Virgin Atlantic is spending big money to get its cool back on with the Dreamliner, and its joint venture with Delta should help with the profitability part of it all.
Richard Branson’s Virgin Atlantic Airways Ltd. flew its first Boeing Co. 787 to the Atlanta base of U.S. shareholder Delta Air Lines Inc. yesterday, with the cabin pounding to live music from a synthesizer-wielding dance duo.
While Virgin likes to show it has its finger on the cultural pulse, the in-flight glitz can’t mask the corporate challenges facing a carrier. Virgin has reined in global and local ambitions, scrapping short-haul unit Little Red after little over a year in operation and closing routes to cities including Tokyo and Mumbai, as Gulf carriers led by Dubai-based Emirates roll out luxury networks across most of the planet.
Even the 787 Dreamliner, which makes its first commercial flight to Boston on Oct. 28, is joining Virgin more than a year after debuting with arch-rival British Airways, a carrier that also boasts trans-Atlantic trips using the Airbus Group NV A380 superjumbo model which Branson has ordered yet declined to take.
Chief Executive Officer Craig Kreeger, seeking to return Virgin Atlantic to profit while reviving its reputation for doing things differently, said he’s convinced the $5 billion Dreamliner fleet will establish new service standards in the world’s busiest market for premium travel. Kreeger was appointed chief 21 months ago, four weeks after Delta agreed to purchase a 49 percent stake in Virgin previously owned by Singapore Airlines Ltd. for $360 million.
“The first two years have been about preparing the company for a successful future and the Dreamliner is the beginning of that future,” Kreeger said in an interview at Gatwick Airport south of London before taking off.
Even as it reins in costs, Virgin is striving to remain on trend, introducing Vivienne Westwood-designed uniforms in June, spending 300 million pounds ($480 million) on enhancing customer experience with perks spanning faster in-flight Wi-Fi to new lounges, and trialling the use of Google Inc. Glass computerized eye-wear that enables users to check e-mail or listen to music.
The in-flight bar, so-called upper class seats and premium economy cabin as well as the in-flight entertainment system are all made according to Virgin specifications, with the custom lighting options able to replicate the ambiance of a restaurant or time of day, said Philip Maher, Virgin’s director of aircraft operations.
“Its got a very cutting-edge, but very subtle mood to it,” Maher said at Gatwick. “It’s boutique hotel, not in your face, not a lot of bling, but really very subtly-elegant.”
To support the notion that Virgin remains the last work in stylish air travel, the carrier has recruited two musical acts to perform live during the trans-Atlantic voyage, with the gigs by four-piece Rudimental and duo Gorgon City streamed live from above the Atlantic Ocean via the Internet.
Virgin Atlantic has 17 787-9 planes on order, with the first named “Birthday Girl” to commemorate the 30th anniversary of the company’s inaugural flight from Heathrow to Newark, New Jersey, which fell on June 22. The next planes to be delivered will be used on routes to Washington and New York’s John F. Kennedy airport, as well as to Newark.
The revenue-sharing relationship with Delta helped halve Virgin Atlantic’s 2013 loss to 51 million pounds as sales gained 4.9 percent to 2.98 billion pounds. The airline said last month it’s on course to end annual losses this year and is targeting record profits by the end of 2018.
The deployment plan ramps up competition with BA, though Virgin’s profitable rival maintains a grip at Europe’s busiest hub with a 53 percent share of prized landing slots. Virgin won antitrust clearance for joint operations with Delta last year, allowing coordination of schedules and prices and giving access to a network including more than 40 cities beyond New York.
“There’s been a bit of dating of the product and that’s why things like the Dreamliner are important,” said Stephen Furlong, an analyst at Davy Stockbrokers in Dublin. “With Virgin, you always want to have the perception that it’s cool.”
To contact the reporter on this story: Kari Lundgren in London at firstname.lastname@example.org To contact the editors responsible for this story: Benedikt Kammel at email@example.com Christopher Jasper
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Photo Credit: Virgin Atlantic's new 787 was preparing for take-off as Rudimental and Gorgon City hit new heights. Virgin Atlantic