India is an important market for all sorts of airlines around the globe, and for Virgin Atlantic, it is no different. After the United Kingdom and the United States, India is one of the most important markets for Virgin Atlantic, and they’ve recently brought some of their newer products to the market here. I recently met the country head for Virgin Atlantic in South Asia, Alex McEwan, to talk about how things are shaping up for Virgin Atlantic in India. Here are the edited excerpts.
Ajay Awtaney (AA): Alex, it turns out India is now approximately five to 10% of your global revenue, and it is the third largest market for you guys. So, how are you guys looking at the Indian market? What has been the shift, if any, in the thought process of people at Virgin since before the pandemic, and how do you see the market now?
Alex McEwan (AM): That is a good question. During Covid, India was one of the markets that we could actually operate to because transatlantic was almost closed off completely for us. And we had a lot of cargo demands, particularly from India. Obviously, we were restricted by the air bubble. But we’d pretty much maxed out our allocated frequencies. We wanted to do the maximum (we could fly).
So our profitability was not great at that time because we were obviously carrying very minimal passenger numbers, but our cargo revenue was very good at that time. From a cash perspective, we were fine. But from a pure operating profit perspective, India and every other route across our network were not too good. We still had better load factors than some of the rest of our network.
Before Covid, we had plans to expand in India. That was planned before the pandemic and was then put on hold. But the performance during the pandemic convinced us that we should get back on track when the circumstances are correct.
We got back on track with that last year. We started our second Delhi service, and we also did an IndiGo partnership. So that was a big moment for us. I think there’s been a quicker recovery from this market than other markets, so that means that it’s easier for us to add extra flights. Last year we added extra flights, and they performed very well. I think there is a growing importance and a growing understanding of the potential of this market.
AA: And has the growth also been seen in the front cabins as well?
AM: There’s not a disproportionate trend. I mean, everything is increasing kind of at the same rate. The one sector we were concerned about was corporate travel, which doesn’t necessarily always travel in the Upper Class but can travel in premium or economy. That was the last segment to recover, but now it’s recovered in full, so that’s very positive.
But in terms of cabin trends, we got individual feedback that people wanted to have more space during Covid. So people wanted to have that extra level of comfort and extra level of service. So we did see people making choices to upgrade to premium or upper. Also, during that time, our fares were very competitive, so people had the opportunity to try out those cabins. But I think when you look at our load factor by cabins, it is pretty consistent.
AA: How much of Virgin Atlantic’s traffic is split, between O&D (Origin & Destination) and people travelling onwards, let’s say to the US or so on?
AM: So obviously we have a lot of point-to-point travel between London because London is a huge market. That’s, you know, a mix of student travel (last year, the UK issued 130,000 Student Visa), but also VFR (Visiting Friends and Relatives) travel, leisure travel, and corporate travel. So that’s one segment. Then you’ve got a lot of travel beyond London on to the US. That probably fills about 30% of our flights. It is a bit more prominent in Delhi than it is in Mumbai because, in Delhi, we have two services, so we offer greater connectivity.
AA: And are the transfers at London Heathrow smooth? I’ve used a lot of T5, but I’ve never transferred through T3, so how does it work?
AM: Both T3 and T5 (at London Heathrow) have the same MCTs (Minimum Connection Time). All of our flights operate from Terminal 3. So when you’re transferring from Virgin to Virgin and Virgin to Delta, which is our joint venture partner, there’s no need to change a terminal.
And you can connect with in one hour sometimes. It’s pretty seamless. And we’ve got the vast US network that people can connect to from here. So I think when you combine Virgin and Delta, we offer 200 destinations in the US because you are not just the direct destinations, but the destinations that Delta often beyond their hubs.
AA: So you signed up with IndiGo, and it got activated last year. How has the performance of that been?
AM: So far, it’s beat our expectations. We launched it in September (2022), and so far, we’ve carried 10,000 passengers. That’s a pretty good number. We’ve got 16 destinations with IndiGo. We want to grow that over time, so there’s potential for that number to get bigger. We’ve seen a lot of demand from the UK.
Given that EVisas (to India) has now opened up, you see people connecting to the likes of Goa, Kerala and these big leisure markets that are very attractive from a leisure perspective. There is also demand for offline markets such as Amritsar and Ahmedabad. So, IndiGo gives us access to some of these big traffic flows that we had some access to before because we had some interline partnerships. But obviously, a codeshare is much more powerful. So, yes, it’s performed very well for us, and as I said, we hope to develop and grow it over time.
AA: Back in the day, your partners KLM and Air France were, and you guys as well, depending a lot on Jet (Airways). There was also a sort of metal-neutral partnership that was brought up. And then Jet left. And then you had to launch by yourself again. So have you been able to crack the Mumbai route the second time around? And is there any other route that you’re planning at this point in time?
AM: So it was actually the third time to Mumbai. So it was the third time lucky for us, and that’s how it proved to be because we’ve now been operating it very comfortably for years. So even during the deepest parts of the pandemic, we offered direct flights to Mumbai. That’s a good indicator of our commitment to the market. We see very high load factors on Mumbai and Delhi. And that route continues to be full for us.
Jet going out of the market, they had three direct daily services between Mumbai and London. So, they left a big gap. And we were able to fill a portion of that. So, the Mumbai route does very well for us. We’ve also been able to grow our presence in Mumbai quite well.
AA: You also had the Manchester route on the table once upon a time, and then it never happened?
AM: That was part of the growth that we planned for Summer ’20, which didn’t materialise. We’ve got a number of challenges at Manchester at the moment, so our level of Manchester flying (as Virgin Atlantic) is less than it was back in 2019.
We’ve consolidated a lot of flying into Heathrow. We still have a commitment to Manchester. We still think it’s an opportunity because there’s not much direct international service from Manchester. And I’m talking about that from a global Manchester perspective. There’s a huge (Indian) diaspora in North England, which Manchester is more convenient for.
We don’t have any plans to restart that market (yet). But obviously, you know, that can change over time. That market will continue to grow. Also, student visas will generate a lot of that traffic, but for the time being, we are still carrying a lot of those passengers on our Heathrow services.
The UK is not huge. So people can easily drive down or get a train down to London and connect to Heathrow. So no plans for us to add that flight on the map, but it’s something that we continue to evaluate and continue to look out for.
AA: And any other markets in India, given, given your competitor (British Airways), covers like five ports of call in India, and you guys are only at two?
AM: We evaluate markets over time, and obviously, the supply and demand dynamics will change over time as well. So all of those markets are growing rapidly. And so they, therefore, become more attractive to us over time, but we generally grow in a phased manner. So if you look at last year, we added Delhi’s second flight, and we added IndiGo. That was a big year for us in India. We like to see how that performs first before then growing further.
Obviously, IndiGo gives us access to those markets on a one-stop basis. So again, that gives us more data and more information about which markets are growing and which markets are deploying well. All of that data enters the mix when you’re looking at the network planning. Right now, we’re committed to Delhi and Mumbai, which are obviously the two largest from India to London.
AA: Any India-specific initiatives you guys took to make the Virgin Atlantic product more attractive to the Indians?
AM: There are a few key differences that we have in India versus other markets. Our standard baggage allowance is one piece in economy for the rest of our network. But we offer two pieces as a standard for India. So that’s, that’s unique. I mean, some of our competitors do the same, but it’s unique for us in, in the sense that we don’t offer it everywhere.
We also make sure that we have at least one Indian-based crew on every flight. So that means that we have good coverage of dialect. We have Bollywood films. We, we have Indian food that, you know, obviously cater from here, but also cater from the UK. We take into account the different tastes of the customers, be they British or Indian. And we offer quite a nice mix of the two.
Over the course of 22 years, we’ve learned these specific quirks and these specific things that we need to tailor to each market. And we get good feedback from customers.
I think, particularly during Covid, people wanted that sense of safety and quality of service, and that’s something that Virgin has a reputation for. And hospitality is so valued in India, and that’s something that, again, we really pride ourselves on.
So that’s where we have an advantage. That’s where I think we go above and beyond for Indian customers.
AA: Let’s take a detour to some of your competition. Now, two of your competitors, the Indian ones, are coming together, and Air India is growing massively at London Heathrow. Air India just announced that they’d move a lot of their flights to Gatwick to be able to tap more numbers. Vistara will eventually come into the fold, and it’s gonna be one big airline. So there is going to be a bigger challenge by Tata group airlines. So how does that affect some of your planning for India?
AM: I don’t think it changes our planning much. We’re pretty confident in our service and the kind of reputation we’ve built in this market.
But obviously, we can’t ignore the competition. Competition is good for customers and obviously gives them more choices. We feel confident that we are partnered with the largest Indian airline here in IndiGo. IndiGo give us access to a vast number of connections. And that level of domestic connectivity is not something that Air India or Vistara, even together, could match. So that gives us confidence.
It’s not something we can completely ignore. Obviously, you know, they’re gonna be an influential player in the market. The London market is always going to be large, and it’s always going to be very, very significant. So that’s naturally going to attract airlines, and it’s going to attract a number of frequencies.
So again, you know, coming back to our longevity in the market, we’ve always, whether it be in the form of Jet, whether it be in the form of Kingfisher, whether it now be in the form of Tata group of Air India and Vistara, I feel quite confident we can continue to offer a good proposition to the customers.
AA: Talking about your own partner, IndiGo, while they’re not committed to coming into the London market, they’re going to eventually get the equipment (A321XLR) in the next maybe 12 or 18 months to fly all the way to London. Is that going to be a potential opportunity to team up with them, or is it going to be one more set of people who you will look at as competition?
AM: I think it’s too early to say. I mean, until the point at which they’ve announced service. It’s difficult for us to comment on that.
You’ve seen in the past that we had a very extensive partnership with Jet Airways, and now, we obviously want to grow our partnership with IndiGo over time. But in terms of their plans to operate to London, I’d leave it to them to comment on that.
AA: You also know Air Canada operates fifth freedom flights on Mumbai – Heathrow. So do you look at them as competition or just as a fringe player in the market?
AM: All flights operating between UK and India are competition. I don’t think we can ignore any player in them, regardless of their business model. They might be more disposed to carrying connections beyond (London) Heathrow on their network. So they might have a different strategy to us. Still, ultimately when a passenger is making a purchase decision, Air Canada is going to come up on the same page with us and BA and Air India. So we would consider them as competition, and we would monitor their activities and adjust our strategy accordingly.
AA: Interesting you bring up the purchase decision part. So, how much do you see loyalty in the Indian customer for the Virgin product? For instance, I know a lot of people who really swear by the BA Executive Club. But are there a lot of loyalists for the Virgin product, uh, as well, or, how, how does it work out for you guys?
AM: I think the fact that we offer more choices in the market has meant that people are flying with us much more frequently. So, you know, we’ve been able to increase that base of customers over time. First, it was just one flight from Delhi. Now we have Mumbai and Delhi and the two flights, plus the fact that we are going to be joining SkyTeam this year.
So that will also make our loyalty program much more attractive because perhaps people will have flights to Korea with Korean Air, or perhaps they’re going to Saudi with Saudia. There will be various other options for the passengers will collect points and accumulate loyalty with the SkyTeam Alliance as well as Air France/KLM as well as Delta.
So that will make our programme more attractive over time. I think that if you compare where we were three-four years ago, where we were an independent airline and we just had one daily service, to where we are now, we have a much more compelling proposition for customers who want to collect points and earn that status, flying to the UK and beyond to the US.
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