Business | Aviation
Virgin aims to go higher despite rising fuel prices
Sir Richard Branson of Virgin Atlantic hopes European Union and US will sign 'real' open skies policy.
- By David Westley, Business Features Editor
- Published: 00:00 March 29, 2006
In an interview with Gulf News Sir Richard Branson spoke about the impact of rising fuel prices on profitability, the possibility of a UAE space station for Virgin Galactic, and a true open skies agreement between the EU and US. Here's what the Virgin president had to say, in full.
Gulf News: Your fuel bill rose by $150 million last year. What do you believe will happen this year and what will be the impact on profitability?
Richard Branson: Unless something is done about fuel over the next decade the price will continue to go up and up and up. There will be a shortage and people will scrap to get it. That will drive prices higher.
In some ways that may be a good thing for the environment. It will make people think about alternative energy sources.
There are no scientists left who do not accept the existence of global warming. We have all got to do our bit. Virgin has set up Virgin Fuel to develop cellulose ethanol which is 100 per cent environmentally friendly.
We will be making specific announcements about this over the next month.
We're also looking at windpower. I spend a lot of time in the Caribbean. We will have a giant wind tower to provide electricity to the island. With fuel prices the level they are it will have payback in three years.
Though that is not much help to Virgin Atlantic.
Although it would be fun to have a giant windmill on planes!
No, for Virgin Atlantic we are trying to make sure we have the youngest fleet, which as a result is the most fuel efficient and most environmentally friendly. We're also investing in new technologies to help with this.
Going back to the impact on profits...
As far as profits are concerned despite the rising cost of fuel Virgin has remained profitable by investing in its products. The Upper Class lounges really bowl you over.
The Upper Class seat is the best seat there is. We're investing, which means we can keep high load factors. High load factors mean we can remain profitable in spite of the increasing costs.
What level of load factor are you managing to achieve? What's the average you aim for?
We have a 78 per cent load to Dubai. Above 75 per cent we're profitable, although that's to a degree misleading business class has an important impact on margin.
What about Virgin America how is that going?
Well, bizarrely I don't have much to do with Virgin America. We license the brand. We have a 25 per cent stake. Fred Reid, its Chief Executive, is in the process of getting permission. They are hopeful of that being forthcoming in the next months?
Have you missed a trick with Space Adventure with its decision to build a space station here - a region with high net worth individuals? Has it also undermined your pricing structure being $100,000 half of your $200,000 fee. It will also launch one year before you?
Well, Virgin Galactic can be anywhere. We had planned in the US. We could build a spaceport in the UAE or Australia.
But didn't you say when you were last here you could not build in the region because of the sensitivities regarding US technology?
Well, I think the technological restrictions are overcomable now.
The second thing is? Look, what we're doing is? I would be very happy to go up now. We have had three flights already. We will have another 50 before launch. It will be safe. That's what people want.
Space Adventures has been selling tickets for years, and taking money for years, but hasn't actually had a space ship apart from selling the occasional bloody expensive ticket they are not spending the money in development.
We have the best technical team in the world? Some of the best space engineers? We will have a space ship company which will be around for years to come.
So you doubt Space Adventures ability to launch in 2008??
I think that?. Yes, I won't be drawn to comment on that.
Do you think the EU and US will agree an open skies policy any time soon?
I hope that they will, but it has to be a real open skies policy. At the moment I believe it is very one sided. US airlines get complete access. They can fly anywhere in Europe.
However there are a mass of restrictions for European airlines who they can fly into the US, as well as the large restriction that Europe's carriers won't be able to launch internal flights.
As I said, it is, I believe, too one-sided at the moment.
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