Chris Jasper/LAS VEGAS
Virgin Atlantic Airways is trying to put together a network of up to 10 US feeder carriers following the launch of an initial deal with National Airlines. The move represents a fallback option for the UK carrier as its "Virgin America" plans continue to be blocked by restrictions on foreign ownership of a US airline.
"You can't afford to wait for a change in policy, so we have to build up an internal network of carriers to feed us," says Virgin chairman Richard Branson. He adds that, with Virgin operating to 10 US gateways, it would make sense to have 10 such relationships.
Speaking in Virgin's latest destination, Las Vegas, Branson said he is reluctant to invest in a US operation, given the 25% ownership cap. He believes any minority investment would send the wrong message to Washington, which he hopes will ease the restriction. Marketing deals, however, will improve feed without the necessity to make any capital investment.
Virgin's agreement with Las Vegas-based National will see the pair begin joint marketing and offer joint frequent flier programmes from September, with the aim of deepening the alliance later.
The head of Virgin's US operations, David Tate, says "the marketing deal will hopefully be followed by a codeshare". National's services to its Las Vegas hub from San Francisco and Los Angeles (served by Virgin) mean the UK airline could effectively offer daily service to the Nevada city, rather than the twice weekly frequency it now operates directly.
The National tie will also allow Virgin customers to travel internally between its various gateways, given that the pair's networks overlap almost exactly. Branson says he would maintain the pact even if he was able to launch his own US domestic operation.
"America is enormous and even if we did have our own airline here we would still want a relationship with other airlines, as it would take years to build up a network with our own aircraft," Branson says. "So we will work with National and talk with other carriers".
Tate says Virgin also held "intensive" discussions with New York-based start-up JetBlue, but they fell through. Sources suggest a deal would have seen Virgin take an equity stake, but that Branson felt this might jeopardise the liberalisation of ownership regulations.
• Continental Airlines boss Gordon Bethune has added his voice to those calling for a relaxation of restrictions on foreign ownership of US airlines. He supports an immediate move to 49% foreign ownership and says there should be a debate over whether 100% is acceptable.
Speaking in London, Bethune said: "To successfully compete for the long term on the world stage, US airlines need the same ability that exists in businesses like telecommunications that must globalise their capital structure and networks to meet the demands of the global economy."
Source: Flight International
