Virgin Atlantic eyes airline alliance

 
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Virgin Atlantic is close to joining an alliance with other airlines, marking a turning point after 30 years of fierce independence, according to founder Sir Richard Branson.

The tycoon told reporters in India that “we may finally give up and become part of a bigger alliance”, with further details expected in the next three to four months.

Loss-making Virgin Atlantic has been battered by surging fuel costs and aviation taxes in recent years, and in 2010 hired Deutsche Bank to examine various options for the firm.

The airline has been critical of alliances in the past, campaigning against a tie-up between British Airways and American Airlines.

“There are anti-competitive alliances and there are competitive alliances,” Sir Richard explained yesterday. “If someone controls 60 per cent of the market they become dominant, and if they take up with someone who controls 30 per cent of the market then they become even more dominant.

“If Virgin has one alliance, BA has 30 of them. We are a minnow compared to our competitors.”

He said it is “unlikely” that Virgin Atlantic would join BA’s OneWorld alliance. Virgin Atlantic was last year linked to Star Alliance, of which 49 per cent shareholder Singapore Airlines is a member, but neither Sir Richard nor chief executive Steve Ridgway would comment on the identity of any possible partners.

“It’s best to do these things behind closed doors,” said Sir Richard.

Virgin Atlantic is also examining additional routes in India, after reintroducing services to Mumbai this week, having pulled out of the city three years ago on financial grounds.

Flights to Hyderabad, Bangalore and Goa are on the cards – though Sir Richard admitted that the routes are among Virgin’s “top ten” list of prospective routes and are unlikely to be launched soon.

He used the potential routes to bang the drum for greater capacity at Heathrow Airport, pointing out that more than 50 per cent of passengers on the new Mumbai flights are using Heathrow as a hub to travel to the United States.

Plans for a new Virgin Atlantic route between Heathrow and Moscow appear to have fallen through this week, after the Civil Aviation Authority handed a licence to easyJet instead of Virgin – a decision Ridgway yesterday said the firm could appeal.