Richard Branson hinted to Bloomberg on Thursday that he and the Virgin brand may be coming back to the US domestic airline business. He also indicated that there’s still tension with Alaska regarding royalties. Branson says that Alaska has to pay royalties through 2040 whether they use the brand or not, unless a new Virgin venture is formed. Meanwhile, Alaska has indicated that it only needs to compensate Branson while the name is in use and the company has set a 2019 retirement date.
Alaska has to keep paying “unless we decide to start another airline. So, we’ll see what happens”. When asked if he would create a new carrier, he said, “watch this space.”
Branson told the same story when he was in Seattle last month to celebrate Virgin Atlantic’s inaugural flight to the city.
“When I sat down with Alaska, I genuinely believed that they would treasure the brand, that they would treasure the people, that they would treasure the product and that they knew what they were buying. They spent $2.6 billion buying it. And that the last thing they would do would be to rip the heart out of it, which seems effectively like what they decided to do. It just seems such a waste.”
According to security filings, Virgin America paid a fee to the Virgin holding company equal to 0.7% of the airline’s total revenue for 2016, just north of $10M last year.
The Puget Sound Journal comments on the hypocrisy of Branson’s complaining.
In 1997, Virgin Group acquired the low fare carrier Euro Belgium Airlines for $60 million and promptly dropped the name in favor of Virgin Express. Virgin Express lasted only nine years; it ceased operations in 2006 when it was sold and merged into the new Brussels Airlines.