The Engadget Interview: Sir Richard Branson, Chairman of Virgin Group
By Paul Miller 
posted Aug 9th 2007 1:02PM
posted Aug 9th 2007 1:02PM
Thank you for talking with us today. Congratulations on the flight!
Thank you very much.
How are you liking it?
[Laughs] Well, I'm biased. And we've spent years and years trying to get this Virgin born and off the ground, and so many people have put so much time and effort and sweat and toil into it. Our competitors have tried to smother it at birth and make sure it never happened, but now it's finally happened. It's the perfect birth, I can't think of anything I'd change. She's a beautiful baby, has got beautiful eyes, and I'm very very proud of her, very proud of what everyone's done to get this.
It's definitely been a well publicized fight to make this happen, what made it worth three and a half years to launch Virgin America?
I think anybody who's traveled on the legacy carriers in America will know why people have to fight to try to compete with them. The quality of their service is almost non-existent. I wouldn't say that's particularly the fault of their crews, it's the tools that those crews have been given by their masters, or they haven't been given any tools, and the end result has been... If you look at any poll of the best airlines in the world, I've never seen an American carrier come anywhere but very very near the bottom. So, in a situation like that, it's right for Virgin to come in and shake up that industry. The very fact that we come in and we offer that equality will mean that will lift those legacy carriers, it'll be actually good for them. They'll have to compete back, and I'm sure they will. But, you know, it's up to our team that we always remain one step ahead.
With you guys in play now, how do plan to stay cutting edge? It took so long for you guys to get off the ground that a lot of these features are basically outdated at this point. In speaking with Panasonic today, they already have the next generation of this hardware out on the market.
It's just a permanent investment game. You know, we invested $200 million in new seats on Virgin Atlantic, we decided they weren't good enough, they were already out of date by the time we got them on our planes. And within a year we've put even better seats on. We've just gotta stay ahead of the game, we can never be second best, we always have to be... in reality, be the best in the world. And that applies to Virgin Blue in Australia (which we have a stake in), Virgin America (which we have a stake in but we don't control), and Virgin Atlantic, Virgin Nigeria and all our airlines.
With this new competition in the market, where do you see the US airline experience and US airlines in general in the next 5 years?
I certainly believe that Jet Blue will stay around, I certainly believe that Southwest will still be around, and I certainly believe that Virgin America will still be around. As for the others... Dot dot dot [laughs]. The legacy carriers, if it wasn't for Chapter 11, none of them would be around, I mean they just keep on going in and out of bankruptcy. In Europe, if you're dead you're dead, make room for new children to grow. You're a tree and you die, you make room for new trees. In America you've got this bizarre situation with Chapter 11 and the big carriers keep on going bankrupt, stumbling back out again, going bankrupt, stumbling back out again. It's not good for the traveling public. It's much better if you have the English system, where if you don't succeed you're bankrupt and you make room for somebody else.
We know internet is in the works for Virgin America, coming in 2008, what about the "dreaded" possibility of in-flight cellphone usage that is so debated currently?
Well, the internet, I'm delighted to say, we're going to introduce next year, and I think that once we have the internet, I don't think phones will be that needed. I think people will be able to communicate with people on the ground through the internet. We've gotten phone in Virgin Atlantic and we find they don't get used that much, but there is enormous demand for internet, and that's why we're rushing ahead for that.
So you think technologies like VoIP that would be enabled by the internet... it seems like somehow people are going to figure out a way to annoy their neighbor next to them by talk loudly on a plane, how do you feel about that?
If somebody really wants to talk to somebody, we might well have a couple of rows at the back where people can go and make a call there. We wouldn't really want to have people talking next to each other, but a place on the plane where people can make a call if they really wanted to, if we had VoIP, then that might be possible.
A lot of people are bringing their own media players, their own content to the table now. How do you guys plan to support that and expand that experience for users?
(Charles Ogilvie, Director of Inflight Entertainment & Partnerships for Virgin America, answered this one) We're doing a number of things. Every single seat on this aircraft has access to a power outlet. So even passengers that bring on their own devices, they're able to maintain a charge. Now if that's a laptop or that's a DVD player, we welcome that. We hope that we will constantly innovate on our in-flight entertainment system to provide things they may not think of bringing or they may not necessarily want to take out of the overhead bin. So we're trying to provide choice the the passenger.
As far as video out to the screens or actual media syncing between the devices?
(Charles) It's something we're actively looking at.
How are things going in the US mobile market? A lot of companies are struggling with the MVNO market lately, how does that apply to you guys at Virgin Mobile?
Well, fortunately Virgin Mobile's been a great success. I think we're just coming up to our 5 millionth customer, and I think we're the most successful MVNO in America. Again, having a great brand has helped, but the brand has to deliver, and I think the team of people at Virgin Mobile have delivered. They've offered great value for the public, they've done it with the same sort of panache and style that we doing with Virgin America, and it's growing very well.
How do products like the iPhone and things Helio is currently doing in that space affect you guys?
Not affecting us at all at the moment. We're working on technology to try and compete in that field. At the moment the iPhone's very expensive, and if they ever bring down their expensive price, we hope to be able to compete with them head on, and we'll see how we go.
Do you think the old model of selling music at a cash register is broken? Obviously you have a few years of experience in the music industry -- will digital sales replace that system?
I own record shops [laughs]. It's not easy, and music shops have to adapt. We've been adapting by launching things like mobile phones, in order to have other products in our stores, but I suspect music stores are going to have to adapt even more, and it's certainly getting tougher and tougher.
(And that's all the time we have) Thank you so much.
Thank you.
I certainly believe that American Airlines will be around as one of the so called dot dot dot's.
And for the record to the best of my knowledge, AA has never filed any type of banruptcy protection.
what a blah interview, with half assed answers from mr virgin
" In Europe, if you're dead you're dead, make room for new children to grow. You're a tree and you die, you make room for new trees. In America you've got this bizarre situation with Chapter 11 and the big carriers keep on going bankrupt, stumbling back out again, going bankrupt, stumbling back out again. It's not good for the traveling public. "
That's a disingenous comment. In EU, they keep subsidizing companies so they never reach bankrupcy. A prime example is the airline Alitalia, in which Italian government has finally had enough and is trying to rid itself of it. Unfortunately, with all the restrictions placed, no one wants. It should have been dead long ago.
I suggest you get better information. That doesn't happen in the EU. Alitalia doesn't go under because it's STATE OWNED not because it gets rescued by the state
As the lawyers like to say: Distinction with out a Difference. State-owned, state-subsidized. Still comes out of the public treasury.
There are stricter rules regarding subsidies in the EU to the US. The EU requires ALL subsidies to be repaid as loans at commerical rates. There is no subsidy of EU airlines.
You may be confusing state owned airlines with subsidies. Again these are few and far between. We don't have Chapter 11 equivelents in the EU. If a business cannot raise capital through shareholders, banks or states at commerical rates then the company is in administration and ceases business until a buyer can be found. Is is legal for a state to own a percentate of a business and therefore an airline but rules still apply and many airlines have been found in breach of rules and had to pay back money they have received.
The American system is very different and the chapter 11 option does not allow new businesses to florish but keeps inept businesses alive. United and others should have died like PanAm some time back but the system keeps them alive. True it doesn't get state loans but it doesn't face market forces equally either. New airlines in the EU are florishing at the expense of the older larger ones. In the US there isn't enough small airlines competing at a national or international level to force United and others to sort themselves out.
"The EU requires ALL subsidies to be repaid as loans at commerical rates."
You mean like the "launch subsidy" that Airbus receives?
Airbus doesn't receive subsidies. This is a common misleading complaint of Boeing. Airbus and the European Commission has been upfront on more than one occasion and made this complaint to the WTO. All money received by airbus is repayable. Boeing's complaint is the money is a subsidy because it is money granted by the state but ignores the repayment element. Airbus counter argues that Boeing receives unfair subsidies in breach of the WTO rules because it is provided with millions of American dollars in subsidies and grants for it's military development programmes. Technologies learnt from these programmes find their way back to the civilian arm of the company and into their airlines. This money is never repaid back.
The first plane is Air Colbert? Is Stepehen Colbert somehow involved in this? First the eagle named after him then the Ben and Jerry's icecream flavor now a friggen' plane?? That's frigg'n sweet!!
It is named after Stephen Colbert. From yesterday's posting: http://www.engadget.com/2007/08/08/virgin-americas-inaugural-flight/
9:27AM: "I don't know who organized the weather today!" New York got nailed by some horrible weather this morning, and we're running about an hour late. Stephen Colbert, who the plane is named after and is supposed to be christening the plane this morning, is stuck in traffic, along with a few other main figures. We're going to carry on all the same. Sir Richard mentions how hard this has been to get off the ground, but it's finally happening. "It's time Americans get the airline they deserve, it's been much too long." Applause.
Stephen Colbert was supposed to christen the plane on Wednesday but was delayed by rain and didn't make it to the event.
Well he's certainly correct in his assessment of the legacy carriers, but I cannot see how his gizmos and such will offer what the legacies don't - and what people really want: customer service.
Customer service seem like a very vague term so I'm not quite sure what you mean by that. Do you mean flyers will have options if the plane is stuck on the tarmac for 6hrs? The legacies in this day and age don't offer what everyone is clammering for, simple access to a power socket to power all their electronics.
Wait so they own but don't control Virgin America? Why would they choose to do that?
They didnt choose do not control it. Its the law in the US that an airline has to be run by a US citizen. Branson is English and so could not control a US based airline.
' By law, no more than 25% of a US airline may be owned by foreign interests and must be under the "actual control" of U.S. citizens '
This is one of the major criticisms of the American Airline Industry. Down to its core it is very anti-competitive. It prevents many airlines that offer better and cheaper service to operate in the US. Of course the legacy carriers wouldn't have it any other way. If you ever get the chance, go to Europe and fly around on their regional airlines. It is a different world from what we experience here in the US.
Makes sense I suppose. Thank you.
Something to do with archaic US laws, airlines can't be owned by foreigners I believe.
I think it something to do with non-US companies controlling an america domestic airline or something. So as Virgin is British based that's probably why.
I believe the answer is that in the US, airlines have to be controlled by US citizens. Since Branson owns/controls Virgin, they had to basically spin off an independent company controlled by Americans (whoever the head execs are of Virgin America).
They don't own or control it, they are a minority shareholder (Branson and crew I mean). That is the only way they could get in America. There is a law that states basically, no airline can be owned or controlled by non-US citizens or companies. That is why it took 3 years, they had to restructure.
America, despite it's constant talk of equal and open markets is one of the most protected and insular markets in the world. Foreign individials and companies cannot own a majority share in any US company. For airlines this means someone like Virgin cannot set up a whole owned and registered American version of their airline and offer African or European routes across America but must get someone else to set up a firm and own a small percentage of it. This keeps big unproductive and unprofitable American businesses in American hands rather than being owned by a fair global capital market.
The EU model is different. No such restrictions on foreign ownership exists but the EU does have much much stricter competion rules to prevent monopolies, therefore an American business cannot buy a German, Polish, Spanish or British firm if the combined output of the American and European business would breach certain thresholds. Many US takeovers of EU firms have been stopped this way because competition would be affected.
United, for example, could not take over or merge with British Airways (the reverse could never happen because of old fashioned rules on ownership) unless the combined business gave up 50% of it's landing and take off slots. This would clearly make the deal unworthy.
The EU market is much more flexible and fluid than the American one which still enjoys state protection when businesses over a certain size fall into trouble.
"Not effecting us at all at the moment."
Man, I certainly hope you mean "AFFECTING".
Best me to it
I've never flow on Jet Blue but, how do they compare to the "legacy" airlines? Would they be VA's biggest competitor?
I can agree somewhat with his assessment of legacy airlines in the US. I mean, I used to fly on NWA weekly. What a joke that airline is. I feel for the crew and the employees as I'm sure they do the best they can with what they have but, man...Flying economy is just so demeaning these days. You really do feel poor when you fly economy. And then First Class is not even like it used to be. I remember only getting a free bag of nuts and pretzels when I used to fly First Class between DTW to BOS on NWA. The planes were obsolete and looked so freakin' used. Plus the cabin usually stank of old plane. Just not nice at all.
I wonder how much change VA will make to this industry in America. Did Jet Blue change the same industry here? No. Did Song change the industry here? No. It went belly up though. Did South West change things here? Maybe. Fares are lower now. Let's see if these old farts running the legacy airlines will at least put some sort of in-flight entertainment that won't cost an arm and a leg to view. I think that's about as far as the changes may go with the old airlines.
"I wonder how much change VA will make to this industry in America. Did Jet Blue change the same industry here? No. Did Song change the industry here? No. It went belly up though. Did South West change things here? Maybe. Fares are lower now. Let's see if these old farts running the legacy airlines will at least put some sort of in-flight entertainment that won't cost an arm and a leg to view. I think that's about as far as the changes may go with the old airlines."
I think Jet Blue did change the industry. I fly jetblue as often as possible and I HATE when I have to fly another airline (especially American). I for one hate this whole business, first class, first first class, ultimate first class seperation. Why not do what jet blue does? Treat everyone like first class. And in their case jet blue "coach" seats have better inflight entertainment that most of the other airlines first class.
As great as Song was Delta didn't give it the attention and time it deserved. Ironically the first time I flew Song, it was their last flight ever. New york to Miami.
Southwest is an incredible competitor in pricing.
By what I see VA offers rates from JFK to LAX as low as 129 each way. Which is ridiculously cheap. Would love to see VA and Jet Blue push the oh-so-low standard of flying in the US.
cant wait til tuesday when I fly to cali on virgin america oh yea
Oh come on! I am surprised you did not ask more questions about Virgin Mobile. A good question would have been why their phones are all dated and why is it that Virgin Mobile in other countries offer a better selection?
Before people dismiss the possibility that Virgin America will be as good as Branson claims, consider Virgin Atlantic - it's one of the top airlines in the world and my 1st choice for any transatlantic flight. If Branson knows one thing, it's how to operate a successful airline. And he would agree that it's not only about gizmos - Virgin Atlantic's customer service is excellent. Their cabin crew are sexy too.
general_generic, cabin crews in US will never equal (in terms of "sexiness") that of many int'l carriers due to america's strict discrimination laws... fly the asian-based airlines (e.g., Singapore Airlines, Cathay, etc). you can't tell me there isn't a tacit minimal attractiveness and age floor in their hiring...
Good point Rob. The image I had in my head of my first Virgin US flight has been slightly sullied now :(
I think Steve Jobs and Richard Branson must have grown up in the same commune in the 1960s.
The one that produces charismatic, industry-leading multi-billionaire visionaries? Sign me up!
Go Dicky! I love Beard Atlantic and now it's time to stick two fingers up to AA, United, Delta, Continental etc... You may not love Sir Richard but when he gets into a segment, it gives the competition a kick up the behind.
On a personal note, as a resident of San Francisco can I say thank you for making us your first hub. I'm a founding member of eleVAte and look forward to taking to the skies on VA!
i agree with Sir R on one issue.
that is the abhorrent way that US airlines treat
passengers. it starts with the gate and ends
with the gate. they are responsible for everything
in between and they mess it up daily.
1 - if a flight is cancelled and there isn't a new plane to cover the route or the weather is a factor, why not have access to pre-reserved rooms at the airports for all your customers? some brilliant joing marketing between the airports and the hotel industry will make all layovers much more civil.
2 - can you take an example from Virgin and have
decent seats?
3 - partner with someone like Panera and provide real food on the flights. allow people to grab something to eat at the boarding and zip onto the plane for gods sake.
4 - if you take a reservation, and promise a plane,
you are obligated to fly the passenger, even if they are the only one on the plane.
5 - have some enforcement of passenger carryon luggage to be stored where the passengers sit, not above someone closer to the gate.
i could go on and on but it will take a change of minds
to achieve friendly skies once again.
i disagree on whether Euro or other airlines are that free to fail. most of them are highly subsidized and more a reflection of state honor than a bottom line.
RE 1: Virtually all airlines already do this. When there's a huge weather event that cancels hundreds of flights, however, there's not much the airlines can do with a finite amount of hotels rooms avail.
RE 3: Again, this is nothing new. AA offers this, and they generally work with locally know delis to provide something halfway decent. Thing is, nobody seems interested. Most people are content picking something up at the airport and carrying it aboard.
RE 5: Fat chance enforcing this one. So... suppose the jackass sitting next to me monopolizes the overhead space for my row. Does this mean I'm screwed? Beyond enforcing carryon limits (which I fully support), I don't think there's a whole lot the airlines can do here. Your solution would probably make things every worse.
Dan: For example, it's Continental's policy that they will not provide lodging for any weather or air-traffic induced delays, regardless of availability. It's not that they can't do it. They've just cut it out of their costs.
Oh please oh please add Newark!
Here's to great success with VA.
-and even MORE with Virgin Galactic!
I have travelled V Atlantic and must say they provide good seats and excellent cs.
they r the only ones that have a dignified economy class with some good seats.
as for american airliners, they should jus rename economy to "third class".
and for all u branson haters--
"compare your life to his....and then kill urself" :P
i knw i knw, its jus an improvisation of bender's one liner :)
How about covering the South? I mainly travel to Nashville, and I'd love to travel on Virgin (Virgin Atlantic Shanghai-London-JFK/IAD and then to BNA on Virgin America but they don't cover that airport yet) because United has been total crap to me (THe only thing that made the experience bearable was that I was in the exit row because I was in coach class).
airbus isn't a carrier its a manufacturer so its bound by different laws
Would just like to make note that the small Milwaukee-based carrier, Midwest Airlines, does an excellent job of treating their passengers similar to Jet Blue and VA.
My wife has worked for Virgin Atlantic and currently works for Midwest - I'm always happy to fly Midwest as they offer first-class leather seating for the entire cabin as well as their signature fresh-baked cookies on board. I hope they stick around and get through this hostile takeover bid from AirTran. : x
yeah, those European airlines aren't sheilded and don't have monopolies. Please.
BA, Europe's largest airline, is based in one of the most restrictive airports in the world, shielded with Bilateral Agreements everwhere you look. Competitors can't come into Heathrow, they have to purchase slots first, and fat chance at that, much less securing the route authority. And the restrictions flying from London to America were controlled for YEARS under Bermuda II, specifying everything from the airlines to operate the routes (only two American airlines permitted at Heathrow, UA/AA) to the destinations the planes can land at. Denver-London was NOT permitted under Bermuda II for a US-based carrier. Virgin Atlantic shook this notion up, so it seems Branson is trying to have it both ways. The man has a long history of telling outright lies regarding US Legacy carriers (hell, look how he just dismissed the fact that AMR never entered Ch. 11), constantly calling for their demise.
Not many know, but Virgin America's plan was to take over San Francisco after UAL Corp.'s expected immediate liquidation following their entry in Ch.11 back in 2003. They found their way through and have emerged as a much more tangible airline than they were before, their SFO hub fully intact. I can see why Branson would be a bit bitter over Ch.11 hurting their game plan. VA has been delayed for YEARS on that issue as well as every single legacy carrier (Continental at the head) petitioning the DOT to deny VA's application on the grounds it exceeded the foreign ownership law, and it worked, VA having to change thier ownership structure.
It is ironic that Glen Tilton, Chairman and CEO of UAL, has been tirelessly publically stating that foreign ownership laws of the US should be expanded greatly, the same thing Branson is whining about. When that happens, Lufthansa AG buys a significant portion in UAL.
Lufthansa and Air France are far bigger than British Airways, carrying nearly twice as much passengers.
"It is ironic that Glen Tilton, Chairman and CEO of UAL, has been tirelessly publically stating that foreign ownership laws of the US should be expanded greatly, the same thing Branson is whining about. When that happens, Lufthansa AG buys a significant portion in UAL."
The reason why UAL wanna the foreign ownership laws to be expanded was the fact that they are in Chapter 11 and they can't find anyone willing to keep them afloat except their Star Aliance partner.
The American airline industry really need a reform, they really need to bring in more competition and let those subpar legacy carriers to just die off. Anyone who has ever fly anywhere outside of USA will know that most of the US carriers provide no service in their domestic operations (even if the flight is like 3 or 4 hours long, they will just provide nuts and coke), but if you look at overseas carriers, any flight over 2 hours during meals time will offer hot meals (outside of meal time will offer hot snack). Also a lot of US legacy carriers staff are unhappy and just rude to their passengers, they do not understand what's the meaning of service. Besides transporting people from point A to point B safely and on time, airline is a part of the SERVICE industry, the quality of service is important. This simply doesn't exisit in most US carriers.
The fact that there's a lack of quality competition in the US airline industry are not helping the US domestic carriers. Also when people say US airline fares are cheap, I will have to tell you, they ain't that cheap. You will find the bargain fare if you book early but you can also do the same anywhere in the world. If you look at the average fare pay for a given route (over a certain distance), the US carriers are not charging any less than any European or Asian carriers (on their domestic routes), yet they are not providing any form service to their customer. It is just crazy that airline like this are allow to exist, they should all goes bankrupt and let other people offer better product to the travelling public.
As a farmers' son I can add that one of the old complaints of the US vs the EU is about protecting their (grain, sugar etc) markets with subsidies. In reality, the US is helping their farmers in a simular way via tax cuts. (This is no surprise, as no one can grow products at the 'world market' prices, simply because those are based on dump prices of regions that are overproducing.)
Great arguments guys, very enjoyable, agree that VA has upped the stakes onboard, charging points etc. You should count yourself lucky RyanAir haven't come your way. I am sure they will be charging the public to use their toilets soon!
Still do not agree this is anything other than a freebie, not an engadget story, maybe a review of the onboard entertainment, but they did that, so the launch flight was a thank-you for that imo!
I wish the airlines would address the REAL issues:
(1) Coach class should not be a cramped cattle car that leaves you with aching sore knees at the end of the flight. American had the right idea with their "Extra room in Coach" concept a couple of years' back.
(2) We don't want to travel through "hubs" - we want to go from A to B directly, whenever possible.
(3) We want to go faster than the speed of sound. My mother flew from Boston to San Francisco in 5 1/2 hours back in the early 70's - we're still stuck there 35 years later. I grew up thinking "2001" was my Possible Future and that I, too, would be flying PanAm (oops) to the Moon for vacations by the time 2010 rolled around (not to mention flying around town in my own jet-pack). While I applaud Burt Rutan and the whole Virgin Galactic concept whole-heartedly, it still doesn't replace the concept of a full-sized SST that mere mortals can afford to travel on. The demise of the Concorde and the lack of any replacement (from Boeing/Airbus/anyone) is a disgrace.
Every show about/with any british airline the people working for them were always incredibly rude to their customers, will they export that too to america? or do they have that already in the US?