[canucklad]

Why o why, would an American airline buying into a British independant airline be a good thing…..

Every other month, one US carrier or another files for Chapter 11 protection…..

The in-stability this would cause should put any shareholder off, allowing Delta to buy or United to buy VS….

The US aviation industry is a basket case of unpredicabtability…sorry for the mixed pun!!!

[BeckyBoop]

Delta are good airline and probably more stable than other of their home carriers. They certainly serve more destinations and carry more people than any other airline. So they could certainly be said they are the “world’s favourite airline”?

As for the VS takeover it would be sad to see another British company taken over by foreign hands but it would certainly strengthen the transatlantic availability and give VS customers more onward travel in and around the US along with Virgin America. I doubt SRB will off load his entire share in the company unless he negotiates a deal with Delta to ensure they continue to use the Virgin brand and pay for a franchise agreement. It would be interesting to see how SQ reacts as a result.

[Henkel.Trocken]

It’s certainly an interesting proposition that AF/KLM and DL could jointly end up owning VS.

Perhaps it is time for old beardy to jump ship and play with his new toys.

If AF/KLM are any way down the road on this it would make sense that SQ are perhaps more actively attempting to rid themselves of their share which of course they have tried to do several times in the past but there have been no takers and strangely, Beardy didn’t want it back.

[MatthewBrandon]

Being a DL loyalist, what does this mean for Atlanta? More routes to Heathrow, possible new direct routes to Australia using VA, etc?

[Vertrek]

The reason why the ME carriers do not even think to bid for VS is because VS depends heavily on their USA routes, and they need a good partner to carry their passenger within USA; therefore, ownership from ME carrier is pointless, the same reason why SQ want to quit VS.

And DL is the best fit for VS in term of survival and partnership. I am not saying it because I am a SkyTeam flyer, but because VS simply need a transatlantic JV partner and as DL is dominating NY’s skies and NYC is VS’ main route, VS’ passenger will be able to tap into DL’s network to the rest of USA via NYC. Beside DL need to boost their presence on NYC-LHR routes in order to call themselves the airline of New Yorkers.

Furthermore, with DL, come AF-KLM-AZ and as a person who used to live in LHR, I think the trio would be a better partner for VS because not only KLM serve intra EU’s busiest route, LHR-AMS-LHR, but the AF-KLM-AZ covers more important business and holiday routes out of heathrow then Star (AMS, CDG, FCO, MXP), which would be essential for VS’s London based customer. Beside that, it would make more sense for VS flyer who are going to EU destinations beside the 4 SkyTeam hubs to transit via AMS/CDG as it is closer to London then Star’s hubs of FRA, ZRH, CPH, LIS, MUC.

[Bullfrog]

Interesting reading Vertrek … one interpretation of your last post is :

‘VS can provide a feeder service from London to New York, with onward flights on Delta. In addition, VS can provide additional feeder flights to AMS or CDG for onward transfer with KLM or AF’.

I hope any purchase of VS’s slots from LHR would provide for greater long haul route options ex Heathrow, and not just a feeder operation.

[Vertrek]

Bullfrog,

It is a 2 way relationship, DL will be able to provide feeder to VS and so does AF-KLM as they will be in a JV, similar to BA-AA-IB. At the moment, if you book a flight from AMS-JFK at AF, KL or DL, the website will give you all flight operated by those three, either non-stop or direct and if VS were to join them, VS will show up in the booking machine as well.

The second point regarding AF-KLM; as VS Flying Club members will then be part of SkyTeam, their membership would give access and recognition whenever they fly AF-KLM-AZ out of LHR. and those trio offer more non-stop flight services and better routing to EU important cities than Star’s member flying from LHR. At least in my opinion. =)

[Bullfrog]

Vertrek, I appreciate your opinion.

My thought processes tell me that DL would be paying a high price just to get more transit passengers through New York from London. KL & AF’s investment would yield them more services feeding in from London.

If DL want more capacity, why not offer A380s on the NY route, although this would not allow a frequent service, ie 10 a day.

It all depends what business opportunities are perceived by Delta in acquiring Virgin’s slots at LHR.

Just my opinion.

[scott66]

It feels like the thread is about to take a turn to towards putting a figure to either all or half of the value of VS – based around it’s operation out of LHR. An airline posting an operating loss, so it’s going to come down to the value of the slots it owns in and out of Heathrow. Bullfrog mentioned A380s, is there value in Virgin’s position on the production line for their order of (is it twelve or half a dozen) A380s. Who would we guess would want want to be the second largest operator out of LHR? It’s fair to assume SRB and the wee oirsh fella couldn’t do a deal, one) because they wouldn’t want to, and two) because they wouldn’t be allowed.

Point to think about, Virgin’s core business is trans atlantic, where BA perform very well and at a profit, we’re lead to believe it’s the short haul stuff that kills the flag carriers. Where does the operating loss come from? Following this train of thought, it might appear, the acquisition of the short haul slots is even more about dressing the company up for sale. Still looking for a a buyer – LH eliminated, previous poor experience with British Airline. KLM/AF busy cost cutting on their existing operations.

The Elephant in the room would be BA, we’ve suggested and eliminated other suitors, the most obvious buyer would be BA, for the LHR slots.

Thinking about the EU approval issue , I can’t remember the exact numbers, prior to the BMI sale, LH operated a higher percentage of flights out of Frankfurt, as did KLM/AF from AMS/CDG, than BA out of LHR.

It would be sad if BA did pick up Virgin, I’m ambivalent to the Virgin brand/product, but I do recognize BA would be a lesser product without the Virgin competition.

[simdesman]

I’m not so sure IAG buying up VS would be such a bad thing.

VS in a way dilutes the value of LHR slots. It simply doesn’t need to exist for there to be healthy competition for BA. The fact is that other flag carriers such as AF, KL, AY etc. have no direct ‘home’ competitors, which VS is to BA at least in long-haul. We also live in a world where connecting flights are on the rise, and alliances are growing. The rise of Emirates, Qatar Airways, Etihad and even Turkish Airlines shows this. BA would still have a lot to keep it on it’s toes if VS weren’t there. Domestic flights with no connections may need some kind of price regulation however.

I’m sure any IAG takeover of VS would mean the surrender of some slots – possibly with very flexible conditions for the new owners.

But obviously this is only hypothetical. (!)

[dutchyankee]

@scott66, I feel the same way that you do with regard to Schiphol and CDG as the entrenched carriers there have over 70% of all traffic in the case of KL at AMS, and AF even higher at CDG. That said, these carriers have built these levels of traffic within hubs that are not at bursting point, so there is no problem for competitors getting slots in eithert AMS or CDG. Unfortunately, the same is not the case for LHR, and hence causes BA their major headache in securing slots in an already full hub. Further, the EU somehow tends to close a blind eye to issues such as this when related to France or Germany (LH control of traffic at FRA is well over 70% as well). I can not see how IAG could ever be allowed to buy VS or their slots, which, unfortunately, will keep BA at a disadvantage to the likes of AF, KL, and LH.

[christopheL]

BA’s problem is LHR and the unability of all British gouvernments to make any decision about the building of a new airport.
BA should think about having a dual hub instead of focusing on LHR only.
LHR is an airport of the past and should BA be allowed to buy VS (which is very unlikely) this would only be a very short term answer.

[simdesman]

Dual hubs were tried, but it didn’t work out. Mind you, that was well over a decade ago. Things have changed, and just because an idea didn’t work before doesn’t mean it can’t work at all. It’s not in the idea, but rather the execution.

I could see an opportunity to bolster long-haul ops at LGW quite a bit, even duplicating some more destinations at LHR – but not necessarily as a hub. Obviously there will be some transfer traffic, but I imagine it’s likely to stay mainly O/D.

The 787 would be great for all LGW long haul. Coming in three sizes, it allows for a very economical and flexible long haul operation with crews needing to be certified on only one long-haul type.

Might be something to consider later in the decade, especially when the economy picks up.

[Vertrek]

Hi Bullfrog,

I would think DL (as well as AF-KLM-AZ) want both load factor and frequency between LHR-JFK to increase, after all it is one of the most profitable route in the world and one way to do it is to include VS in their JV and SkyTeam alliance, and I believe that is the main goal.

Once VS join SkyTeam, VS will be SkyTeam’s anchor for the UK and this in return would bring UK based companies (which have strong presence in USA) to DL’s networks and make them as one of the chosen carrier.

For VS, companies would be more attracted and more willing to partner them as the ST would give them broader network and access not only USA but also China. This would be very attractive for major UK companies such as HSBC and Standard Chartered.

In my opinion, it is those type of major companies that DL and AF-KLM trying to lure by buying VS as it will not be easy without an anchor in the UK. =)

[Henkel.Trocken]

Well it seems Walsh has an opinion on this:

http://www.businesstraveller.com/news/walsh-virgin-atlantic-brand-may-disappear

Of course as it’s only 49% of Virgin which is currently for sale so old beardy will continue to own 51% which should ensure the contiunity of the brand for the foreseeable future.

[Author]

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