The Telegraph
Since 1st March, 1999
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Virgin tickles India with bare-minimum fare
- Awaiting the outcome of the battle for new UK routes, Branson promises to halve rates

London, Nov. 13: Sir Richard Branson's Virgin Atlantic is hoping to be awarded the lion's share of the 21 extra direct flights on offer to British airlines when the UK's Civil Aviation Authority (CAA) gives its written decision in a fortnight.

For two days at the CAA headquarters in Kingsway, London, three bitterly competing airlines ' British Airways, Virgin Atlantic and BMI (British Midland's international wing) ' have been making their pitch before the four member adjudicating panel.

At stake is the lucrative Indian market.

Branson, one of Britain's most colourful entrepreneurs, gave evidence yesterday in support of Virgin's claim, a day after the CAA had heard submissions from BA's chief executive Rod Eddington and BMI chairman Sir Michael Bishop.

Alone among the formally dressed dark suited men, Branson turned up as usual without a tie.

'My instinct is that Branson, who is liked by the British government, will get what he wants,' said a source on a rival airline. 'He will not take no for an answer.'

The source added: 'His game plan is to get a foothold in India through his airline and then bring his other businesses.'

The entire picture of flights between the UK and India is set to alter dramatically under a bilateral agreement between the two countries. It has been decided that the number of direct flights available to British and Indian carriers should more than doubled from 19 to 40.

At present, all 19 on the UK side are taken up by British Airways which operates seven flights a week each to Delhi and to Bombay, three to Calcutta, and two to Chennai.

BA believes that it should be allocated all the 21 additional flights because it feels the government should not undermine the British challenge to foreign carriers such as Lufthansa and Emirates. The latter take passengers from the UK to India via third countries.

If BA wins the day, it says it will run two flights a day ' a 'double daily' -- from London to Delhi and to Bombay, plus four a week to Bangalore ' everyone agrees 'Silicon City' needs to connected directly to London ' and increase the number of services to Chennai from three to five a week and keep Calcutta at three a week.

'We are best placed to bring maximum benefits to consumers and the British economy by operating the additional flights,' said a BA spokeswoman. 'We know the Indian market well as we have flown there for 75 years and operate services to Delhi, Mumbai, Chennai and Kolkata. As Britain's national flag carrier we can offer connections to the UK regions and, via Jet Airways, to seven additional Indian cities. We have fought long and hard for the changes to the bilateral agreement which have made these new services possible.'

She added: 'There are 22 airlines flying directly or indirectly between the two countries. Awarding us extra frequencies does not limit competition. If the additional UK/India frequencies are divided up between all three UK carriers it would weaken Britain's position in the market.'

She also said: 'The maintenance of a global network linking Britain to the rest of the world is a key benefit to British consumers and the British economy.'

British Midland, a new would be entrant to the Indian market, desperately wants the London-Bombay flights and is promising to bring down fares ' a pledge also made by Virgin. It estimates that BA makes a profit of Pound38million on London-Bombay.

At present, Virgin flies three times a week to Delhi by taking three of Air India's unused slots under a 'code share' agreement with India's national carrier. But this agreement ends in early December and Virgin is anxious to be given permission to fly to India in its own right.

On the Indian side, the 21 extra flights to London will also be up for grabs, with Jet and possibly Sahara and may be even Indian Airlines muscling into the market.

Branson has said he is interested in taking a stake of up to 49 per cent in a domestic Indian carrier.

Travel experts predict that when 80 direct UK-India flights become available, carriers such as Lufthansa, Emirates and Qatar, for whom the Indian market is very important, will find themselves in serious trouble.

Air-India is gearing up to meet the challenge by leasing second-hand aircraft but it will very quickly have to buy new planes if it is to fight Virgin and BA and possibly BMI for business. From Air India's point of view, it would be helpful if BMI wins the London-Bombay flights because this is seen as the weakest carrier and will offer the least competition.

An Air-India official told The Telegraph: 'We can't make decisions without getting bogged down in government bureaucracy while Jet Airways can take quick decisions but many of the senior people in Jet are ex-Air India. We will have the same sort of fight in India for the 21 flights as you are seeing among British airlines.'

In simple terms, the huge prize is India and everyone wants a piece of the action.

Before Branson gave evidence yesterday, Virgin's case was summed up by its counsel, Charles Hadden-Cave, QC.

'There are two great emerging economies in this century: China and India. It is a vital part of Virgin's plans, as the second British global carrier, to be allowed to compete and establish itself properly in India. This is a very important case for Virgin.'

He went on: 'The two major routes it particularly wishes to compete on are Mumbai and Delhi: the New York and Washington of India. Mumbai is, of course, the great prize in terms of size and potential.'

He added: 'Virgin recognised the importance of India several years ago. Virgin has shown great commitment to India. It was so keen to get a foothold it used two and then three frequencies to Delhi from Air India. It has borne the losses ' '4 million in the past two years.'

In his evidence, Branson argued that in 20 years since he set up his airline, Virgin had chosen the long haul route, improving quality ' it offered flat beds, massage and limousines to first class passengers (even if their homes were in Cornwall) ' and pushed down fares wherever it operated.

On India, he had pressed his case with senior Indian politicians from the Prime Minister downwards. It was in India's interests to have as many services as possible, he said. Personally, he was thinking of opening up a company, Virgin Holidays, in India, quite apart from trying to take a stake in an Indian carrier.

BA at present dominated by controlling 75 per cent of the direct British market in India 'but we will give them a run for their money', pledged Branson.

He hoped to introduce the giant A380 after 2008 when the plane would be capable of carrying 500 plus passengers to and from India in one go.

After his evidence, Branson gave a short interview to The Telegraph when he said he saw no reason why fares to India from the UK should not come down to 'Transatlantic levels'.

In effect, this would mean fares being halved for economy passengers from their current levels of about '500 in the low season and '750 in winter. To fly to New York from London costs between '200 to '300, and to Los Angeles and San Francisco, which is further away than Calcutta, not very much more. If Branson delivers what he promises, he will revolutionise air traffic between India and the UK.

Should he get the flights he was demanding, he told the CAA, 'we will hit the ground running'.

That's what others are afraid of.

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