Varsity Express: Baby Branson’s bogus business

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Varsity Express: Baby Branson’s bogus business

Post by Scylla »

The 23-year-old would-be airline tycoon admits his latest venture was built on a lie

Daniel Foggo and Martin Foley

A YOUNG aviation entrepreneur, who styled himself “Baby Branson” when he set up an airline at 19, has admitted his latest venture, which collapsed last week, was based on false claims and little more than thin air.

On March 1, Martin Halstead, 23, launched Varsity Express, an airline operating daily return flights between Oxford and Edinburgh. When it came to grief after just a few days, there was widespread sympathy for a plucky young man.

Investigations of his business methods, however, have revealed numerous failings. This weekend Halstead admitted he had:

- Used a fictitious name, Will Gilligan, to pretend to be both the commercial director and a financial backer of his airline. He confessed to sending emails to people purporting to come from “Gilligan”.

- Launched his business with a partner, David Lawrence, who is disqualified from being a company director.

- Boasted of a “consortium” of wealthy investors in the airline who never existed.

- Raised money for the enterprise by luring four young pilots to pay more than £50,000, which went into his personal bank account. All of it has since been spent.

At least one of those who have lost money has informed the police.

Halstead claimed to have been “naive”. He said: “I have allowed things to happen I should not have allowed to happen.”

His first attempt at running an airline, Alpha One, foundered in 2006 after six weeks of flying passengers between Edinburgh and the Isle of Man. Before its launch, Sir Richard Branson said of Halstead: “He’s a very nice lad and as bright as a button. If anyone can succeed in business, he can. It’s good that he is starting young — that’s what I did.”

In January this year, he teamed up with Lawrence, 33, to found Varsity Air Services Ltd, a company that would front their new intended airline, Varsity Express. The men were joint shareholders of the company, but only Halstead was named as a director.

Halstead, a qualified pilot, wanted to arrange a contract between Varsity and an existing airline which owned its own aircraft.

However, his attempts to interest suppliers met with little success so he decided to make approaches as “Will Gilligan” instead. Halstead admitted: “For whatever reason, we weren’t getting replies to our emails, so then it was suggested we use a pseudonym just to get an initial reaction.”

Soon the Gilligan persona had taken on a life of its own, and Halstead posed as Gilligan to make arrangements with airports. He also issued press releases in his name and had him mentioned in the media as a wealthy financial backer.

A spokeswoman for Oxford airport said: “We were emailing Will Gilligan and he was replying to us. But if we tried to speak to Gilligan, Martin would say he was in Tenerife. Eventually he said Gilligan was not pulling his weight and he had had to get rid of him. We only found out about who he really was this week.”

Halstead succeeded in agreeing a contract with Links Air, a charter company, to use its 18-seater Jetstream 31 to provide a daily service between Oxford and Edinburgh. Advance sales of tickets, priced at £49 a seat, were brisk.

Contrary to its pronouncements to the media, which claimed financial backing sufficient for two years, the enterprise had almost no capital.

To raise cash, Halstead and Lawrence offered jobs to four recently qualified pilots on the basis that they paid up to £15,000 each to be “type trained” to use the Jetstream. Halstead had not set up a company bank account. The pilots paid the money directly into his own personal account.

Halstead then paid about £30,000 to Links Air in advance of the passenger service being launched on March 1. The rest of the money, Halstead said last night, had been used up on “operational” costs, although he insisted that the pilots, who received no training, would be reimbursed eventually.

One of the pilots, Peter Chilvers, 23, said he had been offered a £24,000-a-year job after being interviewed by Halstead and Lawrence at the Gherkin tower in London in February. “The contract was emailed to me on the Sunday and I was told I needed to return that and £15,000 by the Wednesday,” he said.

“I got some from my grandmother’s savings, some from my aunt and uncle’s savings, and my mum and dad took out a loan as well. I am devastated.”

Jon Ibbotson, the owner of Links Air, said he was left at least £60,000 out of pocket when he was forced to suspend the flights last Monday after just one week of operation, leaving passengers stranded in Edinburgh.

He said: “They could only pay me for half the agreed hours. I personally paid for the whole week for the aircraft to fly, on the promise we would get the ticket sales from that week. By last Monday Halstead wouldn’t return my call, so I had to pull the service.

“When I think of the kids, the pilots, that have lost money on this, it makes me want to be physically sick.” Ibbotson said he had informed the police about Halstead, who has not allowed anyone access to the £8,200 in ticket receipts.

Lawrence, a former nightclub operator who agreed to be disqualified as a director three years ago after it was alleged he misappropriated £60,000 from a previous company’s funds, said he was blameless over the collapse of Varsity.

Despite signing the pilots’ contracts on behalf of Varsity Air Services, Lawrence insisted that he had not acted as a “shadow director” for the company while banned, something which is illegal and can lead to a fine or prison sentence.

He said Halstead, whom he met while both were training to be pilots three years ago, knew he was a disqualified director. Halstead said he had not known Lawrence was disqualified: “David was certainly helping to run the business. We were definitely taking joint decisions.” Of his “Gilligan” fakery, he said: “I saw nothing wrong with that.”

Richard Maslen, deputy editor of Airliner World, said: “The aviation industry has long attracted talented young entrepreneurs and Martin Halstead was once hailed as possibly being the next in line.

“But what has now emerged shows he would be unlikely to work in this industry again.” ... 061160.ece
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