BTN's annual answer book for business travel managers.
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Virgin Atlantic's Shai Weiss talks:
Responding to increased competition from low-cost carriers, Virgin Atlantic in March reconfigured its economy class cabin with three options: delight, classic and light. Chief commercial officer Shai Weiss spoke with BTN associate editor JoAnn DeLuna about that and how the carrier is adjusting to other changes, including European regulations and Delta's Air4 passenger system.
BTN: It's been nearly a year and a half since Virgin Atlantic switched to Delta's passenger services system. How has the new Air4 system worked out, and are you planning any more integrations?
Weiss: It's going really well. Downtime is almost nothing [due to the] high reliability of the system. [Air4 provides] our agents the ability to work when [Delta and Virgin Atlantic are] in the same system, and more importantly, to work through irregular operations when things go wrong. Air4 is truly remarkable. Within seconds you have people rerouted based on [passenger priority]. Delta is 10-times our size, and the beauty of the joint venture is that the innovation Delta is bringing to its customers will also be available to Virgin customers. We will see more things coming, like [radio frequency identification] for baggage and a more integrated digital platform that's more intuitive.
BTN: Virgin Atlantic has had a JV with Delta for about five years. Last July, you jointly announced the addition of Air France/KLM to the JV. How is that progressing?
Weiss: We are working on definitive agreements and hope to conclude those soon. The new JV will take off in the second half of 2019. The important thing is the connectivity it will provide Virgin Atlantic. In the U.K., we have beautiful connectivity in the U.S. with Delta. The loyalty program can now be expanded to short haul, as well. When customers fly Virgin Atlantic, they'll be able to redeem on Air France/KLM for flights to [for example] the south of France. The rational is all about providing more services to customers.
BTN: How will Alitalia fit into this?
Weiss: That's for Alitalia to figure out. Alitalia is part of the existing JV. They're undergoing their own [bankruptcy] process in Italy, so it's hard for us to speculate what that process may yield.
BTN: How is transatlantic competition faring as low-cost carriers add routes?
Weiss: [The reconfiguration of our economy class offering] is all about listening to our customers. They want more choices without the compromise, so we launched the three products in our economy cabin while providing the same excellent service, great food with abundant wine and drinks, tasty snacks, the blanket and Wi-Fi across the fleet. In terms of taking the fight back to some of our competitors, we have the economy light [product]. Millennials who are doing a quick city hop are willing to forgo baggage. In return, we're guaranteeing the lowest fare possible. Where other people are adding seats into the cabin, we're taking six seats away and introducing extra legroom and seats with a 34-inch pitch into our delight product and premium boarding. Classic [provides] families and groups of people who want to travel together dedicated [joint] seating.
BTN: Virgin Atlantic is a U.K. carrier operating under a U.K. license and rules. How are the ongoing Open Skies negotiations affecting Virgin Atlantic?
Weiss: We're very confident that the new Open Skies agreement will be reached between the U.S. and the U.K. It's absolutely the right thing to [do to] protect trade, tourism and travel between these two nations, and we're confident it will be reached.
BTN: The U.K.'s withdraw from the European Union is not scheduled until next year, but what effects are you seeing now?
Weiss: The impact has been secondary. It's impacting us mostly through the exchange rate and the weakening of the pound. Of course, our costs are higher because we buy fuel in dollars, and it's also more expensive for our U.K. consumers, as 70 percent of Virgin Atlantic traffic is through the U.S. But the U.K. consumer is very resilient in protecting their costs, so they adjust. Instead of eight days [of vacation they'll do] seven days. Instead of a four-star hotel, they'll do 3.5 stars. Business has been good. We've had a good start to year.
BTN: How is corporate travel demand holding up?
Weiss: Pretty good. You see the reverse [happen] with business [travel] from consumer. The weaker pound means exports are stronger across the board, so activity is pretty good. Businesses do like certainty, so the quicker we can get certainty on the implications of true Brexit, the better it is. But for now it's pretty good.
BTN: Any new strategies to win over new corporate clients?
Weiss: Offering the best service we can. The corporate travel [market] is inherently interested in our connectivity in the U.S. and with Air France/KLM. In the U.S. over 200 locations are now connected seamlessly [through] Delta. Seamless service is one of our key [achievements] to the JV partnership we have. We literally monitored every single seam and tried to eliminate it. Reliability and new seamless products are the major thing for corporates. And we're No. 1 at Heathrow with Delta in terms of operations. People do actually care about that, on-time arrival, the ability to provide resiliency, knowing you can fly through the storm safely.
BTN: Will you expand the sales team?
Weiss: Our sales team is rightly structured. A lot of it is coming through direct channels anyway. But yeah, we'll grow as much as we need based on demand.
BTN: In April 2019, Virgin Atlantic will begin adding 12 new Airbus A350-1000 aircraft to its fleet. Will you be adding any more aircraft or new routes?
Weiss: [To date this year], we added three A332-200 [because of] some of the issues we had with the Rolls-Royce Trent engines on the [Boeing] 787. We wanted to protect our schedule. And indeed, we expect to add a few routes in multiple geographies in 2019. We're now in a position to start growing again. Watch this space.
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