August 21, 2012 / 9:18 AM / 5 years ago

UPDATE 1-Virgin to compete with BA on domestic routes

* Virgin to start London-Manchester services in March 2013

* To run three daily return flights between the cities

* Route will help to feed Virgin's long-haul network

By Rhys Jones

LONDON, Aug 21 (Reuters) - Virgin Atlantic will go head to head with rival British Airways (BA) on routes between London and Manchester next year after unveiling plans to make its first foray into the domestic short-haul market.

The airline, founded by serial entrepreneur Richard Branson in 1984, announced plans to operate three daily return flights from London's Heathrow to Manchester airport in northwest England from March 2013, providing competition to BA's short-haul service.

Virgin Atlantic claims that BA, part of IAG, operates a monopoly on the Heathrow to Manchester route after its takeover of UK carrier bmi this year.

"The airline believes competition on this route has been neglected in the remedy process and aims to provide choice for the 650,000 passengers who travel between the two cities," Virgin Atlantic Chief Executive Steve Ridgway said.

The new route will be Virgin's first move into domestic flights and will feed its long-haul services from Heathrow. It also plans to launch flights between London and Scotland in the future.

Ridgway added that about two thirds of people who fly from Manchester to London then connect to another long-haul flight; a market Virgin Atlantic wants a share of.

BA operates 17 return flights between London and Manchester, 13 of which are from Heathrow.

"We are pleased to see Virgin Atlantic increasing their presence in Manchester and to see competition returning on the London route," said Ken O'Toole, Manchester Airports Group's chief commercial officer.

Rivalry between Virgin Atlantic, which is part-owned by Singapore Airlines, and BA dates back more than 20 years to the so-called "dirty tricks" affair, when Virgin accused BA of conducting a smear campaign.

That ended with BA being forced to make a public apology and pay damages to Branson and Virgin. There have since been price wars, allegations of price-fixing and public rows over the size of passenger beds.

Virgin denied that the new service was a response to Virgin Rail being stripped of the West Coast Mainline franchise that covers London to Manchester.

Britain's Department for Transport last week awarded FirstGroup the 13-year franchise for the West Coast line, a decision Branson attacked as "insanity".

Virgin, which is applying for the 12 Heathrow take-off and landing slots that BA was forced to give up as part of the bmi deal, said it would use some of its existing slots to service the Manchester to London route.

Irish carrier Aer Lingus is also expected to bid for some slots to enable it to offer services between the Scottish capital Edinburgh and Heathrow. Applications for the slots are due by the end of this week.

Virgin plans to use leased Airbus A319 aircraft on the London to Manchester route.

BA was not immediately available for comment when contacted by Reuters.

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