Examination of Witnesses (Questions 300
- 319)
WEDNESDAY 7 JUNE 2000
SIR RICHARD
BRANSON AND
MR BARRY
HUMPHREYS
Mr Donohoe
300. Can you honestly say that you would be
able to compete in the United States itself and beat the likes
of Continental that are beating you at present on the trans-Atlantic
route?
(Sir Richard Branson) Continental certainly are not
beating us on the trans-Atlantic route.
301. Where are they beating you?
(Sir Richard Branson) On the trans-Atlantic route
we are the third biggest airline. You have got British Airways
and Lufthansa and then Virgin is the third most successful airline
on the trans-Atlantic.
Chairman
302. Rather large steps? They are quite a long
way down?
(Sir Richard Branson) Yes we are, but we are bigger
than Air France on the north Atlantic, which says something.
Chairman: Not everybody would regard that as
altogether a recommendation.
Mr Donohoe: You said earlier that they beat
you for fares.
Chairman
303. He said they were under-cutting him on
his own airline, which seems a most interesting example of capitalism
at work to me.
(Sir Richard Branson) What we are doing is letting
them have seats on our planes and we are having seats on their
planes—
304. Except they are selling yours cheaper than
you are?
(Sir Richard Branson) At the moment.
305. It is all quite clear.
(Sir Richard Branson) So we have set up successfully
a pan-European airline based out at Brussels, Virgin Express,
which has reduced fares dramatically throughout Europe and you
have got Easyjet and Ryanair all driving fares down in the European
sector.
Mr Donohoe
306. The Continental set-up in the United States
drove fares down. Is there somewhere further to go? You are going
to the United States. 250 folk were involved in airlines in the
United States that are no more because of competition within the
United States, yet you say you would be successful. Would you
not find also if there were to be open skies in Europe with Continental
operating the same services as you in Europe that you would find
yourselves in great difficulty?
(Sir Richard Branson) On a level playing field we
can beat anybody. We have proved that. We are setting up in Australia
against Qantas and Ansett. Qantas' shares dropped 25 per cent
on the day that we announced that we were setting up in Australia.
People know the kind of quality of service that Virgin brings
and we will go there and succeed in Australia and drive fares
down in Australia to the benefit of the consumer. We have done
the same in Europe, the same across the Atlantic, we would like
to be able to do the same in America and we believe all four airlines
can be successful.
307. What was your purpose in selling 49 per
cent of your shares on your American routes to Singapore Airlines?
(Sir Richard Branson) Instead of going public we brought
in a powerful partner as a minority partner. They are an excellent
partner. None of our routes overlap so there were no competition
issues at all and we can help each other develop.
308. They are calling for freedom rights to
allow themselves to operate into the United States from Heathrow.
That would be in direct competition with you?
(Sir Richard Branson) Yes, but we as Virgin Atlantic,
for instance, in a year's time we may get up and compete on the
Singapore route. We are very happy to compete with Singapore Airlines
on Singapore and they as a minority shareholder—it is like
having outside shareholders in the market as minority shareholders—are
quite happy to see us get up and compete.
309. Was there any truth to the fact as was
widely reported before the sale of the 49 per cent that you were
not going to continue to operate services?
(Sir Richard Branson) Before the sale of the 49 per
cent? I am sorry, I am not with you.
310. You were finding it difficult because—
(Sir Richard Branson) It is common knowledge that
Virgin Atlantic is one of the most successful airlines in the
world. We made over £100 million profit last year at a time
when British Airways were not doing so well. We made those profits
despite only having two per cent of the slots at Heathrow because
we have been voted best business airline the last ten years in
a row, best trans-Atlantic airline for the last ten years in a
row. We compete well and I think people enjoy using our service.
311. What would be the effect on your company
of a takeover of KLM by British Airways?
(Sir Richard Branson) We would be concerned, as I
have said, if all the alliances that BA are pursuing, American
Airlines, KLM, Northwest—
312. Specifically on the KLM takeover?
(Sir Richard Branson) Stelios from Easyjet rang me
at 8 o'clock this morning and said that as far as he is concerned
he would be extremely worried.
313. But that is him. What about you?
(Sir Richard Branson) I am speaking for him because
he is not here. It would affect all smaller airlines. It means
if you add their slots back at Heathrow to British Airways and
American Airlines' slots back at Heathrow you are coming up to
around 80 per cent of all the key slots at Heathrow.
314. Presumably we are going to see on the tails
of your planes some further slogan, are we?
(Sir Richard Branson) We will do whatever we can in
the same way you will to campaign for what we believe in. I am
sure you are campaigning to keep Scotland part of Britain.
Chairman
315. You are very articulate, Sir Richard. Have
you ever made any great effort to do anything about the conditions
at Heathrow that you say are restricted by Bermuda 2? Have you
called, for example, for extra slots, have you negotiated with
the Government or suggested these ideas to the Government?
(Sir Richard Branson) Yes, we have.
316. Which? What did you ask for?
(Sir Richard Branson) We put in papers on a regular
basis on how we feel that the slot allocation systems should be
changed.
317. What are you suggesting?
(Sir Richard Branson) I think I would be repeating
what I have said earlier.
318. Fine, and you continue to campaign for
that? Have you asked for extra runways?
(Sir Richard Branson) I personally believe that there
should be an extra runway. The South of England needs a number
of extra runways.
319. Have Virgin asked for that? That is you
personally, but has the company asked?
(Mr Humphreys) We have, both individually and as part
of an industry group.
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