British airline seeks to take 10% of Dubai market by year-end

Dubai: "Everything about Dubai is slightly unreal," said Sir Richard Branson to an audience of journalists at the launch of Virgin Atlantic's regular service to Dubai.

The same could be said of the level of excitement surrounding the arrival of the two-week-old Virgin Atlantic Airbus A340-600, which touched down at the Dubai International Airport from London Heathrow yesterday morning.

The flight marked Virgin as the 111th airline to start regular services to the emirate.

With just four flights a week until June 1, and daily flights thereafter, realistically Virgin Atlantic is not going to be significant competition for Emirates, Dubai's incumbent operator, which operates more than 80 flights weekly to London.

London has become Dubai's busiest long-haul destination.

More surprisingly Dubai has become the second busiest long-haul route from Heathrow.

Steve Ridgway, Virgin's Chief Executive, talking to Gulf News before the press conference, was candid about Virgin's aspirations.

"Our basic principle, particularly in business markets, is to get a daily flight leading to a sensible market share. With one flight a day we can make a good standard of living, and offer a choice to the market."

Branson told journalists the airline is aiming to take 10 per cent of the Dubai market by the end of the year.

Virgin hopes the market share it takes will not just eat into existing Dubai traffic, but develop a new market for the emirate.

"The Dubai route is growing anyway, but given our position in the UK as the owner of the number one tour operator, Virgin Holidays, there is no doubt we will further grow the market particularly as a tourist destination."

So far Virgin claims to have enjoyed success on its 26th route with prebooked load-occupancy above 78 per cent for its first month of operation. The airline aims at 75 per cent as a break-even point.

Virgin has achieved that load occupancy with highly competitive pricing. At Dh2,190 for a return flight to London, the UK airline was 40 per cent cheaper than Emirates for its economy fare, although that margin has since been reduced to 15 per cent as Emirates has responded by reducing its prices.

"We always come into markets as the consumer champion. We offer great value wherever you are on the plane," Branson said.

Andrew Fyfe, Regional Manager for the Middle East and Indian Sub-Continent, was clear however that pricing would be demand led and June pricing, peak season for Dubai traffic to London, would be higher.

Virgin presently has no plans to use Dubai as a hub to launch operations elsewhere.

Branson, however pointed out that Dubai would have a second Virgin route to Nigeria. However, the route is being run by Virgin Nigeria, not Virgin Atlantic. Virgin Atlantic is a minority shareholder in the African airline.

Long term profitability for the route will be governed less by pricing and marketing than by global oil prices. "We are resigned to the fact oil prices will remain high. We are learning to live with it," said Ridgway.

Virgin is one of the few airlines that has proved able to do so and remain profitable, largely as a result of its young and fuel efficient fleet. Its fuel bill rose by $150 million last year.