Virgin Atlantic Reports Slowdown In Transatlantic Demand

During its annual earnings call discussing 2024 earnings, Virgin Atlantic revealed it has seen a short-term slowdown in leisure travel on its transatlantic flights, particularly from passengers originating in the United States. That’s an expected development with an unexpected twist.

Virgin Atlantic Reports Transatlantic US Leisure Slowdown

Virgin Atlantic published its 2024 earnings earlier today and the British carrier was profitable for the first time since the pandemic, though reported a profit of only 20 million USD.

On the heels of joint venture and SkyTeam partner Delta Air Lines slashing its earnings earlier this year, Virgin Atlantic announced that it is seeing a weakening in demand too. Specifically:

• This weakening demand is for traffic originating in the United States
• Most weakness is for short-term spring travel, not summer or autumn travel
• Corporate travel appears to be unaffected (steady and even growing)

During an earnings call, Chief Financial Officer Oli Byers explained:

“When we say signals of a slowdown in demand…we’ve had weeks where it’s been flat, we’ve had a few weeks where it’s been negative.”

Interestingly, it appears it is leisure travel that has seen the dip in demand. Factors to blame include economic uncertainty on both sides of the Atlantic over national economies and US tariffs. Byers added:

“We think that’s quite a natural reaction to the general consumer uncertainty there is in the U.S. at the minute.”

One Mile At A Time says, “For many Americans, a summer vacation in Europe has become a non-negotiable, which is very much a post-pandemic trend.”

To some extent, I think he’s right…that’s true for me (though I’m doing it to visit family and promote my children’s German language skills, not to “keep up with the Jones”) and I tend to think that we’d continue to find a way to get to Germany even if my pocketbook took a big hit due to the uncertain economy.

On the other hand, while I think many Americans who might be scraping by will be willing to put the European vacation on their credit card and pay it of over time, there will certainly be some who will not do this…who will hold back and not commit to price trips due to the uncertainty.

It’s interesting to me that the demand is short-term. Just a month ago, United said it was seeing healthy spring break demand to London.

CONCLUSION

Virgin Atlantic has reported eroding demand, particularly on leisure travel from the US to London. Meanwhile, the carrier reports corporate demand is strong and growing, though not enough to offset an overall dip in demand.

Virgin’s route network is so US-dependent that I am not surprised to see it report dipping numbers first. The real thing to watch, however, will be to see if this is an early barometer of what is to come, or an outlier.

image: Virgin Atlantic