Losing My Virginity

by Richard Branson

  Throughout the week of 21 October, I stood in for Angela Rippon on her early-morning LBC radio show. This was not my ideal job since it entailed getting up at 5a.m. and heading off in the dark to the LBC building near Euston. I was in the studio from 6a.m. to 8a.m. and then went home for breakfast.

  The radio-show producer called up Lord King to invite him on the show to debate with me the problems which British Airways and Virgin were having and the sorts of tactics that British Airways was employing against us.

  ‘Tell him we’re not prepared to lower our standards that much,’ Lord King snapped at her. ‘And you can quote me.’

  It was the first time I had approached Lord King since our exchange of letters in January and February, but his reply had lost none of its sting. My invitation to Lord King to debate what was going on was only half tongue in cheek. The previous week I had been called by Joseph Campbell, who ran a limousine service for Virgin Records.

  ‘Richard,’ he said, ‘I’m sorry to bother you but I thought you should know that something rather sinister has happened. One of the ladies who works for us has a daughter who works for a company of private investigators. And she told her mother that the company has just started spying on you. They followed you to Claridges last week and sat at the next-door table.’

  I flicked back my diary: I had indeed had lunch at Claridges. I thanked Joseph and wondered what to do. Should I call the police? I put the telephone down and looked at it. All my life the telephone had been my lifeline. But now I wondered whether anyone was listening in to my calls. I wondered whether these private detectives were following my children to school. Or sifting through my dustbins. I wandered over to the window and looked up Holland Park. Perhaps the British Telecom van parked there was a fraud and was actually packed with listening devices. Perhaps I had been reading too many spy novels.

  Then I pushed the thought out of my mind. I couldn’t change the way I lived and I had nothing to hide. If I tried to second-guess these detectives and whoever was employing them, who I was sure had to be British Airways, then I would drive myself mad. I couldn’t live like that. If I started thinking that I was being continually followed, I’d rapidly become paranoid. I decided I would carry on my life as normal. I wouldn’t even stoop to their level by having my telephone checked for bugs.

  All week I was up at 5a.m., and by Friday I was feeling rather exhausted. In the middle of the afternoon I went back to my office to find a note on my desk from Penni: ‘Chris Hutchins from Today called about a potential gossip story. Wanted you to call him back.’

  Chris Hutchins was a gossip columnist with Today newspaper who had a known drink problem.

  I called him back.

  ‘Richard, first of all I want you to know that I’ve done Alcoholics Anonymous,’ Chris said. ‘I’m clean, so you can take what I say seriously.’

  I began to listen and picked up my notebook.

  ‘I’ve spoken to Brian Basham.’

  ‘Who’s he?’

  ‘BA’s PR man. He is to Lord King what Tim Bell is to Lord Hanson. I know Basham’s wife Eileen quite well because she used to work for me here. She called me to say that Brian might have a good story about Branson and drugs.’

  ‘Great,’ I said sarcastically.

  ‘I called Basham up and he told me that he’d been doing a detailed study for BA on Virgin’s operations, its strengths and weaknesses. He also mentioned an unsubstantiated story about Heaven and suggested that I check out the drug position there for myself. He said he didn’t particularly want to put you out of business; in fact the last thing BA wanted was to be seen to have your blood on its hands.’

  This struck a chord. I tried to remember which other journalists had been asking about Heaven and suddenly it came to me: among them was Frank Kane, the financial journalist on the City pages of the Sunday Telegraph.

  ‘He then told me that I should also look at the recent piece in the Guardian about your cash position. Well, finance isn’t my thing and I wasn’t that interested.’

  ‘Well, perhaps you should turn the tables on BA and investigate them,’ I suggested.

  ‘I could consider that,’ Chris said, ‘but it’s not really my style. I just write a gossip column. Anyway, I’m having lunch with Brian Basham on Monday at the Savoy.’

  ‘Will you come and see me over the weekend?’ I asked. ‘I’d love to chat this through with you.’

  ‘Sure,’ Chris said.

  I buzzed the intercom up to Will.

  ‘Chris Hutchins called me.’

  ‘He was the one in 1989 who caused all that fuss by claiming you were in for a knighthood: “ARISE, SIR RICHARD”. REMEMBER?’ Will said.

  ‘He sounds like he’s cleaned himself up. He called me with a story about BA and their interest in us.’ I read from my notes. ‘Have you heard of Brian Bingham?’

  ‘No,’ Will said, nonplussed.

  ‘Well, he is to Lord King what Tim Bell is to Lord Hanson.’

  ‘Never heard of him,’ Will said.

  ‘Basham,’ I corrected. ‘Brian Basham, and he’s talking about drugs at Heaven.’

  ‘Brian Basham! Christ! I’m coming down.’

  Will always looks flustered, as if he’s itching to get on and make the next telephone call, but when he stormed into my room he looked in a flat panic.

  ‘Brian Basham is bad news,’ he said. ‘He’s one of the most influential PR men in the business. If he’s up against us we’re in deep, deep shit. He’s got closer ties in Fleet Street than anyone.’

  26 Barbarians at the departure gate

  October–November 1991

  BRITISH AIRWAYS WAS OBVIOUSLY gaining access to computer information that should have been off limits. It was confirmed when, out of the blue, Peter Fleming from BA wrote a second letter in which he detailed a number of things that British Airways had done. Dated 29 October 1991, it covered a wider range than his letter from earlier in the year. He started off by repeating how a management task force had been set up to discredit the ‘Branson image’. ‘This, I felt,’ he wrote, ‘would have originated as a strategy at a very senior level within BA. I was shocked that the company could be so open about this and state it in such an uncompromising way.’ He went on to say:

  However, not long after when Virgin took some concerns to the European Courts there was a noticeable backlash which swept the whole company. At this time I was told to destroy all documents that had any references to Virgin, not once but four or five times by different people from managers to managers’ secretaries. Again I was reasonably shocked that BA’s senior management could be so concerned about its activities that it felt that all references to an airline should be destroyed in this way. I did not destroy anything myself, as I did not feel that my files had anything of a damaging nature, but I know that other people in my department did destroy material because of this directive.

  Peter Fleming had already described these two aspects of BA’s campaign, but I was still surprised to see them set out in black and white. More interesting were the further details he highlighted: ‘The following points are the issues that I was aware of in respect of BA trying to squeeze Virgin out of the picture. They do not necessarily constitute anti-competitive behaviour but this is something for you to decide.’

  The list included British Airways deliberately applying for slots to Japan and Australia that it didn’t need for the sole purpose of stopping Virgin getting them; a special sales force getting business in the Gatwick area and offering low fares from Gatwick to squeeze yields for all airlines there (while continuing to operate a high-fare monopoly from Heathrow); refusing to process bookings for passengers who had flown from Japan to Gatwick by Virgin and then wanted to switch to BA, so that they would have to fly BA all the way; and accessing our booking information by delving into the computer reservations system.

  ‘In my opinion,’ Fleming wrote, ‘BA lacks integrity and this stems right from the top of the organisation with Lord King, and unfortunately per
meates the whole structure.’

  With Peter Fleming’s evidence, I now knew some of what British Airways was doing behind the scenes; when I also got hold of Chris Hutchins’ tape of his conversation with Brian Basham I also knew what they were doing in the press. Although I was caught in this two-pronged attack, at least I knew exactly which tactics BA was using. It was sinister, but I could begin to think about how to retaliate.

  ‘BRANSON ATTACKS BA “TRICKS”’ was the headline in the Sunday Times on 3 November 1991. This wasn’t exactly what I had in mind but it was true nonetheless. I’d been hoping that the Sunday Times would stick their neck out and say how scandalous they thought BA’s tactics were rather than just repeating my claims, but it was a start. For the first time in the campaign, Brian Basham was publicly linked with British Airways, blowing his cover. Insight reported how Basham had given his confidential report to a number of journalists. I was quoted as saying that I had a list of one hundred complaints which I would take to the European Commission unless British Airways stopped their dirty tricks. And Nick Rufford made no mention of the cash-for-fuel story which had started his investigation.

  27 ‘They’re calling me a liar.’

  November 1991–March 1992

  ‘RICHARD YOU’RE NOT GONNA believe this about BA,’ Ronnie Thomas told me.

  ‘Try me,’ I said. ‘At this particular moment I’m prepared to believe almost anything.’

  Ronnie Thomas runs his own limousine company in New York. Twenty years ago he started out as a regular cab driver in Manhattan and slowly saved enough money to trade in his clapped-out yellow cab for a smart limousine, which he offered as a chauffeur-driven service specialising in collecting and dropping off passengers at New York’s two airports. By the time I met him in 1986 he had a successful limousine service with over 200 cars. He had called me as soon as he read that Virgin Atlantic was going to offer a limousine service to all upper-class passengers, and he pitched for the entire account. He won it, and over the years Ronnie has never let us down.

  In the previous few days he and his drivers had been finding that, when they dropped passengers off at the kerb, British Airways staff were meeting them and offering them ‘incentives’ to fly BA instead of Virgin. Ronnie had had a flaming argument with them, and later got a call from BA banning him from BA’s own terminal at JFK.

  ‘Have you ever come across anything like this before?’ I asked Ronnie.

  ‘No, man,’ he said. ‘I thought that American carriers weren’t exactly gentlemen, but this is another ball game altogether.’

  I had no idea whether this was illegal or not, but it was certainly the most blatant attempt yet to poach our passengers.

  After the Sunday Times had exposed some of British Airways’ tactics, the next paper to follow was the Guardian, with a front-page headline: ‘BA UNDER FIRE FOR VIRGIN CAMPAIGN’. There was a full-page analysis of British Airways’ tactics entitled ‘VIRGIN’S COMPLAINT TO EC CASTS MORE DOUBT ON BA’S PRACTICES’.

  In spite of the articles, the dirty tricks carried on. No matter how many accurate press stories were published, British Airways had always been immune to criticism. To the world at large, they shrugged off my allegations as the hysterical overreaction of a man who couldn’t take competition. Their arrogance was overwhelming. As it became clear that British Airways was intent on seeing the back of us, I knew that I had to fight back even harder. In mounting desperation, I began to look for any legal action that we could take against British Airways.

  ‘It would amount to an anti-trust case in America,’ Gerrard concluded when we’d finished going through what BA was up to. ‘But there’s no equivalent legislation here.’

  There is a surprising lack of legislation governing competition in the British aviation industry. The Monopolies Commission and the Office of Fair Trading had no jurisdiction over BA in this instance, since they could investigate only an airline merger, and the CAA had little jurisdiction beyond the safety angles involved in servicing aircraft and supervising the prices of air tickets. Although BA was a privatised monopoly like British Telecom, there was no government watchdog like Oftel to supervise it. We had lodged a complaint with the European Court, but although there were some grounds for this court to rule against BA under Article 85 of the Treaty of Rome, which deals with the principles of fair competition, in practice it lacked the teeth to enforce any request that might make a company change its business tactics. In effect, our list of complaints to the European Court was useful only as a publicity exercise.

  I didn’t want to take British Airways to court. I knew that it would be expensive and risky, and that they would employ a top-flight team of lawyers to try to overwhelm us and the jury with the great weight of statistics that a vast airline can muster. I simply wanted the dirty tricks to stop and, as I cast about for other ways in which to persuade British Airways to call off their campaign, I thought of the nonexecutive directors. Since I had already written to Lord King without success, I hoped that the nonexecutive directors of British Airways might be more impartial. If I asked them to investigate what was going on in their company, then in principle they would have to take that request seriously. A nonexecutive company director has the same legal responsibilities as an executive director, but they typically look after the shareholders’ interests if there is a conflict between the directors and the shareholders. As British Airways was now being accused of behaviour that could create such a conflict, and accused by the press as well as by Virgin Atlantic, the shareholders deserved an explanation of what their company directors were doing.

  The British Airways nonexecutive directors comprised Sir Michael Angus (a director of Thorn EMI at the time and formerly chairman of Unilever), Lord White (who ran Hanson Trust with Lord Hanson), the Honourable Charles Price, Sir Francis Kennedy, and Michael Davis. Their names read like a Debrett of business. The letter took me over a week to compose, and set out everything we knew about what British Airways was up to. On 11 December 1991, I eventually signed and sent off an eleven-page document which outlined the facts and concluded:

  I have found it hard to believe that a major public company like BA could be behind the sort of conduct identified in this letter whose primary purpose can only be the discrediting of a competitor and the damaging of its business. I am writing to you because I doubt whether you would want a company of which you are a director to conduct itself in such a way and in the hope that the directors of BA would wish to be absolutely and unequivocally disassociated from any such activities because they would agree that it was not the proper way to run a business.

  I would like you to investigate the matters raised in this letter, provide detailed responses and give me your assurance that you will ensure that the conduct revealed to you on investigation or any similar conduct is stopped and never again repeated.

  I would have thought that British Airways’ experience of trying to eliminate the competitive threat posed by Laker Airways was sufficient deterrent against trying to do the same to others. I am sure you remember the impact upon BA of its actions towards Laker Airways. BA’s privatisation plans were disrupted; the directors in the United States were threatened with criminal prosecution; there was a huge waste of management time; BA attracted considerable adverse publicity; millions of dollars were spent in legal expenses and BA made the biggest single contribution to the massive legal settlement fund.

  I attached an eight-page appendix which covered all the details I knew, and divided the dirty tricks into six sections: the press campaign, spoiling tactics, engineering matters, sales and marketing, dirty tricks, and private investigators(?). I put a question mark on the final category since I still found it impossible to believe, and wrote, ‘Bizarre incidents have been taking place recently more suitable for an episode of Dick Tracy than the airline industry.’ I related the snippets I’d picked up and asked, ‘Can you shed any light on any of these incidents? I cannot believe that a major public company like British Airways is behind this sort of c
onduct.’

  As the letter was sent, I had no idea what reaction to expect. I did not wish to sue British Airways. There was enough to do without having to spend eighteen hours a day fighting British Airways. I was acutely aware that I was having to ignore all the other businesses within the Virgin Group as we fought this battle.

  I wondered whether the nonexecutive directors would assume that I couldn’t compete with Freddie Laker’s court case, which had produced over a million legal documents. Sir Freddie had sued British Airways only after he had gone bust and had time to devote all his energy to the lawsuit. But, by then, of course, BA had accomplished their task. The court case may have delayed their privatisation and forced them to pay £10 million compensation, but this was nothing compared with the profits they made on the transatlantic route by hiking prices as soon as Laker’s planes were grounded. I was trying to stop British Airways while simultaneously running the airline, but BA might not back off until Virgin was grounded too.

  Whatever their reaction, I felt sure that the nonexecutive directors could not ignore the eight-page attachment which detailed their company’s dirty tricks. Since they were also responsible to their shareholders, we released copies of this letter to the press to ensure that their shareholders would have the chance to read it too.

  To my amazement, I received a reply from both Sir Colin Marshall and Sir Michael Angus the very next day. Sir Michael Angus wrote a disclaimer saying that it would be ‘wholly inappropriate for the nonexecutive directors of a public company to report to a third party in the manner that you request’, and concluded that ‘the proper course of action is for any such allegation to be directed to the board as a whole’.

  Sir Colin Marshall’s answer was equally patronising. His letter flatly denied that British Airways was involved in a deliberate attempt to damage Virgin or sought ‘to compete other than through normal marketing and promotional efforts’. He suggested that our ‘allegations’ were made to gain publicity, and that I should devote my ‘undoubted energies to more constructive purposes’.