Virgin Atlantic’s Little Red service still struggling to fill more than half of its seats as UK domestic market stops shrinking

Virgin Atlantic’s ‘Little Red’ domestic network

Not such stiff competition after all? In its first 14 months of domestic operations Virgin Atlantic Airways’ ‘Little Red’ domestic network of three routes from London Heathrow (Aberdeen, Edinbugh and Manchester) has failed to achieve a monthly load factor of 50% – a bit flaccid really. It may now be the fourth biggest airline in the UK domestic market, but it had the worst load factor in May of any of the 12 UK airlines operating domestic services.

Data from the UK Civil Aviation Authority reveals that since Virgin Atlantic Airways launched its Little Red domestic operations from London Heathrow at the end of March 2013, the airline has failed in any one month to fill at least half of the seats on offer, on the A320s operated on its behalf by Aer Lingus. However, CAA data is currently only available up until the end of May, so it is possible that average load factors of over 50% may have finally been achieved in either June, July or August.

Chart - Virgin Atlantic's 'Little Red' Monthly passengers and load factor: 4/13 to 5/14

Source: UK CAA.

The best month for passengers so far has been May 2014, though load factors were higher in April, possibly due to the timing of Easter this year. Virgin Atlantic obtained a number of so-called ‘Remedy slots’ as part of the EU process for approving British Airways’ takeover of bmi British Midland. Slots were made available for anyone wanting to operate services to Aberdeen, Cairo, Edinburgh, Moscow and Riyadh. As a result Virgin Atlantic decided to enter the UK domestic market and start operating (with Aer Lingus’ assistance) to Aberdeen and Edinburgh, as well as to Manchester. All of these domestic routes have since been served with between three and six daily flights.

What is not known is how important these domestic links have been in feeding Virgin Atlantic’s long-haul network at London Heathrow. As from today (10 September) Little Red’s flights will operate from the new Terminal 2 (Queen’s Terminal) at London Heathrow, moving over from Terminal 1. However, Virgin Atlantic’s long-haul flights continue to operate from Terminal 3 at Heathrow, which is hardly conducive to efficient and timely connections.

‘Little Red’ #4 in UK domestic market

According to UK CAA statistics for May 2014, Virgin Atlantic is now the fourth biggest UK airline in the UK domestic market with over 63,000 passengers. This is a long way behind the top three of easyJet, British Airways and Flybe and means that Richard Branson’s airline has around 3.7% of the UK domestic market with the three routes that it operates. In terms of load factor it has the worst at just 43.8%. Four airlines achieve a load factor of between 70% and 80%, with easyJet filling over 81% of its seats on UK domestic routes in May.

Chart - UK domestic market top 12 airlines Monthly passengers (and load factor) in May 2014

Source: UK CAA.

Compared with May 2013 passenger numbers are up a minimal 0.5%, but this disguises some significant shifts. While easyJet (+8.0%) and British Airways (+3.8%) have increased their domestic passengers, Flybe has seen a 15.7% decline in domestic passenger numbers as the new management team have made a number of cuts to the airline’s domestic operations.

UK CAA figures are for UK registered airlines only. It should be noted that Aer Lingus operates domestic flights between Belfast City and both London Gatwick and London Heathrow airports, while Ryanair also operates UK domestic services from City of Derry airport in Northern Ireland to Birmingham, Glasgow Prestwick, Liverpool and London Stansted airports.

UK domestic air travel demand peaked in 2005

Last year saw the first year-on-year improvement in UK domestic passenger numbers since 2005, when almost 26.2 million passengers flew. Between 2005 and 2012 the market has shrunk by over 20% to just over 20 million annual passengers. Last year’s figures of 20.65 million were the highest since 2009.

Chart- UK domestic air passengers Annual passengers (m) and change versus previous year

Source: UK CAA.

Dundee to Stanstad

Soon to be counted as an international service? Despite cutting UK domestic capacity by around 20% this summer, Flybe has still launched a number of new domestic links, including between Dundee in Scotland and London Stansted at the start of the summer 2014 season.

 


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Comments

  1. Hobbit says:

    Does this mean that the UK regions don’t need Heathrow as much as they say they do? An interesting situation if that is the case!

    Also, the overall decline post-2005 has a lot to do with growth in railway traffic.

  2. Andrew Sharp says:

    Why the big jump in Little Red carryings in the last 3 months? From less than 50k to over 60k?

    • Frank G says:

      I wonder why there was no mention of Sunday’s news that Virgin Little red will close? Only speculation but still worth mentioning as most likely true. Maybe this article was written before the news broke and wasn’t amended.

      Also no mention of Virgin Atlantic’s JV with Delta and minority ownership by Delta? Virgin announced last week that rotes like Mumbai and Cape Town will be cut, and capacity will be added to Delta hubs like Seattle and Detroit. Clearly news like this would seem to suggest that Virgin (with an American CEO) will be looking to alter the nationality of the passengers on board, from British to American. They look like they will focus on onward feed from Delta’s domestic network, forgetting about the poorly performing UK domestic feed.

      Also this piece really should have produced a graph with all domestic traffic. It does state that the CAA figures they are using only include UK based carriers but Ryanair’s new Glasgow and Edinburgh to London flights should have been mentioned, as that will likely be a lot of capacity added, competing with easyjet and British Airways as well as others. Even if the CAA didn’t have the figures for non-UK based airlines the author should have used an alternative source such as OAG, etc…

      Also no mention of Aer Lingus and their expansion of Aer Lingus Regional. Their expansion is an example of where a lot of the non-London UK traffic is going, connecting in Dublin (or Amsterdam like the article mentioned). The Aer Lingus example is particularly apt as they increase their share of UK passengers transferring to its long haul network by using a sub contractor in the form of Stobart Air. At the same time Aer Lingus is being a contractor for Virgin Atlantic, competing for the same passengers in many respects (transferring passengers to the US) but has now likely lost that part of its business as Little Red may disappear, quite Ironic.

      • Hi Frank.

        Thanks for your comments and observations. Yes we saw the Sunday Times article speculation. We prefer to present facts and let our readers do their own speculating. Regarding Ryanair’s planned domestic routes to London these are indeed yet to start. The graph showing the total domestic traffic for the last decade is for ALL airlines, not just UK airlines. It is worth recalling that back in 2003 Ryanair was operating up to 10 daily flights between Glasgow Prestwick and London Stansted, but gradually reduced frequencies until suspending the route completely at the end of the summer 2011 season. The Aer Lingus situation is indeed ironic.

        • Hobbit says:

          Would the decline in Ryanair’s activity between STN and PIK, be best explained by assuming that with Ryanair offering more direct flights into and out of Scotland, the need for services to the ‘de facto’ hub at STN declined as well?

          • Several factors possibly involved. Improved rail services, increased APD, increased cost of fuel, and the difficulties of attracting higher yielding passengers on a domestic route operating from a secondary airport (PIK) to a secondary airport (STN). Ryanair encountered the same problems when it tried similar domestic routes in Germany and Scandinavia.

    • Primarily down to an improvement in load factors due to seasonality of demand effects.

Comments are closed