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Virgin invests US$200m in Kingston route
Virgin invests US$200m in Kingston route - Branson vows no retreat, meets with Golding today
published: Wednesday | October 31, 2007
John Myers Jr., Business Reporter
Sir Richard Branson, chairman of [COLOR=orange! important][COLOR=orange! important]Virgin [COLOR=orange! important]Atlantic[/COLOR][/COLOR][/COLOR], disembarks from the inaugural flight of Virgin Atlantic from London Gatwick to Kingston at the Norman Manley International Airport on Tuesday. - Ricardo Makyn/Staff Photographer.
Sir Richard Branson's investment in [COLOR=orange! important][COLOR=orange! important]Jamaica[/COLOR][/COLOR] to service the London route acquired from Air Jamaica is running at US$200 million (J$13.5 billion), the billionaire said Tuesday.
The majority of those funds financed acquisition of a new plane to service the route.
With that level of investment, Branson told Wednesday Business, he was not prepared to hand back the route acquired by his Virgin Atlantic Airline earlier this year.
Virgin had its inaugural flight from Gatwick to Kingston Tuesday , vowing again that Virgin Atlantic does not intend to give back the route. The majority of those funds, said Branson, represented acquisition of a new plane to service the route.
"I accept that there has been a change of government and they need to decide what they are going to do in the future, but, as far as we are concerned, Virgin Atlantic is here today and here to stay," said Branson from the tarmac of the Norman Manley International Airport minutes after the inaugural flight from London to Kingston landed yesterday. "If you include the cost of the plane and all the bits and pieces, it (the investment) is coming on to about US$200 million," the Virgin boss revealed.
Air Jamaica is said to have earned £5.1 million (approximately J$700 million) on the sale of the route. The route was sold to cut annual losses of US$25 million on the route, making it the national carrier's top lossmaker.
'We have a contract'
"We have a contract, we put a plane that is worth a US$160 million to [COLOR=orange! important][COLOR=orange! important]invest in Jamaica," said Branson. "We have a considerable investment based on the contract we had. Governments may not like previous government's decision but the governments have to honour contracts, and we have a contract." [/COLOR][/COLOR]
The new Jamaica Labour Party government is conducting a review of the deal, with a view of rescinding it. Branson has a meeting today with Prime Minister Bruce Golding to discuss the issue.
"We need the Government to make sure there is certainty and we are seeing the Prime Minister tomorrow (today) and hopefully we will get clarity," he said.
The 451-seat Boeing 747-400 aircraft touched down with Virgin's maiden flight into Kingston minutes after 2:00 pm and was greeted with the sound of Caribbean rhythms from a band and a small contingent of officials which included the Mayor of Kingston, Desmond McKenzie; British High Commissioner to Jamaica Jeremy Creswell and Airports Authority of Jamaica president Earl Richards. The flight was filled to capacity.
Branson declared that Virgin Atlantic was in Jamaica to give rivals [COLOR=orange! important][COLOR=orange! important]British [COLOR=orange! important]Airways[/COLOR] "a run for their money." [/COLOR][/COLOR]
He said Jamaica represented an excellent [COLOR=orange! important][COLOR=orange! important]destination to grow Virgin Atlantic's business, hence the decision to enter into the code-share agreement with Air Jamaica to operate the London route. [/COLOR][/COLOR]
Branson explained further that the deal with Air Jamaica was a strategic move to prevent Virgin Atlantic's main rival, British Airways from becoming the dominant carrier out of London to Jamaica.
"About a year and a half ago we heard that British Airways was going to take over the (Air Jamaica) slots and if that had happened it would have meant Virgin Atlantic pulling out of Jamaica which would have left British Airways completely dominant in Jamaica," he said.
"We contacted the government and said we would pay more than British Airways."
No cut in flights
He denied reports that Virgin planned to cut flights by next summer, saying they would be maintained at low fares.
Branson explained that the decision to switch the termination of flights in London from Heathrow to Gatwick airport was an economic one, saying it was less expensive to land planes there.
To fly from Heathrow, he said, would put Virgin in the same position that Air Jamaica found itself, saying that based on his calculations, Virgin would have needed 70 to 80 business class seats per flight flying from Heathrow in order to be profitable.
"They were flying out of a business class airport, Heathrow, which is very very expensive to operate out of, and I think Virgin is a better known global brand than Air Jamaica...so it is easier for us to market Jamaica," Branson said.
Virgin Atlantic has been operating twice-weekly flights between Gatwick and Montego Bay since July 2006 and to date, has flown over 70,000 passengers between London and Jamaica. john.myers@gleanerjm.com
published: Wednesday | October 31, 2007
John Myers Jr., Business Reporter
Sir Richard Branson, chairman of [COLOR=orange! important][COLOR=orange! important]Virgin [COLOR=orange! important]Atlantic[/COLOR][/COLOR][/COLOR], disembarks from the inaugural flight of Virgin Atlantic from London Gatwick to Kingston at the Norman Manley International Airport on Tuesday. - Ricardo Makyn/Staff Photographer.
Sir Richard Branson's investment in [COLOR=orange! important][COLOR=orange! important]Jamaica[/COLOR][/COLOR] to service the London route acquired from Air Jamaica is running at US$200 million (J$13.5 billion), the billionaire said Tuesday.
The majority of those funds financed acquisition of a new plane to service the route.
With that level of investment, Branson told Wednesday Business, he was not prepared to hand back the route acquired by his Virgin Atlantic Airline earlier this year.
Virgin had its inaugural flight from Gatwick to Kingston Tuesday , vowing again that Virgin Atlantic does not intend to give back the route. The majority of those funds, said Branson, represented acquisition of a new plane to service the route.
"I accept that there has been a change of government and they need to decide what they are going to do in the future, but, as far as we are concerned, Virgin Atlantic is here today and here to stay," said Branson from the tarmac of the Norman Manley International Airport minutes after the inaugural flight from London to Kingston landed yesterday. "If you include the cost of the plane and all the bits and pieces, it (the investment) is coming on to about US$200 million," the Virgin boss revealed.
Air Jamaica is said to have earned £5.1 million (approximately J$700 million) on the sale of the route. The route was sold to cut annual losses of US$25 million on the route, making it the national carrier's top lossmaker.
'We have a contract'
"We have a contract, we put a plane that is worth a US$160 million to [COLOR=orange! important][COLOR=orange! important]invest in Jamaica," said Branson. "We have a considerable investment based on the contract we had. Governments may not like previous government's decision but the governments have to honour contracts, and we have a contract." [/COLOR][/COLOR]
The new Jamaica Labour Party government is conducting a review of the deal, with a view of rescinding it. Branson has a meeting today with Prime Minister Bruce Golding to discuss the issue.
"We need the Government to make sure there is certainty and we are seeing the Prime Minister tomorrow (today) and hopefully we will get clarity," he said.
The 451-seat Boeing 747-400 aircraft touched down with Virgin's maiden flight into Kingston minutes after 2:00 pm and was greeted with the sound of Caribbean rhythms from a band and a small contingent of officials which included the Mayor of Kingston, Desmond McKenzie; British High Commissioner to Jamaica Jeremy Creswell and Airports Authority of Jamaica president Earl Richards. The flight was filled to capacity.
Branson declared that Virgin Atlantic was in Jamaica to give rivals [COLOR=orange! important][COLOR=orange! important]British [COLOR=orange! important]Airways[/COLOR] "a run for their money." [/COLOR][/COLOR]
He said Jamaica represented an excellent [COLOR=orange! important][COLOR=orange! important]destination to grow Virgin Atlantic's business, hence the decision to enter into the code-share agreement with Air Jamaica to operate the London route. [/COLOR][/COLOR]
Branson explained further that the deal with Air Jamaica was a strategic move to prevent Virgin Atlantic's main rival, British Airways from becoming the dominant carrier out of London to Jamaica.
"About a year and a half ago we heard that British Airways was going to take over the (Air Jamaica) slots and if that had happened it would have meant Virgin Atlantic pulling out of Jamaica which would have left British Airways completely dominant in Jamaica," he said.
"We contacted the government and said we would pay more than British Airways."
No cut in flights
He denied reports that Virgin planned to cut flights by next summer, saying they would be maintained at low fares.
Branson explained that the decision to switch the termination of flights in London from Heathrow to Gatwick airport was an economic one, saying it was less expensive to land planes there.
To fly from Heathrow, he said, would put Virgin in the same position that Air Jamaica found itself, saying that based on his calculations, Virgin would have needed 70 to 80 business class seats per flight flying from Heathrow in order to be profitable.
"They were flying out of a business class airport, Heathrow, which is very very expensive to operate out of, and I think Virgin is a better known global brand than Air Jamaica...so it is easier for us to market Jamaica," Branson said.
Virgin Atlantic has been operating twice-weekly flights between Gatwick and Montego Bay since July 2006 and to date, has flown over 70,000 passengers between London and Jamaica. john.myers@gleanerjm.com
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