Visa delays inhibiting recovery of air traffic between India & UK: Virgin Atlantic’s Alex McEwan

Q. How have the delays in visa processing affected travel demand between India and the UK? By when do you expect these issues to be resolved?

The delays in visa processing have affected traffic between India and the UK, and the demand has not fully recovered after Covid.

However, even with those challenges our flights have seen very good load factors. So while the visa issues have not affected our operations so far, the delays have inhibited the full recovery of the market after Covid.

Last week, the British High Commissioner in India said that they were dedicating more resources and improving processes so that they could process visas within 15 days.

There are also fast track and super-fast track options for passengers looking to fly to the UK in an emergency. I think we will see some big improvements over the next two or three months.

Q. Competition from India in the international aviation market is rising. Air India is betting big on its international operations, new players like Vietjet, IndiGo, Air Canada, etc., are expanding into the international market. How do you expect the growing competition to impact the sector over the next few years?

Virgin Atlantic only operates flights between India and London, so I would only speak on the routes that we operate, which are also one of the largest international markets from India.

I think London to India are some of the most highly competitive routes, because most airlines want London on their network.

If you look at the Delhi-London route, we compete with Vistara, Air India, and British Airways. On the Mumbai-London route, we compete with Air India, British Airways, and Air Canada.

We at Virgin Atlantic feel these markets have the potential to grow significantly in the coming years, and as these markets grow we expect competition to increase on these routes.

I think that competition is a good thing for customers, it gives them more choice, and we always try to offer more choice ourselves.

At Virgin Atlantic, we are also growing our services to India. We now have three direct daily services from India to the UK. We have two from Delhi and one from Mumbai.

If you look back at summer 2019, before the pandemic, we only had one daily service, from Delhi to London.

India now represents anywhere between 5 and 10 percent of our global revenue and network. Back in 2019, India made up 3-4 percent of our global revenues.

India is our third largest market now, after the UK and the USA, and is a core part of our growth strategy going forward.

We now also have a codeshare partnership with Indigo to offer our customers more options to travel within India, which we expect will help further grow our operations and traffic to and from India.

Virgin Atlantic is also targeting customers who are looking to travel from India to the USA via the UK, and our wide range of connecting flights and destinations to the US is our strong suit.

Q. Before the outbreak of Covid, Virgin Atlantic was planning to launch a Delhi to Manchester service. Where are we on that now?

We had announced our intention to operate a service between Delhi and Manchester before Covid, and were planning to start operations in November 2020. But we had to re-evaluate before the outbreak of Covid. We still see potential in that market, it's a very large market, particularly for Indian customers based in the north of England.

But I think we have to wait for the right time to serve that market. We are regularly reviewing that route.

Q. Airfares have skyrocketed since the outbreak of Covid on most international routes. How do you expect airfares to move over the next six months, especially on the routes you operate?

I think it would depend on a few factors, would depend on fuel prices, and the level of competition in the market.

Fuel prices have risen quite significantly since the pandemic, which has led to a rise in airfares. If fuel prices remain high, airfares are unlikely to fall anytime soon.

While we have expanded our operations, competition on the India-UK routes have dropped compared to pre-Covid levels. Back in 2018-19, Jet Airways operated a daily service between the UK and India — the airline has since shut down.

Furthermore, the growth in supply on the UK-India routes has been slower than the growth in demand on these routes.

Q. Has corporate travel bounced back to pre-Covid levels on the routes that you operate between India and the UK?

We have actually been quite surprised by the recovery of the corporate segment. We have seen very strong recovery in corporate travel after the pandemic, and the number of corporate travellers on our flights is the same as what it was back in 2019.

After the outbreak of the pandemic we expected there to be a behaviour shift and thought that our customers would not be returning in the same numbers as before.

But our corporate customers have been desperate to travel again. I think that in order to grow their businesses, many corporates realised the importance of meeting people in-person, which led to a rise in corporate travel.

I think it'd be interesting to see what happens over the next 12 months because there's talk of a global recession, and how that will affect business travel budgets.

Q. Are all the flights you operate between India and the UK profitable?

After the outbreak of Covid, we at Virgin Atlantic had to really look carefully at where we were flying and which aircraft we were operating. We had to make some tough decisions. Our guiding principle during the  pandemic was that we would only fly profitable routes.

It's difficult for me to comment on route-specific profitability, but what I can say is that this year we have expanded our services to India, which is a clear indication that we believe in the India-UK market, and believe that these routes can be highly profitable for us.

Q. How are you planning to expand your codeshare agreement with IndiGo?

Our codeshare partnership with IndiGo is in the early stages, and so far we have had a really positive reaction from customers. We have had more than 6,000 seats booked by passengers connecting from Indigo's network onto our network.

Over time, we will deepen and broaden our partnerships with Indigo. We are also hoping to expand our codeshare partnership with IndiGo on its international routes and markets like Nepal, Sri Lanka, and the Maldives.

Q. Virgin Atlantic took delivery of its first Airbus A330neo last week. Are there any plans to fly these to India?

We've ordered twelve Airbus A330neos. They’ll be delivered over the next five years and become an integral part of our fleet.

At the moment we don't have any immediate plans to deploy these aircraft on the India routes. We will review the performance of these aircraft and may start flying them to India as well.