Yesterday we sat down with Sir Richard Branson, Chairman of Virgin Group, in the first class cabin of Air Colbert on the inaugural flight of Virgin America. Richard's day started with a rush through NY rain to make the plane that morning, and was losing his voice on top of it, but he was nice enough to spend a some minutes with us chatting up a few of his myriad of companies. We requested to speak to him about Virgin Galactic, but he isn't allowed to comment on the current situation due to an ongoing investigation into the explosion at Scaled Composites.
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 It took so long for you guys to get off the ground that a lot of these features are basically outdated at this point.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.