From the throb of Frankie Goes To Hollywood’s Relax to the maraschino cherry-red stilettos of the stewardesses click-clacking through a grey Gatwick; from the dumbstruck drones to the departure board announcing that Virgin’s first route, VS001 to Newark, is on time. Everything about Virgin Atlantic’s aerodynamically slick 25th anniversary TV advert suggests that prior to 22 June 1984, air travel was drudgery with wings rather than a passport to a life of sipping martinis at 35,000ft.

While the €6.7m campaign is tongue-in-cheek insists Steve Ridgway, the airline’s droll chief executive, between mouthfuls of toast — he has just flown in from his holiday home in Spain — undoubtedly it heightens nostalgia for an era when air travel was more exciting than fraught. A period before overcrowding, routine delays and shoe removal. A time when passengers’ anticipation levels were, as Virgin winkingly acknowledges, mile-high. The advert’s money shot is a cruising 747 adorned with a classic pin-up girl overlaid with the evocative tagline: Still Red Hot.


But after stoking up heat for a quarter of a century, Virgin finds itself celebrating this milestone in the worst aviation slump in history. Faltering passenger demand and staff cuts mean the airline is 10% smaller than it was a year ago, new aircraft have been deferred and long-planned special offers have dovetailed with horror movie fare-slashing. Nevertheless, 2009 could truly be a landmark year for Virgin after all, amid a flurry of industry consolidations. 


Audaciously, Ridgway says the acquisition of short-haul airline BMI — which holds 12.5% of London Heathrow’s take-off slots (currently Virgin has 3.5%) — is still on his to-do list and confirms talks have taken place with Lufthansa, currently awaiting an EU rubber-stamp of a long drawn-out deal to up its stake in BMI to 80%. Moreover, in the current climate, Ridgway is eager to talk up the logic of a broader tie-up with the German carrier, which could create “a real, viable competitor” to arch-foe BA as well as Air France-KLM. Under one scenario, Lufthansa could even acquire the 49% stake that Singapore Airlines has held in Virgin since 2000. Singapore chief executive Chew Choon Seng has publicly revealed his dissatisfaction with the Virgin investment or as Ridgway interprets it, Singapore is refocusing on “China, India, the Gulf, its own back yard”. 


While these things tend to drag on for years, and Lufthansa chief executive Wolfgang Mayrhuber has been far less revealing, Ridgway is optimistic or mischievous enough to foresee BMI being rebranded with a certain red livery. “There should be one simple proposition for the consumer,” he muses. “Virgin something….” A Virgin Europe, say, would definitely be a star turn in the constellation already comprising Virgin America, Virgin Blue, V Australia, and Virgin Nigeria – all affiliated in various ways to Richard Branson’s sprawling Virgin Group. 


The “slightly risqué” Virgin brand and Virgin Atlantic’s unusually strong relationship with its customers is a big plus in the airline’s recession strategy as well as long-term expansion plans, says Ridgway, who trained in sales and worked as a teacher and a boatbuilder before joining the airline he has headed for more than a decade. The 58-year-old — tanned in a blazer and jeans, boots and belt from outdoorsy Australian label RM Williams — bonded with Branson when he project-managed Virgin Challenger, an attempt to cross the Atlantic by boat to publicise Branson’s then one-leased-plane airline 


Now Virgin Atlantic operates 38 aircraft on 215 weekly flights to 30 destinations from three UK airports. Nevertheless it is not even among the top five UK airlines in terms of passengers. The disproportionately high-profile the company enjoys is as much to do with Ridgway’s Tiggerish enthusiasm for self-improvement as Branson’s publicity-seeking antics. Ridgway says the highlight of his time with Virgin is that it “has remained fresh and very intimate with its customers and staff... has never stopped trying to do things differently, half a notch outside from the traditional market”. 


Ridgway says Virgin’s Upper Class cabins — with their flat beds, masseuses and bars and equally sybaritic airport lounges — revolutionised transatlantic travel and that Virgin invented “Premium Economy”. While the entire airline has benefited from the halo effect of the front of the plane, Ridgway believes that Virgin has earned loyalty because it was “the first airline to have seatback entertainment in Economy, from day one”. 


The CEO says the challenge is to intuit what customers want and ignore focus groups. “People laughed at the idea of bars on planes and flight masseuses. Yet the head-and shoulders massage service lasted 20 years; the time to stop was when you can get the same in your local shopping mall.” Even last year, Ridgway says, Virgin introduced things that had never been done before, the topper being the “Upper Class wing” at Heathrow’s Terminal 3 with a private security channel and Drive-Through Check-In — a riposte to Terminal 5, “which was gifted to BA on a plate,” he fumes. “No-one had done the drive-through before. Passengers were wowed, like when the first clubhouse opened.” 


Ridgway says that challenges in difficult times are the same as they are in good ones, being careful about expenditure and offering the best value proposition. “We don’t have to spend our way out of the recession. We invested very aggressively between 2003 and 2007, having decided to spend during the lull after 9/11, when the economy was weak. We made a big investment in Upper Class suites. We developed a new £11m clubhouse, relaunched premium economy, so actually, the product is in good shape.” 


He denies that there was luck involved. “We could see probable slowdown in 2008 — obviously we hadn’t predicted the fuel price shock, let alone the credit crunch — so at the end of 2006 we deferred our A380s and stopped growing. We’re turning capacity, moving aircraft around to respond to market. We’ll stop spending for a couple of years and look after our customers.”


Ridgway says the diverse traffic base will help smooth out the economic bumps, as will the company’s balance between the more business-oriented offering out of Heathrow and its leisure travellers flying out of Gatwick and Manchester supported by Virgin Holidays, which distributes about 25% of the capacity out of Gatwick. From November, Virgin will add Puerto Rico to its Caribbean destinations. Over the past three years, Virgin has tweaked its capacity to expand its premium economy cabin. Now around 25% of capacity is premium (Upper Class and Premium Economy) and 75% economy, which Ridgway suggests “is one of the reasons why in this downturn we are slightly cushioned”. 


He also stresses that the epic TV advert was not an indulgence. “It was part of commerical strategy, a PR campaign to set out our stall and drive up sales on aircraft in a bloody difficult time.” Some lavish parties and media events, on the other hand, have been canned.


As a private company (Branson’s Virgin Group owns 51%), Virgin Atlantic releases scant financial details, and at press time results for its fiscal year ending February 2009 were due 26 May. Ridgway says people will be taken aback: “We have been good at managing costs and hedging fuel and currency. I would be surprised if pre-tax profits were not the around the £50m [€55m] mark.” 


This would be impressive anyway, considering that 12 months earlier the company reported pre-tax profits of £34m [€37m]. It would be even more remarkable given that BA predicts an operating loss for the year ending March of £150m (€167m) and Lufthansa and Air France-KLM have reported huge drops in net profits. Ridgway also points out that Virgin Atlantic has no debt, has no need to go to banks, and that, as a private company, is much more flexible: “Most of our aircraft are leased. We could stay as we are or could contract or grow according to the global market.”


The first 15 of 28 787-9s (Boeing’s Dreamliner) were scheduled for 2011, but this has slipped to at least 2013, when the first of six Airbus A380s arrives, deferred from 2009. “Whatever the economy dictates,” says Ridgway, “we intend to run one of the youngest most efficient fleets in the world, which is very important from an economic point of view — the next generation of aircraft will improve economics and allow more direct service — and a sustainability one. Airlines do pollute and we’ve shown we can lead in pressing manufacturers to do more, push governments to regulate emissions. This is why biofuel trials are so important.”


“The challenge,” he says, “is to make commercial quantities of biofuel and not make mistakes like cutting down forest like the ethanol guys did. That’s the way the industry is going — second-/third-generation biofuel, algae — and it can only be a good thing. Aviation needs first not to increase emissions; then it ultimately needs to reduce them. We live in a global economy and the global economy wouldn’t exist without aviation.”


Yet the even more pressing issue is consolidation, hence the eyelash-batting in Lufthansa’s direction. “Airlines must consolidate. It is the last global industry to still be regulated,” says Ridgway, aware that there are seven airlines, including five flag carriers, under EC investigation over potential anti-competitive practices on transatlantic routes. 


Two inquiries have begun: one into the cooperation between BA, American Airlines and Iberia under their Oneworld code-sharing pact. The other is into the Star Alliance partnership between Lufthansa, United Airlines, Air Canada and Continental. Another investigation is looking at the SkyTeam alliance of Air France-KLM and Delta-Northwest.


“The most important thing is that there is a level playing field and that [consolidation] is good for consumers. That’s why we’re so vehement and vocal about the BA and AA situation. It is totally wrong if things are pushed through quickly because of ‘tough times’. In every other industry it wouldn’t be allowed — apart from banking, of course.” 


For Virgin, the flying experience can still improve. “On new aircraft probably in the next two years people will be able to use computers, Blackberries, make phone calls — if they want that,” says Ridgway. “Consumers will have a fantastic choice. This is very exciting; this means we have to raise standards of entertainment again — with high definition — this means ‘super cinema’ really. Then there’s the cabin fit, finish and lighting. We have really led the way and we will improve.”


Ridgway adds: “Virgin’s first 25 years were all about being taken seriously, being seen as a viable proposition. The next 25 will be about international growth while maintaining our commitment to service. In other words, it will be about staying true to our heritage.”

VIRGIN IN THE AIR

Virgin Group, founded by the UK’s most famous entrepreneur Sir Richard Branson in 1970, is heavily involved in travel, entertainment and lifestyle. Although Branson retains complete ownership and control of the Virgin Brand, the commercial set-up of companies using it is varied and complex. Each of the companies operating under the Virgin brand is a separate entity, with Branson completely owning some and holding minority or majority stakes in others. Occasionally, the brand is licensed to a company that has purchased a division from him, such as Virgin Mobile USA, Virgin Mobile Australia and Virgin Music (now part of EMI)


Virgin Blue 

Launched to fill the vacuum created by the failure of local player Ansett, the low-cost airline is now Australia’s second-biggest airline as well as the largest by fleet size to utilise the Virgin brand. It was listed on the Australian Stock Exchange in December 2003.


Virgin Nigeria Airways

2004 saw the launch of Virgin Nigeria Airways, in which Nigerian institutional investors own 51% and Virgin Atlantic the remainder. Since the inaugural flight on 28 June 2005 from Lagos to London Heathrow, the airline has become one of Nigeria’s largest airlines. The company plans to expand throughout Africa.


Virgin America

Low-budget domestic carrier Virgin America, of which Virgin Group owns 25% (to satisfy local trust laws), made its inaugural San Francisco and Los Angeles to New York flights on 8 August 2007. It reported a $270m loss from August 2007 through the first three quarters of 2008 but expects to turn a profit in 2010 


V Australia

A new Australian international airline, launched in February 2009, with direct services from Sydney and Brisbane to LA. 


Virgin Galactic

In 2010, “tests” are expected for Virgin Galactic, which plans to provide sub-orbital spaceflights to the public within the next few years. The initial journey comprises an hour of spiralling to 50,000ft (15,240m) air launch altitude with the WhiteKnightTwo mothership, seconds of rocket-powered ascent into space at Mach4 in SpaceShipTwo, followed by 20 minutes of glide back to the runway. The cost? €150,000