Q&A: Tom Maynard, Virgin Atlantic
As Virgin Atlantic gears up for the US reopening, Editor Bev Fearis spoke with its new Head of UK and Europe Sales
So, are you ready for the transatlantic restart on November 8th?
Fortunately we’d picked November 8th as our start date. We had no insight. It was a complete coincidence. We were starting to get a little bit nervous about having to start rebooking and pushing the flights out a little but fortunately we nailed it.
Where are you in terms of capacity?
In terms of aircraft movements – not in terms of passengers but in terms of actual aircraft movements – if you took November 2020 we were 53% down on 2019 and by November of this year we’ll only by 17% down on our 2019 movements, and by January 2022 we will be 1% ahead. The flying programme will look different but in terms of actual aircraft movements we will be back to 2019 levels.
We’ve got new routes, so it won’t be identical in terms of the route network. Pakistan has come into the mix and we’re double daily on the Indian routes. We’ve got to get the right split of different market segments. We’ve delayed the restart of routes like Seattle and Washington DC, which are very corporate driven destinations. At the moment we want to get the right blend of corporate, premium leisure and leisure, so that’s why the likes of Miami and Orlando will come back before the purely corporate routes.
What impact have the US reopening announcements had on your bookings?
When the first announcement was made we saw a 600% jump in bookings, with the biggest increase on JFK bookings and Miami and Orlando had a huge uplift too. A lot of that is being driven by premium leisure but we have also seen an uptick in corporate bookings and a lot of that is with SMEs.
After we were given the actual date, we saw an uptick, even though the announcement only came at 2pm on Friday. We saw a 28% rise in TMC bookings week-on-week and it will be interesting to see what happens this week but we’re not yet in that corporate booking window. Maybe people will wait a week because they won’t want to be on the first flight out, but I think in the next few weeks we’ll see a big ramp up in corporate bookings.
If you look at traditional corporate booking patterns for 2019, as you hit Thanksgiving usually those corporate bookings drop off. But this year isn’t a typical year so are people going to try to get a few trips in before Christmas? I think so. I think we’ll see senior people travelling and then others say: “Well, if they’re travelling, I can travel too.”
What booking trends are you seeing in the corporate market?
The vast majority of corporate travel is still in Upper Class. Around 70% of revenue we get from TMCs is in the Upper Class cabin. We have seen some corporates downgrade from Upper to Premium and we’ve seen it happen the other way. I think it’s going to be interesting to see what is driving the decisions. It will be a balance of price, wellness and sustainability. I think wellness is playing a big part in those decisions to upgrade.
Are you also noticing that corporates are doing fewer but longer trips?
I think it’s too early to see now but talking to a lot of our corporate customers that’s certainly an intention. Rather than limiting internal travel and focusing on external travel, I think it’s going to be a case of that if you’re going to do a long-haul flight, you’ll go for a whole week and do as many meetings as you can in that week, and rather than going every month, you’ll go once a quarter.
Some customers are saying they expect their travel budget to stay relatively similar but it will be a different type of travel, so travellers can fly business class and maybe upgrade their policy and have more hotel expense but they’ll do fewer trips in the year.
What’s happening with fares?
There are some good deals to be had. While the operation is coming back nicely, there is still capacity there and clearly we’re monitoring the demand. There are definitely some leisure deals out there and we would encourage people to take advantage.
It’s a balance. We need to bolster demand and if we price too high we will stifle this demand. But we need to make sure every flight we’re operating is cash contributing to the organisation. We’re coming out of that survival mode now to more ‘business as usual’ but cash and revenue are still crucial.
What about sustainability?
Every conversation I now have with corporates has a sustainability agenda. As an organisation, we’ve set out our targets in terms of being net zero by 2050 and we’re also saying how we’re going to get there with targets for 2030, 2040 and so on. It makes it relevant and this resonates with our passengers.
The challenge around sustainability is how do you articulate it in a way that resonates with individual travellers and influences their buying decisions. We know we have one of the youngest fleets out there, with an average aircraft age of 6 or 7 years, and these aircraft are a lot more efficient than some of the older generation aircraft our competitors are flying. But how do we articulate that by flying an A350 you’ve got 20% less emissions? We can put that number out there but there is no methodology or measurement that’s industry wide that will help us articulate that. We need to see IATA, or somebody like that, take the lead to say: “Here’s a Defra 2.0 where we can take into account engine types, aircraft types, cargo, load factors, and all the things that impact the emissions on a per passenger basis.”
What are you doing with regards to switching to Sustainable Aviation Fuel?
We are looking at SAF options, whether that’s as Virgin Atlantic on our own or with our JV partners. The issue with SAF is there’s so little of it around and it’s expensive. We are looking at buying some SAF but it’s not a one-size-fits-all solution. SAF will be a big part of our sustainability manifesto and we aim to get to at least 10% by 2030 but we need governments and the industry as a whole to come together to help production of SAF that’s sustainable. It’s going to come down to supply and demand and is this something we need to compete on or is this something we need to do as an industry?
See our ‘Checking in with…’ podcast with Tom Maynard