Virgin Atlantic

Origins

Virgin Atlantic has its origins in a joint endeavour by Randolph Fields, an American-born lawyer, and Alan Hellary, a former chief pilot for British private airline Laker Airways. Following the collapse of Laker Airways in 1982, Fields and Hellary decided to establish a new company, initially named British Atlantic Airways, as a successor. Reportedly, Fields had formed a concept for an airline that would operate between London and the Falkland Islands during June 1982, when the Falklands War had just finished.

However, it was soon determined that the short runway at Port Stanley Airport, and the time it would take to improve it, would render a route to the Falklands commercially unviable; thus, the idea of such a service was dropped. In its place, Hellary and Fields commenced efforts to secure a licence to operate a route between Gatwick Airport, London and John F. Kennedy International Airport, New York City. During May 1983, a three-day inquiry was conducted, which chose to reject the application following objections from British Airways, British Caledonian and BAA.

Hellary and Fields then applied for a licence between Gatwick and Newark, New Jersey, using a 380-seat McDonnell Douglas DC-10.

Formative years

On 22 June 1984, Virgin Atlantic operated its inaugural scheduled service, flown between Gatwick and Newark using a leased Boeing 747-200 (registration G-VIRG), christened Maiden Voyager, which had been formerly operated by Aerolíneas Argentinas. From the onset, its activities were augmented by leveraging existing Virgin Group resources, such as tickets being sold at Virgin Megastores record shops.

Part of Richard Branson's declared approach to business is to either succeed within the first year or exit the market; this ethos includes a one-year limit on everything associated with starting up operations.

In November 1984, the airline launched a service between Gatwick Airport and Maastricht Aachen Airport in the Netherlands using a chartered BAC One-Eleven.

In 1986, the airline added another Boeing 747 to its fleet and started a scheduled route from Gatwick to Miami. Additional aircraft were quickly acquired, and new routes were launched from Gatwick, such as to New York JFK in 1988, Tokyo Narita in 1989, Los Angeles in 1990, Boston in 1991, and Orlando in 1992. In 1987, Virgin Atlantic launched a service between Luton and Dublin using secondhand Vickers Viscount turboprop aircraft, but this route was withdrawn around 1990. The airline also operated a Viscount service between Maastricht and London Luton Airport in 1989.

Competition

In 1991, Virgin Atlantic was given permission to operate from Heathrow following the abolition of the London Air Traffic Distribution Rules (TDRs), which had governed the distribution of traffic between Heathrow and Gatwick airports since 1978, primarily to bolster the profitability of Gatwick.

The Civil Aviation Authority also transferred two pairs of unused landing slots that British Airways held at Tokyo's Narita Airport to Virgin Atlantic, allowing it to increase frequency between Heathrow and Tokyo from four to six weekly round trips, making it easier to compete against British Airways. The chairman of BA, Lord King, called the CAA's decision, which the government had endorsed, "a confiscation of his company's property".

In later years, the scarcity of Heathrow slots became a structural constraint on Virgin Atlantic's growth and on other airlines seeking to enter the airport. The Competition and Markets Authority has described slots at capacity-constrained airports as a key barrier to entry, because an airline that wants to compete on a route may have to obtain slots from incumbent carriers. A 2023 Department for Transport consultation said that the new entrant rule was intended to help airlines gain access to slot-congested airports, but that in summer 2022 only 12 Heathrow slots were allocated to new entrants from the pool, out of 152,613 summer slots at the airport. The same consultation said that, because most slots at capacity-constrained airports were allocated under historic rights, it was not always practical for new entrant airlines to pursue pool slots.

In the year to October 1993, Virgin Atlantic declared a loss of £9.3 million. The decision to abolish the London TDRs and to let Virgin Atlantic operate at Heathrow, in competition with British Airways, became the trigger for BA's so-called dirty tricks campaign against the company. During 1993, BA's public relations director, David Burnside, published an article in BA News, British Airways' internal magazine, which argued that Branson's protests against British Airways were a publicity stunt. Branson sued British Airways for libel, using the services of George Carman QC. BA settled out of court when its lawyers discovered the lengths to which the company had gone in trying to kill off Virgin Atlantic. British Airways had to pay a legal bill of up to £3 million, damages to Branson of £500,000, and a further £110,000 to his airline.