Virgin Atlantic's London-Shanghai flight has overturned years of losses to come into the black in the first quarter of this financial year.
Chief Executive Officer Steve Ridgway said yesterday it was the first profitable result for the route.
"We were nearly profitable, then it went backwards, due to September 11, and now it's coming back again," he said in an interview with Shanghai Daily at Virgin Atlantic's downtown Shanghai office at the Bund.
The strong performance so far has made him optimistic the flight would start making money in the financial year ending February, 2008. Growth in business from all customer groups - tourists, students and business travelers - is driving the reversal of fortunes.
Ridgway said the carrier persisted in running the route because of its strategic importance. "We always knew it was going to be a long-term investment. We are committed to this market."
The carrier has experienced double-digit growth in passenger volume and revenue every year since the flight's inception in 1999.
Analysts and industry players say Virgin is not the only airline that has seen red figures on flights between Shanghai and London. Shanghai Daily learned from an industry insider that all three airlines competing on the route are booking annual losses.
"Flights to Europe have a lower passenger traffic than those going to the United States," said Ma Ying, an aviation analyst at Haitong Securities. "Airlines are willing to soldier on despite losses because they are upbeat about the market's long-term prospects."
British Airways' China manager, Sara Thorley, admitted that the market is a "difficult" one. Shanghai is caught in a bubble economy in which "there isn't the amount of hard cash that people expect there to be."
Virgin Atlantic became the first airline to fly the London-Shanghai route in 1999. It was joined by China Eastern in 2004 and British Airways in 2005.
(China Daily July 12, 2007)