The move by Virgin Express to establish a new Irish subsidiary in Shannon will, alongside its fledgling French operation, give the carrier the resources and cost structure it needs to pursue growth.

Gus Carbonell, director of marketing and planning at the Brussels-based carrier, says the heavy social charges attached to employees in Belgium and restrictions linked to the Belgian airline operating certificate (AOC) have been a major constraint on growth. Attempts to cut pilot costs by hiring more non-Belgian pilots were thwarted by the authorities. "There is a limit to how many the Belgian authorities will validate under their operating licence," says Carbonell. Pilots cannot operate Belgian registered aircraft without a Belgian validation.

The Irish and French operations will enable Virgin to recruit and attract the pilots it needs at a lower cost, says Carbonell. Previously, Virgin could not "bring pilots in fast enough to facilitate expansion from other hubs", he adds. With the two new companies up and running, Virgin Express Holding becomes the parent company for three subsidiaries in Ireland, France and Belgium. Virgin Express also operates from Rome to Barcelona and Madrid.

Virgin Express Ireland will establish a satellite reservations centre and base crew and at least one Boeing 737-300 in Shannon. Expensive wet-lease pilot contracts will be terminated as new pilots are taken on and a twice daily service will be launched from Shannon to London Stansted in mid-December. Charter flights to the continent are also planned.

The French carrier, Air Provence, was inherited when Virgin took over the former EuroBelgian Airlines and has since been renamed Virgin Express France. With Air France-owned Air Charter pulling out of the market, Carbonell says there is heavy demand out of France to North Africa and the Middle East. Virgin Express France operates a scheduled service from Nice to Brussels but, from November, will be based at Paris Charles de Gaulle. However, Carbonell says that, for now, the operation will be limited to charter.

The new bases and "the softness of the 737 market" mean there will be more expansion next year, but Carbonell insists this will be controlled and the result of "a careful selection of our markets".

Virgin's selection of Shannon against Dublin and Cork is a boost to the airport at a time when its direct transatlantic services are reportedly under threat by Aer Lingus' plans to secure a major strategic alliance partner.

Meanwhile, Europe's other low-cost carriers are also expanding. Dublin-based Ryanair is to build a third hub at Glasgow Prestwick international airport. BA's low-cost subsidiary go is to add eight 737-300s to its fleet over the next 15 months and TEA Basel is to operate as a franchise of London Luton-based easyJet from November.

Source: Airline Business