Virgin Atlantic to drop service between London Gatwick and Saint Lucia in 2020.

John Grant, Partner at MIDAS Aviation, notes that Virgin Atlantic’s announcement that they will drop services to St Lucia has probably come after a serious game of airline/destination poker as the requirement of an inevitable revenue guarantee that supports such services came around for renegotiation. But with St Lucia also served by British Airways is this a case of pragmatic acceptance by Virgin that perhaps a three times weekly service just wasn’t worth the investment and ensuring a daily service crucial.
 
As the table below shows, St Lucia was hardly a Caribbean star for Virgin Atlantic. On a revenue per hour basis the LGW – UVF service has been the poorest performing sector to the Caribbean for Virgin by some distance and whilst US$ 16.7 million route revenue is not to be dismissed, the contribution would seemingly always require some form of subsidy and support.
  
Table 1 – Virgin Atlantic Selected Caribbean Route Revenues May 2018 – April 2019
Source: OAG Traffic Analyzer

And interestingly with some US$14.5 million of the route revenue being generated from the UK area of sale and only US$ 821,468 from St Lucia that amounts to around US$ 2,053 originating from the destination market each flight; equivalent to around 3 passengers!
 Ultimately though the real winner in this announcement is probably British Airways; whilst Thomas Cook currently operate a notional service it places BA in an extremely strong position in future negotiations around route support. So just how are BA doing at the moment?
Comparatively BA appear to be generating around 10% more revenue per hour but, and very importantly, even in the BA network St Lucia is amongst the poorest contributors suggesting perhaps that there may be a case for reduced frequency even once Virgin have disappeared in an attempt to move their yields slightly higher.
Table 2 – British Airways Selected Caribbean Route Revenues May 2018 – April 2019: Source OAG Traffic Analyzer

And whilst for BA some 72% of revenues (US$ 23.8 million) are generated from the UK area of sales; offline sales from areas such as Germany (US$ 2.8 million), Sweden, Italy and Ireland provide network contributions that Virgin Atlantic just cannot realise. 
Ultimately it may well be that St Lucia, at least from an air service perspective, has been very lucky and over supplied with capacity from the United Kingdom in the last few years, and that consequently something had to give. However, when any market, or indeed destination where tourism is such a key industry, becomes reliant on just one airline for the majority of its capacity and where route subsidies have become a way of life, you have to wonder how the next discussion between BA and the St Lucia authorities will begin!
But that may be a jerk assessment of what’s just happened!