Sir Richard Branson has said his new Scottish short-haul air services will not affect his next bid for the East Coast rail franchise on the same routes.

Little Red will replace the former BMI services on 26 flights a day between Heathrow, Edinburgh, Aberdeen and Manchester, carrying up to one million passengers a year and creating 375 jobs, including 130 in Scotland.

Virgin Holidays is also to create a further 15 jobs with three new outlets in Scotland.

At a media conference in Edinburgh's newest five-star hotel, a bekilted Sir Richard insisted his Little Red venture is part of Virgin Atlantic's plan to compete with BA globally using feeder connections, and would not affect his rail ambitions.

He said: "These are primarily Heathrow-based flights. The two areas are different markets.

"We would like to bid for the east coast franchise. We bid twice before, we came runner-up and the people who were chosen both went bankrupt.

"We think we have a plan for the East Coast line which will benefit the travelling public but we will see what happens."

He paid tribute to Baroness Thatcher, who opened up Heathrow's international slots to competition from Virgin, and added: "It has been 30 years since we first tried to get permission to fly on domestic routes.

"Because Heathrow has been full for even longer than 30 years we could never get the slots to do it, and the few slots we did get we put on long-haul routes."

He added: "It was really only because of BMI's demise that a few crumbs came off the table.

"We hope to put those crumbs to good use. In order to compete properly with BA we do need to be able to feed people into Heathrow and onto our 30 long-haul services to the Far East, Australasia, Africa and America."

Although Little Red's frequencies will be lower than BA's on the Scottish routes, Sir Richard said: "I think we will be able to offer some proper competition to BA on this route.... people will go out of their way to fly us and we don't think that will change in the future."

He said expanding Heathrow was the only way to guarantee competition, and added: "We need more runway space, we need a Government brave enough to make a decision and get on with it, we believe we should get at least one or two built in Heathrow as fast as possible and at the same time think about the long-term."

On the possibility of serving Glasgow, the Virgin Atlantic president commented: "I would love to be able to fly to Glasgow as well.

"For some bizarre reason the competition authorities have bequeathed us these slots but didn't allow us the slots to compete with BA out of Glasgow so they have got a monopoly on that route."

Meanwhile, Lufthansa yesterday inaugurated the first service between Glasgow and Dusseldorf for 20 years, with initially six flights per week, a number which will increase to a daily service in June.

Stuart Patrick, chief executive of Glasgow Chamber of Commerce, said Germany was an important market for Glasgow. "This Lufthansa service is the latest new route won by the Glasgow Airport management team.

"We should all recognise their remarkable success, especially in these tough times."