Transatlantic rivals take divergent market views

As Europe and North America continue to make progress away from Covid restrictions, I’ve looked at how the two UK rivals, British Airways and Virgin Atlantic, are planning for the Summer on their prime Heathrow-US routes.?I’ve analysed the July schedule to get a measure of what’s happening.

There are some positive messages.?First, there’s a small overall seat capacity rise on Heathrow-US routes for the two carriers put together, compared with July 2019.?BA in particular is showing strong confidence in renewed market vigour on the North Atlantic.

Virgin appears less enthusiastic.?Its overall Heathrow-US capacity is down about 7% compared with July 2019, if you exclude the Orlando route moved from Gatwick. Orlando capacity is also lower than when the route was at Gatwick. And Virgin's capacity changes are moving out of sync with BA's.

For BA, there are some notable route capacity increases.?There’s a particularly sharp rise for Dallas/Fort Worth, hub for BA’s partner American Airlines as an A380 replaces 777s used in the past.?The A380 also gives a big boost to Washington DC.?

Newark, favoured by some business travellers for its easy access to lower Manhattan, ?gets a third daily frequency.?BA’s planners appear to be consolidating the airline’s competitive position here after Virgin Atlantic stopped flying the route in March 2020.

There’s also an increase in the proportion of BA’s seats flying to destinations which are mostly flown for leisure traffic – such as Orlando and New Orleans. Primarily leisure route* capacity this July will be 12% of BA’s total Heathrow capacity, compared with 8% in 2019.?Some, but not all, of this increase comes from adding Orlando.?

Virgin also has capacity growth on some routes, with a third daily frequency and larger aircraft giving an 80% hike in seats to Los Angeles. ?BA and Virgin will fight this battleground route with the same frequency and practically identical total seat capacity.?Virgin also adds a new route to Austin, competing against BA’s now well-established service to this more leisure-oriented destination.

Virgin’s pure leisure route to Orlando, however, has 24% fewer seats than it did when it operated from Gatwick in 2019.

While BA is increasing capacity to leisure destinations, there’s a small reduction in capacity to New York JFK.?But this is counterbalanced by the extra capacity to Newark, so that BA’s overall capacity to the New York airports is up on 2019.

By contrast, rival Virgin has reduced capacity to JFK by 10% and withdrawn from Newark.?

This shows clear differences of view from the two perennial antagonists as the carriers move out of sync in their capacity changes.?Virgin’s plans reduce its exposure to New York and some other business-heavy markets while focusing afresh on its West Coast anchor of LA.?

BA meanwhile continues to put capacity into business-heavy markets.?New York’s share of BA's Heathrow-US seats rises from 21% in July 2019 to 22% for July this year.?This is not an airline tilting away from its traditional transatlantic business traffic focus.

As air travel recovers from the pandemic, we will see how these divergent attitudes to transatlantic business travel turn out for the two competitors. ?Virgin's plans appear more in line with expectations that longhaul business travel won't return as strongly as leisure and VFR.?

* I've defined primarily leisure as Nashville, New Orleans, Orlando, Phoenix, Portland and San Diego. Two of these routes will operate less than daily, others are known for their preponderance of leisure passengers.