Virgin Atlantic is rumoured to be considering shutting down its UK domestic subsidiary, Little Red, which was launched 18 months ago and has under-performed since.
Last week, Virgin Atlantic announced plans to scrap flights to Tokyo, Mumbai, Vancouver and Cape Town and increase flights across the Atlantic following its tie-up with America’s Delta Air Lines. Delta bought a 49% stake in the loss-making Virgin Atlantic in 2012, and it is believed a close scrutiny of the airline’s current routes will also lead to it pulling the plug on Little Red, which is operated by Aer Lingus on Virgin’s behalf under a wet-lease arrangement.
Official figures published by the UK CAA earlier this year confirmed suspicions that Little Red has been struggling to attract passengers since its launch in March 2013. Load factors indicate the number of seats on flights that were actually occupied by passengers, and Little Red’s load factor was just 37.6% in 2013, indicating that its aircraft were on average flying more than 60% empty.
On Sunday, a report in UK national media claimed that Virgin is set to shut Little Red down. Responding to the report, a spokesman for Virgin Atlantic said: “We look at Little Red through the same lens as the rest of the business – it must deliver on performance, potential or strategic contribution. Little Red is still in its growth phase, so it is too early to comment on these criteria.”
Little Red, which offers flights from London to Aberdeen, Edinburgh and Manchester, was launched after Virgin’s rival, British Airways, bought the loss-making UK carrier, bmi, for £172.5m in 2012. bmi had been a strong source of feeder traffic for Virgin’s long-haul flights out of Heathrow airport.
Earlier this year it emerged that the European Commission had taken an interest in Delta’s influence over Virgin, amid concerns that some foreign interests are effectively controlling European airlines despite owning minority stakes. Virgin says its operations “fully comply” with regulatory obligations.