Britain's Virgin Atlantic to shut Little Red domestic services

Mon Oct 6, 2014 9:35am EDT
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By Sarah Young

LONDON (Reuters) - Britain's Virgin Atlantic Airways is to close its Little Red domestic airline next year, it said on Monday, less than two years after it was launched.

The airline, which is 51 percent owned by its founder, British billionaire Richard Branson, and 49 percent owned by U.S. carrier Delta Air Lines (DAL.N: Quote), said in a statement that Little Red had "not been able to make a positive contribution" to the company.

Reconfirming that the group as a whole was on track to make a profit by the end of this year after two years of losses, Virgin Atlantic said the decision on Little Red followed a review of its network which has put a new emphasis on its transatlantic routes.

The Little Red service did not provide enough feeder traffic onto Virgin's transatlantic and other international routes, the airline said on Monday.

Little Red was launched by Virgin in March 2013, using runway slots at London Heathrow which became available following the acquisition in 2012 of Heathrow-based short-haul airline bmi by Virgin Atlantic's arch rival British Airways (ICAG.L: Quote).

Virgin said the services provided choice to consumers on routes between London, Scotland and Manchester, which were otherwise dominated by BA.

Rivalry between Virgin Atlantic and BA dates back more than 20 years to the so-called "dirty tricks" affair, when Virgin accused BA of conducting a smear campaign. More recently, IAG's chief executive Willie Walsh has been quoted in British media as saying that Little Red was a "mistake".

Virgin Atlantic's chief executive Craig Kreeger blamed the "inadequate" number of runway slots made available by regulators for Little Red's failure.   Continued...

Aircraft models are seen following a news conference to announce the sale of Virgin Atlantic airline to Delta Air Lines, in New York December 11, 2012.  REUTERS/Brendan McDermid