Richard Branson, known worldwide as the face of adventure for his many travel companies, may well be gearing up for one of his toughest branding challenges yet. Branson’s upcoming cruise line, Virgin Voyages, is set to begin sailing this March with its first ship, the Scarlet Lady. In doing so, Virgin Voyages be launching in the midst of a global health crisis as the coronavirus outbreak continues.
First detected in late 2019 in Wuhan, China, the novel coronavirus (Covid-19) has already dented companies, led to travel bans and spread to more than 47 countries including South Korea, Italy and the United States.
While the full spectrum of the illness is unknown, “it’s at least as serious as the flu,” said Dr. Michael Phillips, an infectious disease specialist at New York University. “This is affecting a lot of people; the economic damage from this virus has already been tremendous, and it’s likely to be more.”
The travel industry, already sensitive to everything from weather to geopolitical conflicts, often bears the economic brunt of international chaos and is blamed for spreading the virus.
Event cancellations have included Facebook’s annual F8 developer conference as well as the wireless industry’s Mobile World Conference, and speculation is swirling about whether the Summer Olympics in Tokyo will go on, Virgin is sailing full steam ahead. While not immune to failure (see: Virgin Trains in the U.K.), part of Branson’s brand genius is in projecting luxury, excitement and a sense of adventure clearly encapsulated in Virgin Voyages’ chic, millennial-focused cruise ship. But will it survive coronavirus?
Cruises have already become one of the focal points for some of the worst recorded instances of the disease, as more than 705 confirmed cases were contracted aboard the Diamond Princess, a cruise ship sailing in Japan operated by Princess Cruises, which is owned by the Carnival Corporation, the world’s largest cruise company. So far, four of the travelers on the Diamond Princess have died.
Another ship operated by MSC Cruise line has already been turned away from ports in Jamaica and the Cayman Islands after one passenger was quarantined with flu-like symptoms.
On Feb. 13, the cruise industry’s trade organization CLIA released a statement that its members would “deny boarding to all persons” who have visited airports in China within 14 days of embarkation.
The outbreak of coronavirus comes as the cruise industry was expecting to break industry records, planning to carry more than 32 million passengers in 2020 after the number of passengers boarding cruise ships increased 67.5% over the last decade. Of those passengers, CLIA noted that the industry has received more interest from younger audiences, with more than 71% of millennials saying they have a more positive attitude about cruise ships.
Virgin Voyages’ entire business model is predicated on taking advantage of this audience, as the ship is set to cater to young professionals with money to spend, willing to pay a premium for a kid-free, all-inclusive, rock star aesthetic and experience.
“He’s selling excitement and sophistication,” said Christopher Muller, a professor of practice in hospitality at Boston University, on what Branson’s Virgin brand is trying to achieve. “It’s bad timing—the cruise industry is being held to a standard that they can’t reach. … They should wait it out.”
Virgin Voyages did not respond to a request for comment.
How U.S. airlines are responding
So far, airlines in the United States have proactively waived fees and made scheduled adjustments to help carry travelers, and the airline business interests, avoid the outbreak.
On Wednesday, JetBlue Airways became the first U.S. carrier to remove fees for all travelers concerned about coronavirus; Delta and American Airlines pledged to waive fees for travelers flying to and from certain cities in Asia.
In addition to offering the same waiver as the other airlines, United Airlines rescinded its annual revenue guidance for 2020, saying, “Beyond the first quarter, we believe the range of possible scenarios is too wide to provide earnings guidance at this time.”
While regional airlines like Southwest and Spirit don’t fly internationally, they’ll still feel the sting as travelers avoid the skies, opting to stay home or drive for their next trip.
According to the Air Transport Association, the global cost of the 2003 SARS outbreak was $33 billion, with over $7 billion lost in the U.S. economy. The terror attacks of Sept. 11, 2001 saw the airline industry record losses of $13 billion.
“For as long as the uncertainty remains,” said Seth Kaplan, an aviation expert, “there is going to be a severe impact on travel demand. Airlines will respond by doing what they always do: matching supply with demand. They’ll fly less.”
Although it’s too soon to see the economic losses of the coronavirus pandemic, the outbreak struck during a peak booking season for the industry as travelers are preparing their summer trips.
“Air travel demand is very sensitive to the economy in general. Setting aside fears of traveling, if people are afraid they are going to lose their jobs because the company they work for has supply chain issues in China, or they’re checking their 401K balances and they feel less wealthy, that will impact travel,” Kaplan noted. “These health epidemics are at the top of the list, as bad if not worse than incidents of terrorism.”