgin would own under 50 percent to meet U.S. aviation laws.

Speaking at the unveiling of a new premium class service for transatlantic carrier Virgin Atlantic, Branson said the London-U.S. market for first-class and business-class passengers was improving after the worst downturn in years.

"The premium traffic is coming back. SARS is behind us, the recession is beginning to be behind us and there is a lot more activity out there," he said. "The Gulf War is also behind us."

Branson said Virgin Atlantic's new service, which offers the industry's most spacious beds, could attract up to five percent of business-class passengers and 12 percent of first-class travellers from rival British Airways (London:BAY.L - News).

The new service will be launched after the summer, coinciding with BA's withdrawal of its fleet of Concorde supersonic luxury aircraft.

Branson, whose interests span music, trains and telecoms, said the planned U.S. budget airline would be set up along the same lines as Virgin's Australian discount airline Virgin Blue.

"We will start fairly modestly as we did in Australia, maybe 10 or 15 planes," said Branson, adding that a number of institutional partners would be involved in the venture.

Under U.S. law foreign companies are only allowed to own 25 percent of voting rights in a U.S. airline and an economic interest of up to 49 percent. However, last month U.S. Transportation Secretary Norman Mineta urged Congress to raise foreign ownership limits to 49 percent of voting stock.

Branson said he hoped that the United States would permit clauses within the U.S. airline's structure that would result in Virgin taking control should ownership laws be relaxed. By owning less than 50 percent of the company, Virgin would depart from its strategy of controlling the firms it invests in and those that use the Virgin brand.

The planned airline would be started from scratch, Branson said. "Our philosophy is that (is) the best way to build a company." He added that no decision had been made yet on whether the airline would use Boeing (NYSE:BA - News) or Airbus (Paris:EAD.PA - News; XETRA:EAD.DE - News) aircraft.

 

[Captainjerky]

New Airline

Hey, this guy knows how to run an airline/business. Where do I apply? My resume is updated and ready, and Skyway/Midwest (I fly for Skyway) is a career dead end. Career advancement at my company has about the same potential as that of an Iraqi General right now. I'll be the first to apply when he starts accepting resumes.

 

[AAflyer]

Get ready, I think a lot of pilots will be in line to get their resume in first.

AA

 

[General Lee]

Since it will maybe start in June 2004, I wonder where they will base their ops? They will probably scout around looking for a good starting point----maybe STL when AA leaves, maybe PIT if USAir downsizes there, maybe COS in the West. It will be interesting.

Bye Bye--General Lee

 

[WrightAvia]

How about Spencer, Iowa? They are used to Low Cost Carriers there.

 

[FLB717]

Hey General

maybe it will be ATL, we both apply and be Sim partners

 

[General Lee]

FLB,

Su-wheat. That would be fun. Ofcourse, I have to ask who would be in the left seat, or would we jump back and forth?

Bye Bye--General Lee

 

[Pig]

Anyone think he'll name it American Virgin? Think of the logo possibilities.

 

[TanJMcAdams]

The American Virgin is extinct, right?????

 

[Jake]

Branson may know how to start a company but he sure doesn't know how to read the news and financial pages. There are already three "very powerful low-cost airlines in America" - Southwest, AirTran and Jetblue.

 

[Skank]

I think "Sir" Richard can read the financials better than most. No doubt he will be a factor in the U.S.

 

[rjcap]

Sir Richard is a slick marketer. He probably has determined a market niche and will exploit it at the expense of the major carriers.

This will just accelerate the downsizing of the big 3 or 4 or 5 however you look at it.

 

[b757driver]

Don't Let Looks Fool You!

Hey Jake -

Sir Richard is a VERY astute business man and more than people give him credit for. How do you think he got to where he is today & do you think he got a knighthood from HM Queen Elizabeth II by selling popcorn on a London street corner?

Don't under-estimate the man! I have watched him over the years (not without pains I might add) and seen him come back from the brink a couple of times and go on to bigger and better things.

You should read some of his biography - it's pretty impressive. Just a few examples of his history in airline management - started Virgin Atlantic with just one 747 in the early 80s into what it is today; fought a legal battle against the might behemoth British Airways in the high court and won including damages; started the Aussie Virgin Blue a few years ago and that airline is going leaps and bounds and making a dent against national flag carrier, Qantas.

If this becomes reality, it might very well turn into another JB phenomenon. One thing I have learnt in over 25 years in this business on whether an airline suceeds or fails, is who you have at the helm. There are plenty of owners/CEOs out there only interested in lining their pockets, not remotely interested in their people, not understanding the dynamics of "if you look after your employees, they'll look after the customers etc." Branson is a mastermind in looking after his people and also brand imaging. Rest assured, he has done his homework and he would never put his name or the Virgin brand on a half-baked idea. Just take a look at some other compatriots in this league and the airlines they have built - Herb Kelleher (retd.) & David Neeleman.

One thing is for sure, interesting times are ahead. Watch this space!

 

[klhoard]

Virgin

And most importantly, all of his F/A's double as runway models. . .

 

[Jake]

Don't get me wrong. I think Branson is a good business man and knows how to start a business (as I said in my original post). What he doesn't realize, or is not willing to admit for some reason, is that there is another carrier in the US that is growing by leaps and bounds and is already considered by most to be one of the leading LCC's in the country. Considering the number of times Delta has unsuccessfully tried to put AirTran out of business, I would say AirTran has established itself as a "very powerful LCC".

Having said that, I certainly don't mind Branson's oversight of a significant player in the industry. Let him jump into the market and take on Jetblue and SW. The three will fight and claw for market share. Meanwhile the underestimated AirTran will continue to gain ground in the background. Trust me, flying for an airline that is thriving yet still under estimated is a good thing.

I just felt that if Branson was doing all of his homework he would have realized that JetBlue and SW are not the only two powerhouses in the US - just the two with a better marketing plan at the present time. My comment was made with a great deal of "tougue in cheek". Underestimating anyone or any company is something that you will not find by any AirTran employee - that's how you stay a "powerful company".

Fly safe

 

[General Lee]

Jake,

Quit bragging, it makes you look insecure. Ok, you work for Airtran and it is doing well for the moment---thanks for including it in your "top 3 LCC's." Is Airtran bigger than ATA? Delta knows Airtran is out there and has started its own LCC that will have a large market share on the east coast and eventually both coasts. Branson will realize that his "virgin brand" will have a lot of LCC competition----including Spirit, Frontier, and America West (which again is larger than Airtran and is a LCC)----and will find out that the US is not Australia with one large Major (Qantas) and a bankrupt national carrier (Ansett).

Bye Bye--General Lee

 

[trainerjet]

Jake,

Quit bragging, it makes you look insecure.

General,

I see you have adopted Surplus 1's tactics of chastising others for doing what you regularly do. Evidently it is ok for you to brag about how well Delta, Song, DALPA, etc. is doing, however when "Jake" does the same thing about his company, you tell him to "Quit" since it makes him "look insecure".

Seems a little like bully tactics to me. Unseemly. Insecure.


Right, General??

 

[General Lee]

Trainerjet,

I have no problem when people back up their statements with facts. Jake did not do that. He made his claim that Airtran was the 3rd largest LCC---which is wrong because America West and ATA are bigger. When I state things about Delta, I usually point out the positives about Song etc--like the frequent flyer programs etc, and let it stand on that. I do not try to slam the others. I stated that Airtran is doing well and I frequently point out that they do well on routes from ATL and other point to point pairings, but I do not point out personal stuff like they have a lot of scabs etc. I have been very nice, and I just pointed out that his statement sounded insecure---and if you read it it does. If you can point out my weaknesses, I would appreciate it----and back it up please. (I know I have spelling problems sometimes)

Bye Bye--General Lee

PS--Maybe I was a bit harsh--and I apologize to Jake

 

[AFcitrus]

General,

Okay, let me rephrase. There are already several powerful LCC operating in the US. I used AirTran as an example because I am more familiar with AirTran's financial situation, size, route structure and fleet.

You made my point for me - Branson doesn't consider anyone except Jetblue and SW as competition over here. There are several LCC's that he will have to contend with when he gets here. He is an incredibly talented entrepeneur however, it is very foolish of him to underestimate the LCC market in the United States.

As to your statement that I claimed AirTran is the 3rd largest LCC in the US, please follow your own advice and use facts. If you can find that I said AirTran was the 3 largest LCC anywhere in my post please show me where. What I said was
"There are already three "very powerful low-cost airlines in America" - Southwest, AirTran and Jetblue." There are probably more but I was concentrating on the company that I know most about - my own. I also said AirTran is growing by leaps and bounds and is already considered by most to be one of the leading LCC's in the country. That is an opinion based on what I see and read in the media.

I think what really ruffled your feathers is that I said Delta had unsuccessfully tried many times to put AirTran out of business. That IS a fact and since you couldn't contradict me on that idea you decided to get nasty and call me a "bragger" and "insecure". Let's let the folks on the board decide who is more insecure.

I think it is really funny that when someone shows some pride in their company, something that there isn't a whole lot of these days, He is labled as "bragging" and "looking insecure". This whole board is about people's opinions. Sometimes those are backed up with facts while other times they are not. I was raised to appreciate diversity of ideas and respect others' opinions. General, maybe you need to go back to charm school. Just my opinion.

 

[Jake]

OOPS, I used the wrong computer for that post. Ditto from Jake!!

 

[FLB717]

Gentleman

PISTOLS AT DAWN,..... 10 PACES

 

[General Lee]

Jake or AFcitrus,

I am glad that you have pride in your airline. That is good-- we all should have pride in who we work for. The part I don't think is correct is Delta trying to put Airtran "out of service." I don't think you've proven that. There are government laws protecting airlines from that. No one actually tries to put another airline out of business---usually it is the airline itself that does that---through a crash or shoddy maintenence. If one airline only lowers fares out of one hub and not the others----the government is all over that. Sure, Airtran has proven to be a major thorn in Delta's a$$, but we have tried to stick to our plans and even created a LCC to try to combat the others. We know your costs are lower, and we are in the process of lowering ours. But, our airlines are not exactly alike---you are a LCC, and we have INTL flights, transcons, and large hub and spoke operations with many more RJ's. You can never really compare our two---more likely would be Airtran versus Song when it is up and running fully in another year. After our restructuring and Song's growth, we then shall see how the both of our airlines are doing.

Bye Bye---General Lee

 

[DC10]

Associated Press
Brandon Wants in on U.S. Airline Business
Wednesday July 16, 8:36 pm ET
Virgin Group's Branson Hopes to Enter Low-Cost Airline Business in United States


LONDON (AP) -- Virgin Group chief Sir Richard Branson said Wednesday he hopes to enter the low-cost airline business in the United States.
Branson, whose Virgin Atlantic Airways flies trans-Atlantic, said he hoped to take a 49 percent financial share in a new low-cost carrier with a 15- to 20-plane fleet in the first half of 2004. It would not operate under the Virgin brand, he said.



Notice the last sentence. Without the Virgin brand, the new 'American Virgin' will simply be a new LCC with 49% of the investment coming from Branson.

Branson has had a lot of success with Virgin Atlantic, but let's look at his other endeavors. Virgin Blue (Australia) is extremely successful, but remember that the concept of a low fare airline did not exist in Australia before he came along. I think that anybody could have been successful starting that airline at that time. Ansett had recently gone into liquidation, leaving Qantas with a monopoly on Australian domestic trunk routes. Virgin entered the scene and started charging 10% of Qantas' fares.

Virgin Express (flying 737-300s and -700s from a Brussels hub) has been on the verge of bankruptcy since Virgin took control almost 10 years ago. Admittedly, things have started to improve in recent months but it's hardly a fine case study of a well managed low fare airline.

Finally, if you read pprune.com as I do, you will notice that Virgin Atlantic pilots seem to be among the lowest paid and most disgruntled in the industry. I don't think I have ever read a positive post from a Virgin pilot on that board.

Not quite so rosy when you see the whole picture.

 

[AA717driver]

DC10

If you go to pprune.org on the D & G forums(Australian forums), you will find the Virgin Blue pilots as enthusiastic as the JB people here. I think Branson learned his lesson on Virgin Express--that is, never buy someone else's problems.

VB pays about what JB. I don't know why V Atlantic pays so poorly(I heard they offer a lot of perks but I don't know).

VB is a fun place to work and their formula is working in Aus.

As for too much competition in the LCC market, I think the whole market has changed and the big 5 may be heading down the same road as PA, EA , TW and BN--no one would have forseen that in the mid-70's. TC

 

[General Lee]

AA717,

The reason Virgin Blue does so well is the lack of competition in Australia. That was a smart move on Branson's part because the only giant was Qantas, and they were over charging. Virgin Express in Brussels is doing very poorly. They have a lot of competition, and they only serve 12 cities now from Brussels, which is a lot less than they had 2 years ago. Virgin Atlantic is a very low paying carrier also. The only good thing about their trips are the nice resorts they stay at. So, if branson tries to throw his LCC airline into America---he will have to contend with:
1. Southwest 2. Jetblue 3. America West 4. Airtran 5. Song 6. Spirit 7. Frontier 8. Alaska 9. ATA 10. USair 11. Delta 12. United and it's LCC 13. American 14. Continental 15. Northwest and all of the RJ's out there that do not exist in Australia. Get the point?
It AINT gonna be easy---and the bible belt people will think it is a sin to fly on a "Virgin."

Bye Bye--General Lee

 

[rjcap]

That was a smart move on Branson's part because the only giant was Qantas, and they were over charging.

What, Delta, AA, and United don't gouge their customers?

Its a frickin crime what the major airlines charge their customers for what is at best average service. Considering that more and more mainline flight listings are now being flown by RJ affiliates it is even more insulting that pax are recieving lower and lower quality of service while paying mainline ticket prices purchased from a mainline carrier.

I will be the first to admit that ASA's customer service is abysmal. In many cases it is getting worse especially in Atlanta. If this is how our customers are treated on a daily basis they will flock to the newer carriers like Branson.

 

[Heavy Set]

What, are you kidding? I'll gladly pay an additional $500 for a dried-out, tire-like piece of beef with smelly greens and a 5-year old piece of fudge cake. Plus, the ice "smells" better on UAL or AMR - it probably started in the toilet - I'd easily pay a premium for better smelling ice....

 

[RJPilott]

dam.. and i thought the regional thread was loaded with a bunch of windbags. Holy cow...

In case you havent noticed people... Branson is in bed with ACA. ACA is getting 757's by 2004.....lol

Gen Lee... awesome car... awesome show... awesome chick.. but dude.. you have entirely WAY to much time on your hands... try porn websites.. works for me...

 

[typhoonpilot]

DC10 beat me to the punch. While Sir Richard's proposed airline in the United States will be well financed and start off with a bang it is in no way a guarantee that it will be as good as Southwest has been and JetBlue appears to be. The thing that sets those two apart from the other U.S. LCCs is the way they treat their employees. The airline might be successful, but will it really be a good place to work ?

The are numerous pilots leaving Virgin after 7 plus years due to the low pay and low morale. In the class behind me at my new airline was a Virgin Atlantic 747 classic captain who was furloughed out of seniority after 9-11. In my class there was a 7 year A340-600 First Officer. I've also run into numerous one and two year pilots that either bailed or were furloughed.

One pilot left Emirates to go to work for Virgin Blue back home in Oz and apparently regrets the decision. They work their butts off there and the pay isn't great. The reason that some like it is that they were all out of work Ansett employees who are just thankful to have a job. That said, Sir Richard did buy them an island to holiday on

I'm reading a book right now on Chinese history. It describes how Chiang Kai Shek was nothing more than a well backed Shanghai criminal who enriched himself and his cronies at the expense of the Chinese people. The story we learn growing up in America is far different thanks to a well planned and executed public relations campaign. I suspect Sir Richard Branson's story isn't as rosy as we are led to believe.

Few things are ever they way they seem, still, a job is a job and lots of people are looking for one right now.


Typhoonpilot

 

[iluvetops]

typhoonpilot

he was not furloughed out of seniority, he RESIGNED from Virgin.