Virgin Atlantic is to drop its ties with Japan and the business gateway to India in a shake-up that leaves Sir Richard Branson’s 30-year-old airline looking ever more like the British division of Delta Air Lines, its 49 per cent shareholder.
In a very public end to three decades of the global flag-planting so loved by Sir Richard, Virgin has announced that from the end of January it is ceasing flights to Tokyo — the first non-American international route launched by the airline back in 1987.
In addition, the carrier is coming off the London-Mumbai route often touted as a key link between British and Indian business communities. Virgin launched its service in 2005 and it, too, will end in January.
Virgin is also ditching its seasonal services to Cape Town after this winter and to Vancouver when the summer schedules end next month.
Aircraft and Heathrow’s take-off and landing slots are to be redeployed to beef up transatlantic services and offer more route options for the American travellers on Delta, the world’s largest airline by passenger volumes.
Advertisement
Delta bought 49 per cent of Virgin from Singapore Airlines for $360 million last year. Fifteen months later the hand of Richard Anderson, Delta’s chief executive, can be seen in the ditching of loss-making routes as Virgin promises to become profitable this year on the way to forecast record earnings in 2018.
Virgin Atlantic chalked up losses of £51 million last year, halving the deficit reported in the previous year.
“What we have done [with the routes that have been cut] is to ask whether they are successful financially, whether we could change what we do and whether [the route] is strategically critical,” Craig Kreeger, the chief executive who joined Virgin from American Airlines 18 months ago, said.
After the route closures, which also include the spring axing of Sydney, Virgin will fly to only six international destinations outside of North America and the Caribbean sunspots.
In the United States, it is opening a new service to Detroit — a hub for much of the central and northern United States — adding flights to New York and Los Angeles and increasing seasonal services to Miami, Atlanta and San Francisco.
Advertisement
According to Chris Tarry, a leading aviation analyst, the redrawing of the network is logical and sensible. “It will feed in the high-value passengers from the Delta network,” he said.
“Virgin has not had the penetration [in the US market]. If it is going to be profitable, it has to go where the traffic is. It has to go where markets are and the US-UK is a good market.
“This can be seen as Delta looking to realise value from their investment [in Virgin].”