* Britain in danger of slipping into dark ages -Branson
* Says domestic carrier Little Red could expand into Europe
* Confirms cruise business planned, to build two ships
By Matt Smith
DUBAI, March 24 Virgin Atlantic founder
Richard Branson dangled the carrot of further investment in the
British airline's domestic carrier Little Red as he stepped up
the campaign for a third runway at London's Heathrow airport.
Warning that Britain is in danger of "slipping into the dark
ages" without additional capacity at Heathrow, Branson said
Virgin would look to expand Little Red into Europe only after a
third runway is built.
Little Red was launched by Virgin last year, offering
routes from Heathrow to Manchester and the Scottish cities of
Aberdeen and Edinburgh, after rival British Airways
bought short-haul operator British Midland.
Some analysts had suggested that Little Red would increase
its routes to attract transatlantic feeder traffic after Delta
Air Lines acquired a 49 percent stake in Virgin Atlantic
But Virgin has suffered a difficult past few years in the
face of soaring fuel costs, increased competition and the global
economic downturn. Its 2012/13 results showed a loss of 93
million pounds ($141.6 million), against an 80 million pound
loss a year earlier.
"Little Red was some crumbs we were given when British
Airways bought British Midland - it's very difficult to get
slots at Heathrow so we grabbed them," Branson told reporters at
a news conference in Dubai on Monday.
"We don't have any plans to expand it until a new runway is
built at Heathrow. Then we will want to set up a much bigger
short-haul operation into Europe and one or two other cities in
the UK, but there is still a lot of politics to go before a new
runway is built."
Heathrow, Europe's biggest airport, was shortlisted last
year as a location for a new runway, but its site near
residential areas west of London makes its expansion a toxic
issue for local voters, green groups and the Liberal Democrat
political party, which is part of Britain's Conservative-led
Different expansion plans for airport capacity around London
have been on and off the table since the 1970s, but with demand
for air travel expected to double in Britain to 300 million
passengers a year by 2030, the crunch is coming to a head.
"There's a danger of slipping into the dark ages - we
haven't had a new runway in Britain since 1945 and we have only
two runways at our main airport," said Branson, owner of 51
percent of Virgin Atlantic.
But it is by no means certain Virgin would expand its Little
Red network even if Heathrow gets a third runway.
"I'm very sceptical that domestic short-haul flying is
economic out of Heathrow unless you have the critical mass of
British Airways," said Peter Morris, chief economist at
aerospace industry consultancy Ascend Worldwide.
"However, having complained about the dominant position of
BA and made such a fuss about slots at Heathrow, Virgin couldn't
then say it didn't want to operate these."
The next routes Virgin will look to introduce are almost
certainly going to be long haul, Morris added, pointing to a
sustained squeeze on short and mid-haul flights out of Heathrow.
Branson said that the tie-up with Delta has enabled Virgin
Atlantic to win corporate accounts and predicted that his
airline's next financial results would show the benefits of the
U.S. carrier's involvement.
He also confirmed that Virgin would set up its own cruise
ship division, having been quoted in an Abu Dhabi newspaper as
saying he was seeking investors for a $1.7 billion project.
"Most of the money is now committed," Branson said. "We will
start by building two big ships from scratch and feel the Virgin
brand will work very well in cruises."
(Editing by David Goodman)