No new Virgin Atlantic sub-brand coming

Earlier this week at Routes Europe it was rumored that Virgin Atlantic was considering a new “airline within an airline” operation based at London‘s Gatwick Airport. Today during the company’s earnings call that rumor was dismissed out of hand by the company, bringing all sorts of speculation to an abrupt halt.

“Those reports are not true," says @VirginAtlantic chief Kreeger in response to Qs on a possible long-haul low-cost subsidiary at #LGW

— Edward Russell (@ByERussell) April 27, 2016

And, quite frankly, I’m glad to hear this.

The plan, as reported, was to move Delta A330-300s to the Gatwick hub and operate them in an Economy/Premium Economy layout to compete with Norwegian which is quickly growing its transatlantic service from Gatwick. It would retain a Virgin branding (No “GIN” operations here…RAR!) but on separate employment contracts. And, as we all know, that never creates resentment or other troubles within the staff resulting in a mess for passengers.

There are also questions about the economic viability of such efforts. As airlines are better managing revenue and inventory within their regular operations it is less clear that a demand for wholly dedicated subsidiary operations versus dedicating portions of inventory is a more effective move for the carriers. It is also unclear that the TATL market really needs more capacity, even at a very low CASM point. In recent quarters RASM for TATL flights has been dropping and legacy carriers cannot cut capacity quickly enough to keep yields up and maintain their network value. Adding high density A330-300s doesn’t help that problem at all, even if the cabin crew costs are a bit lower. To say nothing of what would Delta do for its other operations as it sheds widebody aircraft.

But it seems none of it matters since the CEO says it is off the table, despite a seemingly solid statement that it was being considered just a couple days earlier.