Branson. Tom Bower
to the waist, wearing baggy trousers, no shoes and with a hole in his socks, the informal tycoon welcomed his guest to spread the new gospel: ‘We’re becoming a global entertainment company and we’re going into the United States big.’ Virgin Records successes, he rattled off, included Genesis, Phil Collins, Human League, UB40 and Mike Oldfield. The Sex Pistols had sold one million albums and Boy George had just scored a major hit in America. Virgin Films had been promised $45 million from investors following the ‘success’ of Electric Dreams due to be released in one thousand four hundred American cinemas, and 1984 was next. Virgin was also launching a music cable channel, a book publishing company, a video game division and a record label in America. ‘That’s how we maximize profit,’ he repeated, mouthing ‘synergy’, the latest cliché of the Bonfire of the Vanities era.
At the end of his monologue Branson was satisfied that his guest was suitably awed. No discomforting question required him to reconcile his new global ambitions with his other script, ‘We want to stay small because small is profitable.’ The contradictions had passed unnoticed and no doubts were raised about Virgin’s finances. Branson’s performance had chameleon-like qualities, adjusting itself to please its audience and to distract from any contradictions within.
‘I’m not on a crusade with this thing,’ Branson had modestly told his American interviewer about his new airline. ‘If we had to pack it all in, the whole venture wouldn’t cost but two months’ profit of the Virgin Group.’ ‘Packing it in’ was far from Branson’s mind. The excitement of owning an airline bit deep. His only concern was managing the chaos of operating even one aeroplane. Maiden Voyager, Virgin’s single Boeing 747, was occasionally flying either empty across the Atlantic or airport staff were cowering in fear of lynching from crowds of irate passengers complaining about gross overbooking. Administration and technical troubles were causing delays. Occasionally, flights were cancelled when the plane’s load was genuinely too low to earn profits and passengers were placated by talk of ‘technical problems’. To make a virtue of those problems, Branson regularly telephoned or travelled to Gatwick to apologise to passengers about his ‘teething troubles’.
His early flights on Virgin Atlantic’s single 747 to New York convinced him that only ruthless care over his finances would guarantee the airline’s prosperity. The 747’s bubble for business class was often empty during the summer. In winter, he knew, when the major airlines reduced their fares, it would be even harder to fill his jumbo. Copying the blueprint of Laker and People Express had been wrong. ‘I knew we had to start working very hard to make sure that within a few years half the plane would be full of business class passengers,’ he said. The model to emulate, he realised, was British Caledonian. Their extras had established a uniqueness. Copying British Caledonian, Virgin would also offer business class flyers better seats, two-for-one fares, a special lounge at the airport and a free limousine service. Presenting the old as the new was Branson’s genius but one frustration was unassuaged. After the first burst of publicity, Virgin Atlantic had become unmentioned in the media. The indifference was intolerable. ‘We need to make waves,’ he told his marketing executives.
Stunts and gimmicks were Branson’s only tool to find thousands of new customers, especially in America. When a couple were bounced from an overbooked Virgin flight to New York and complained that they would miss seeing their deceased son in his coffin before the funeral, an anonymous marketing executive had, on his own initiative, bought tickets for their flight on Concorde. Within minutes of their flight leaving Heathrow, Virgin’s publicity machine fed to the media how Branson’s personal intervention had rescued the heartbroken parents. The cause of their ‘heartbreak’, Virgin’s chaos, was brushed aside. Branson understood how to turn every negative into a positive story.
‘BA has just fired a girl and she’s protesting,’ laughed an aide.
‘Hire her,’ ordered Branson.
‘What?’
‘Hire her straight away and get the publicists to tell all the media how Virgin saved the poor girl.’
But the small news items could not compete with the big budget campaigns orchestrated by British Airways and the American airlines. ‘They’re so greedy,’ Branson repeatedly moaned, frustrated by BA’s invincibility. ‘They’re so big.’ Influenced by Freddie Laker, he feared BA’s misuse of their huge advantages and goodwill against a newcomer. As a customer, too, Branson had every reason to dislike BA. Despite the appointment of Lord King in 1981 to revolutionise the state-owned airline for future privatisation, the corporate culture still reeked of imperious military officers managing an engineering corporation. BA’s administrators resembled Whitehall civil servants rather than entrepreneurs and most of the cabin staff patronised the ‘punters’, as they unlovingly called their passengers.
Branson had good reason to welcome those deficiencies. British Airways’ weaknesses were his opportunity to earn profits, although Virgin’s single Boeing 747 operating on a peripheral route (Gatwick to Newark) against BA’s two hundred and fifty aircraft did not even register on the giant’s horizon. Branson, however, wanted to be noticed, especially to attract passengers. His tactic was to play the ‘victim’ card. His weapons were pranks. ‘We’re the cheeky airline having fun at the expense of a dinosaur,’ he proclaimed.
In establishing Virgin Atlantic, Branson had frequently consulted Freddie Laker, the founder of Skytrain which had collapsed in 1982. At their meetings, Laker had inculcated Branson with his complaint that British Airways and the other major transatlantic airlines had conspired to destroy his airline by undercutting Skytrain’s fares. That depiction appealed to Branson. He preferred not to inquire about another cause of Laker’s collapse: that the flamboyant businessman had imprudently purchased three DC-10 aircraft financed by an unprotected £350 million loan just as fares were tumbling and before he received permission to fly the planes between London and New York. Laker also preferred to ignore his own imprudence, describing Skytrain as the ‘victim’ of BA’s cartel.
If any British airline had cause to scream ‘victim’, it was British Caledonian, then British Airways’ national competitor, which operated twenty-seven planes. But the managers of British Caledonian usually desisted. Flying was a cut-throat business and every entrant knew that survival depended upon attrition.
Ruthless competition was as natural to Branson as commercial warfare. In seventeen years, he had lied about his finances, he had lured managers, dealt harshly in litigation, denounced friends and had perpetrated a fraud against Customs and Excise. There was an instinctive progression from manipulating individuals in business deals to manipulating public opinion in his favour. Competition, to Branson, implied attacking British Airways. Freddie Laker had attempted the same but Branson subtly concealed his motives – his lust for money and power – by emphasising his altruism. Within days, the people’s champion was conceived and born. His first attack coincided with the traditional autumn slump in ticket sales.
In October 1984, British Airways and the American airlines announced their usual price cuts. BA’s was a reduction of £19 to New York, from £278 to £259, just £1 above Virgin’s fare. Virgin had not featured in BA’s calculations. The four-month-old airline operating between Gatwick and Newark, was invisible. Branson’s remedy, in a deliberate echo of Laker’s campaign, was to bombard the government with complaints that BA’s new price was ‘predatory’ and calculated to destroy Virgin.
The complaint was ignored and Virgin’s fares were cut, but in later years sympathetic journalists would accept Branson’s version: the cut in the 1984 price constituted British Airways’ first attempt to destroy Virgin Atlantic. His assertion was nonsense. The real victim in autumn 1984 was Randolph Fields, a casualty of Branson’s ambition to be crowned an airline tycoon.
Partners irritated Branson, especially those who criticised his decisions. Field’s latest challenge, Branson decided, was intolerable. ‘Your staff at Virgin are making contracts on behalf of Virgin Atlantic without consulting me,’ complained Fields. ‘I’m a director.’ Additionally, complained Fields, Virgin Atlantic’s avalanche of cash from advance ticket sales was being used by Virgin Records as if there were a common pot. Branson scoffed denial and outrage. Shuffling money around was normal. Intolerant of