Bloomberg News

Virgin Atlantic Names Aer Lingus as Short-Route Partner

December 09, 2012

Virgin Atlantic Airways Ltd. chose Aer Lingus Group Plc (AERL) to operate U.K. routes feeding its long- haul services, the carrier’s first domestic flights, to help replace traffic lost when British Airways bought partner BMI.

Using aircraft carrying the U.K. airline’s brand, Dublin- based Aer Lingus will run a combined 24 flights a day linking Manchester, England, and two cities in Scotland with London Heathrow airport, Virgin Atlantic said today in a statement.

British Airways, a unit of International Consolidated Airlines Group SA, completed the purchase of unprofitable BMI from Deutsche Lufthansa AG in April and dismantled it. Crawley, England-based Virgin, controlled by U.K. billionaire Richard Branson, is taking over some Heathrow takeoff and landing slots that its main competitor gave up to win antitrust approval for the BMI deal, and the flights will be Virgin’s first short-haul services under its own badge, it said.

Virgin Atlantic currently serves 34 intercontinental routes from its Heathrow base, and BMI, which also had its main hub at the airport, provided some transfer passengers under a code- share agreement. Virgin plans to lease four Airbus SAS narrow- body A320 planes and crews from Aer Lingus and expects to carry almost 1 million passengers a year on the short-haul services, it said.

Starting Fare

Manchester-Heathrow flights are scheduled to begin in March while the routes out of Edinburgh and Aberdeen will start in April, Virgin said. Tickets for the Scottish connections will go on sale Dec. 19 with a starting round-trip price of 99 pounds ($158). The carrier is targeting business travelers with early- morning domestic flights, it said.

“This is a robust business model that will protect competition to and from Heathrow for the long term,” Chief Executive Officer Steve Ridgway said in the statement. “Virgin Atlantic has successfully fought British Airways (IAG) all over the world and has offered passengers a compelling alternative.”

The average fare between Glasgow and Heathrow has increased 34 percent since BMI dropped flights and left the route to British Airways, Virgin Atlantic said. An assessment by the European Union antitrust regulator found that competition out of London’s Gatwick and City airports “did not seem to constrain the ability of IAG to increase its prices significantly on the Heathrow-Glasgow route, even for economy restricted fares.”

British Airways “offers highly competitive fares to Scotland,” Laura Goodes, a spokeswoman at London-based IAG, said in an e-mailed response to questions. “There are many factors that determine fare levels,” such as fuel prices and airport charges, “as well as the competitive landscape.”

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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