[Anonymous]

[sparkyflier]

Following the Delta agreement to take over Singapore Airlines 49% share of VS, how do you think this will impact on their route network and growth plans, and affact the Skyteam airlines operating into UK?

Assuming that Virgin does join Skyteam, I feel the ramifications could be quite drastic, providing serious competition to BA, especially in some of the fast growing economies, such as China.

Below I have listed by continent, going west to east, what changes I feel could take place:-

North America

Obviously code sharing with DL on all routes, and tweaking of timetables, especially on New York routes. New routes could start, and Seattle could be one of them, operated by DL or VS. DL tried a few years ago, but with more UK feed, adding the VS code, many Flying Club members choosing VS/DL would make this route viable.
Mexico City – moving slots around, AeroMexico could get better slots at LHR for connections to their network.VS & AM would add their codes to each others flights to the capital and to Cancun.

South America

Virgin will start to Brazil at last, this time with a local partner, GOL, which Delta is also a part owner of, providing feed to UK, and distribution from London via GRU, GIG or even Recife/Salvador/Brasilia etc to the rest of this huge country and key economy.

Europe

Virgin code will go on all Skyteam flights to UK – Air Europa, Air France, KLM, Alitalia, Tarom & Aeroflot (!) – more opportunity to get Flying Club miles/points etc.

Africa

Will Virgin still start the rumoured Tanzania routes, providing “partners” KQ & KL with competition?

Middle East

Virgin codes will go on Saudia & Middle East Airlines routes from LHR.

Asia/Far East

It is here I see the greatest impact, as Virgin could partner /codeshare China Eastern, China Southern, and Vietnam Airlines on their London routes. Virgin will provide plenty of UK feed, and the others a massive network of connections, giving BA some serious competition in the worlds most dynamic markets. Having Virgin in Skyteam will also attarct other airlines to UK, including Garuda.
Virgin would also codeshare with Korean to Seoul, perhaps making life difficult for Asiana.

But what are your thoughts? Is this a game changer? Will this give BA serious competition on a global level? What do you think will be the impact of the Delta partnership and Skyteam membership?

[Vertrek]

Interesting post,

I am sure that Virgin will join SkyTeam as this would give a lot of benefit and strengthen VS profile to businesses in The UK. Here are my opinions regarding threat to BA.

VS/DL alliance is a big threat to BA’s NYC route :

1. DL have a stronger network out of JFK than AA is, which makes connecting out of JFK is easier.

2. As DL have a bigger presence in NYC as a whole and already won lots of NY’s businesses, with Virgin join in and more connection to London, this is an attractive proposal for those businesses who have a strong presence in both NYC and London but presently force to relay on limited AA domestic networks.

3. In term of facility, Virgin Club House + the new upcoming Delta SkyClub in JFK T4 is at least on par with BA T5, but way ahead of AA’s JFK T8.

4. Product wise, DL/VS offer flatbed in Business Class, BA does but not yet AA.

VS joining SkyTeam is also a big threat to BA and Oneworld as they are now have to share their premium market with VS and SkyTeam, but VS is winning for Asia as:

1. Oneworld has limited networks in Asia especially China, this would prompt those companies that have a strong presence in China and the UK to relay on VS and SkyTeam.

2. Recent development of UK and Indonesia’s relationship which relaxes rules for both nation to invest means that more and more UK businesses will be in Indonesia and vice versa, in the near future Garuda presence in the alliance would boost VS’ profile to those businesses (according to an insider, GA will put London in his network latest 2014) and unless Oneworld recruit a member in Indonesia, BA will lose a lot considering Indonesia’s booming economy.

3. If VS decided to fly to Seoul, it will be a threat to BA’s new Seoul network as VS would be able to offer their passengers connections through out South Korea and Japan or even Australia via KE’s networks (and KE would be able to feed VS), generally this would be a more reasonable route for those who need to travel to Japan, especially South-West Japan’s cities, rather than transiting in NRT with JL.
And as you mention, this is a bigger threat to Asiana than BA. 🙂

while for Asian routing,

As SQ is no longer a holder, I will not be surprise if VS starts Singapore. VS will then be able to connect their passengers to KLM’s jet to Bali and GA’s jet to Jakarta and other major Indonesian cities. There is also a possibilities for VS to start LHR-MEL or second SYD service via SIN and provide connection to AUstralia for both AF-KLM as QF is out of the picture for both AF-KLM and no longer serve SIN-LHR. This would further strengthen SkyTeam presence in Economy power house of Singapore and weaken Oneworld’s!

The above scenario would be a big threat to BA’s SIN route if QF were to rearrange their Australia-Singapore flight to a timing which contradicts with BA’s arrival time. I will not be surprise if BA cut SIN flight to 1/day and switch it to KUL to provide more connection throughout SE-Asia.

Having said that, I don’t think this is a big threat for BA’s USA (except NYC), EU and Africa networks.

Last but not least,
Merry Christmas and Happy New Year to you and your love ones. =)

[LuganoPirate]

It’s not a given VS will join Skyteam, after all despite many years being owned by SIA they never joined Star.

Next, there is no reason why they need to join an Alliance, they can have code share agreements instead. As part of Skyteam they could see passenger numbers increase but revenue actually decrease since through fares from lower revenue destinations such as Milan, Athens, Poland etc would apply.

KLM would not really want to see the bulk of the revenue go to VS on AMS-SIN-Bali just picking up the crumbs, so would likely fight to keep that traffic perhaps with special pricing via AMS, especially for those living outside London and for whom LHR is not their first choice of airport.

Then of course there is still the threat of the M.E. carriers with their new planes, convenient timings and additional services. Emirates for example will now come to collect me in Lugano for their flights ex Milan.

Interesting times and I look forward to seeing the outcome of it all.

[LeTigre]

Also a consideration is that under EU conditions VS cannot interline with BA if it joins an alliance.

However, this major loss of revenue must be weighed against the possible obtaining of excess slots from KLM and others which may prove far more profitable.

[Vertrek]

Hi Lugano,

For KLM’s AMS-SIN-DPS route, their UK market could be focused on those who lives outside London while for those who live within LHR can have a choice to go to SIN direct or via AMS and while for Bali they can go direct via SIN. Remember, UK is an important market for KLM, but it is not the only one. =)

I would think as part of SkyTeam, not merely more passengers but they could have more businesses signing to them. beside, 5% lower fares but 15% more passengers, is still a positive things. 🙂

Nice service from EK btw. I have never flown them before, but if they do not join an alliance I don’t see my slef flying them anytime soon. If I want a good services to the East I can always rely on SQ or a direct connection to my destination with AF-KLM-AZ-SU and KE, =)

LeTiger,

If VS were to start their own domestic flight, I don’t think it would matter much, while for passenger from USA to EU, the main EU holiday and Business destination (Paris, Amsterdam, Rome, Milan) could be reach with fellow SkyTeam partners,

Just a thought. 🙂

[MarcusUK]

AF/KLM have signed \10 year agreement with Etihad, providing links down from Middle East to Australasia / pacific region.

This also means a greater feed through Abu Dhabi for AF / KLM. Virgin runs a cul de sac route into DXB currently,.Etihad out from AUH, offers worldwide destinations across the whole EK network. It is only 50 miles away from DXB.

Should virgin join, it will create a fully global link, along with their other 3 Virgin Airlines members in Australia, US, etc.

VS signed an agreement with Delta, Etihad a 10 year agreement with KLM / AF, so i cannot see VS not signing up to Skyteam, as even the FFP’s are going to have reciprocal benefits within months.
This was evidenced on the KLM/AF shareholders website, and the press releases by KLM/AF.

The combination, including the other Virgin Airline Companies, would greatly enhance both sides, and provide a good match in Skyteam.

KLM/AF will feed customers through AUH for onward connections to Asia and Australia, and capture the cut back routes that BA and Qantas are letting go off. This could also completely cut out customers flying via Asia if they choose…

[sparkyflier]

I heard a rumour that there will be a big VS announcement tomorrow. Could this be Skyteam entry? Any other ideas as to what it could be? New route?

[Vertrek]

Hi spark, where did you heard the rumour from?
It could be possible that VS will announce it’s SkyTeam decision tomorrow, as tomorrow will be the day when Garuda will officially join the SkyTeam family. So, if Branson is currently in Indonesia, it will most probably be it!

[Shearer]

CAPA is an interesting website which provides analysis on airlines and business plans. As a VS fan myself, they are startlingly blunt in their appraisal of what could happen to Virgin, and what has happened to Virgin.

http://centreforaviation.com/analysis/and-then-there-was-one-virgin-atlantics-withdrawal-leaves-ba-as-only-european-airline-in-australia-151240

I quote:
On axing Sydney:

…Virgin itself is undergoing a round of pragmatism and there is no room for a high profile but unprofitable service…

On Virgin’s futiure
…namely that with Virgin’s new owner – heavily risk-averse Delta – just across the pond, Virgin’s future will swing more towards the Atlantic…

Virgin has already traded an avant-garde ideal for complacency. It would be a sad end if the onetime industry trendsetter were to become a mere extension of Delta’s Atlantic aspirations.

[canucklad]

Morning NIRscot, sparkflyer & Vertrek

I’m not an aviation analyst but this part of the article reminded me of my gut feeling at the time.

“But Virgin’s withdrawal is part of another story: Virgin’s own re-shaping and maturity. That process arguably started with Virgin’s losing bid for bmi.”

My gut feeling is that the VS board have jumped into bed with the wrong suitor and more importantly, into a family that long term they will find incompatible to get along with.

To me Star failed to grasp how important BMI was to them in the UK market place and BA has benefitted most at the expense of VS and Skyteam !

Oh, and i loved the last point, yep Virgin is now become a bit of a boring old maiden rather than an exciting vibrant and want to know girl you chase at the start of the night. Rather than the frumpy standing alone when the slow dances come on that Richards baby has now matured into.

[JohnHarper]

Clearly no big VS announcement, perhaps Branson has decided not to have his hair cut after all.

canucklad – 05/03/2014 09:14 GMT

I agree about VS being positioned in the wrong place but beggars can’t be choosers and they messed about so long with SIA and then over BD that they might not easily find friends in *A.

I also think that *A failed to grasp the value of BD but that was really down to LH. Had they put in to BD half the expertise they put in to OS they could have turned it round and had a valuable asset and a strong position at LHR. LH lacked foresight, management capacity or both. BD had been badly managed and lost its way but it was not the basket case that OS was. Such a missed opportunity.

[sparkyflier]

JohnHarper, Vertrek & Canucklad, Nirscot & Markus it seems no “big announcement” after all. I had seen a discussion on this on airliner.net so it seems in this case not always a credible source. Frankly though I think BA, VS and BMI have all missed opportunities and not been as well run as they could have been, or had a better/actual strategy in place.

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