Failure to set up low-cost airline was big mistake, says Branson

Sir Richard Branson, the billionaire entrepreneur, yesterday admitted that his failure to set up a low-cost UK airline ranked as one of the biggest mistakes of his career.

In an interview published today he said he had considered launching a no-frills carrier from the UK but was worried customers would confuse it with Virgin Atlantic.

"We decided not to enter the UK because we thought it would muddle people's image of the brand," he told Travel Weekly magazine.

"I think that was a mistake. We shouldn't have been so worried about that and just done it."

British Airways launched Go, a low-cost airline, from scratch in the 1990s as a separate organisation and sold it for £110m in 2001. Earlier this year easyJet, the successful no-frills airline set up by Stelios Haji-Ioannou, paid £374m for Go. Meanwhile Ryanair, the Irish carrier, now has a larger market capitalisation than British Airways thanks to its ability to post large profits and attract passengers from the flag carriers. "They are doing so well, I think we have missed the boat," Sir Richard said. In the end he decided to establish low-cost operations in Europe and Australia under the brands Virgin Express and Virgin Blue. Now he is turning his ambitions towards the US and he urged governments and regulators on both sides of the Atlantic to press for a new "open skies" agreement.

"We would like to see the European Union negotiate an open skies agreement with the US where the whole of the US and Europe becomes one unit and any European airline can fly anywhere and any US carrier can fly anywhere in Europe," he said. "Hopefully Virgin will get permission to set up in the US and therefore feed on people we fly to New York."

Meanwhile, Australian Airlines, a no-frills carrier owned by Qantas, was officially launched yesterday to serve Japanese and other Asian routes.