Virgin announces new domestic flights

Where's the fabled capacity squeeze?

Richard Branson's Virgin Atlantic will today unveil plans to break into the short-haul market after winning the bidding for 12 pairs of slots at Heathrow.

Those slots will allow it to start flights to Scotland, with regular daily services from Aberdeen and Edinburgh to London. They will being in March, along with the airline's flights between Heathrow and Manchester.

Ridgway, the company's chief executive, told the Financial Times that:

We have fought hard for the right to fly short haul and take a strong challenge to British Airways within these shores.

Just last month, Richard Branson, chairman of Virgin Group, which controls Virgin Atlantic, launched a public campaign for more slots at Heathrow. But the campaign was predicated on Branson's desire, not for flights to Manchester and Edinburgh, but for flights to Hyderabad, Bangalore and Goa. The Guardian's Gwyn Topham wrote, in October:

Virgin Atlantic is considering a break with its go-it-alone history by joining an airline alliance, Sir Richard Branson said as he launched Virgin's new route to Mumbai with a pledge to expand to three more Indian destinations if he can win slots at Heathrow.

Virgin said its investment in India would pass £300m with its two newest A330 aircraft now operating the Delhi and Mumbai routes. Branson said he was also looking at direct Hyderabad, Bangalore and Goa services from Heathrow, although the chances of winning scarce slots in the immediate future seemed slim.

He said finding slots would be tough but "we're going to start campaigning". It would be "part of our campaign for an extra runway to be built at Heathrow", he added.

The fault here does not really lie with Virgin. The extra slots that they picked up in the auction have to be used on the same routes that BMI, the company which used to fly them, operated. If Virgin want to fly more planes to India, then they have to get different rights which allow them more long-haul trips.

Nevertheless, the news puts a different spin on the standard claim that Britain generally – and London specifically, and Heathrow even more specifically – needs greater airport capacity to fly more planes to emerging markets. The problem doesn't seem to be lack of space in the country's airports, but terrible, centralised and backward-looking allocation of that space.

As Zac Goldsmith wrote for this magazine in September:

We need to encourage a shift from air to rail wherever possible. Every week, there are 78 flights to Brussels, 94 to Manchester, 37 to Newcastle, and 95 to Paris. All of these, and many others, can be reached easily by train. With a better high speed rail network, they will be easier still.

Or, as I wrote the month before:

If we want to have more capacity, one really easy thing to do is stop flying from London to bloody Manchester.

Richard Branson dances in India, because he is Richard Branson and he will do what he wants. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Leader: The unresolved Eurozone crisis

The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving.

The eurozone crisis was never resolved. It was merely conveniently forgotten. The vote for Brexit, the terrible war in Syria and Donald Trump’s election as US president all distracted from the single currency’s woes. Yet its contradictions endure, a permanent threat to continental European stability and the future cohesion of the European Union.

The resignation of the Italian prime minister Matteo Renzi, following defeat in a constitutional referendum on 4 December, was the moment at which some believed that Europe would be overwhelmed. Among the champions of the No campaign were the anti-euro Five Star Movement (which has led in some recent opinion polls) and the separatist Lega Nord. Opponents of the EU, such as Nigel Farage, hailed the result as a rejection of the single currency.

An Italian exit, if not unthinkable, is far from inevitable, however. The No campaign comprised not only Eurosceptics but pro-Europeans such as the former prime minister Mario Monti and members of Mr Renzi’s liberal-centrist Democratic Party. Few voters treated the referendum as a judgement on the monetary union.

To achieve withdrawal from the euro, the populist Five Star Movement would need first to form a government (no easy task under Italy’s complex multiparty system), then amend the constitution to allow a public vote on Italy’s membership of the currency. Opinion polls continue to show a majority opposed to the return of the lira.

But Europe faces far more immediate dangers. Italy’s fragile banking system has been imperilled by the referendum result and the accompanying fall in investor confidence. In the absence of state aid, the Banca Monte dei Paschi di Siena, the world’s oldest bank, could soon face ruin. Italy’s national debt stands at 132 per cent of GDP, severely limiting its firepower, and its financial sector has amassed $360bn of bad loans. The risk is of a new financial crisis that spreads across the eurozone.

EU leaders’ record to date does not encourage optimism. Seven years after the Greek crisis began, the German government is continuing to advocate the failed path of austerity. On 4 December, Germany’s finance minister, Wolfgang Schäuble, declared that Greece must choose between unpopular “structural reforms” (a euphemism for austerity) or withdrawal from the euro. He insisted that debt relief “would not help” the immiserated country.

Yet the argument that austerity is unsustainable is now heard far beyond the Syriza government. The International Monetary Fund is among those that have demanded “unconditional” debt relief. Under the current bailout terms, Greece’s interest payments on its debt (roughly €330bn) will continually rise, consuming 60 per cent of its budget by 2060. The IMF has rightly proposed an extended repayment period and a fixed interest rate of 1.5 per cent. Faced with German intransigence, it is refusing to provide further funding.

Ever since the European Central Bank president, Mario Draghi, declared in 2012 that he was prepared to do “whatever it takes” to preserve the single currency, EU member states have relied on monetary policy to contain the crisis. This complacent approach could unravel. From the euro’s inception, economists have warned of the dangers of a monetary union that is unmatched by fiscal and political union. The UK, partly for these reasons, wisely rejected membership, but other states have been condemned to stagnation. As Felix Martin writes on page 15, “Italy today is worse off than it was not just in 2007, but in 1997. National output per head has stagnated for 20 years – an astonishing . . . statistic.”

Germany’s refusal to support demand (having benefited from a fixed exchange rate) undermined the principles of European solidarity and shared prosperity. German unemployment has fallen to 4.1 per cent, the lowest level since 1981, but joblessness is at 23.4 per cent in Greece, 19 per cent in Spain and 11.6 per cent in Italy. The youngest have suffered most. Youth unemployment is 46.5 per cent in Greece, 42.6 per cent in Spain and 36.4 per cent in Italy. No social model should tolerate such waste.

“If the euro fails, then Europe fails,” the German chancellor, Angela Merkel, has often asserted. Yet it does not follow that Europe will succeed if the euro survives. The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving. In these circumstances, the surprise has been not voters’ intemperance, but their patience.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump