Virgin Atlantic
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compton - yes, there would be some more Skyteam aligned LHR slots, but for Skyteam to make effective use of those slots would to some extent mean Virgin killing off some of their existing tried-and-tested routes in favour of routes to Skyteam-aligned destinations. As an example, how does a Heathrow-San Francisco or Heathrow-Dubai route really benefit Skyteam, when Pairis-CDG and Amsterdam both already have excellent local feed from all over Europe as well as plentiful long haul flights ?
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I'm not saying that Delta taking a 49% (or more) stake in Virgin would be a bad thing - I just haven't seen a convincing agrument yet and hope someone can persuade me as to the merits of such a deal.
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I'm not saying that Delta taking a 49% (or more) stake in Virgin would be a bad thing - I just haven't seen a convincing agrument yet and hope someone can persuade me as to the merits of such a deal.
I wouldn't see a DL/AF-owned Virgin killing off any tried-and-tested routes as long as they were profitable; similarly, though, I wouldn't see VS basing its network on long-haul connecting feed through LHR. AF/KL have far stronger hub operations in CDG/AMS (as you rightly say) and won't dilute those. So IMHO the main rationale for Delta and AF to buy Virgin is to compete effectively with BA for (especially UK-originating) point-to-point traffic on the more lucrative long-haul routes.
To be honest, a Skyteam-aligned VS makes much more sense to me than a Star-aligned one. In Star, United already covers LHR-US routes pretty well, so there wouldn't be so much network upside there for the alliance (and more competition for Virgin). VS would also face intra-alliance competition to India, S Africa and Japan.
Conversely, VS isn't competing much with Skyteam carriers on its existing network. No competition to India, S Africa or Japan. And some scope to codeshare with Aeroflot on LHR-SVO and as a consolation prize pick up some of the Russian traffic which the recent scarce capacity hearing denied them.
I can't judge whether DL would end up paying over the odds for the share of VS. But I do find myself wondering: if DL invested in Virgin Atlantic, would the next step be for them to buy out Virgin America?
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Aer Lingus are to announce in the next 24 hours that they are to commence short-haul flights from next March on behalf of another airline:
The Sunday Business Post - News - Aer Lingus expected to announce short-haul tie-up
It has to be Virgin Atlantic...
The Sunday Business Post - News - Aer Lingus expected to announce short-haul tie-up
It has to be Virgin Atlantic...
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Originally Posted by British Airways
If that is the case, maybe they could also rebrand LHR-Ireland flights under "Virgin Ireland" branding! (and transfer their slots at LHR to VS)
The Virgin brand is non-existent between Ireland and the UK. Aer Lingus on the other hand is very well known. If it does turn out to be Virgin, I could still see Aer Lingus having some type of brand presence, even if its just an "operated by Aer Lingus" logo on the aircraft.
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Skyteam in general and AF in particular have eyed up the UK market for many years - you'll recall for example the commercially disastrous AF LHR-LAX service which lasted a whole season back in 2007. APD notwithstanding, there is a huge O&D market to and from the UK, including significant business flows, and for UK-originating traffic (business traffic in particular) there is now no significant competitor to BA on most point-to-point long-haul routes from London - and Skyteam covets this.
I wouldn't see a DL/AF-owned Virgin killing off any tried-and-tested routes as long as they were profitable; similarly, though, I wouldn't see VS basing its network on long-haul connecting feed through LHR. AF/KL have far stronger hub operations in CDG/AMS (as you rightly say) and won't dilute those. So IMHO the main rationale for Delta and AF to buy Virgin is to compete effectively with BA for (especially UK-originating) point-to-point traffic on the more lucrative long-haul routes.
To be honest, a Skyteam-aligned VS makes much more sense to me than a Star-aligned one. In Star, United already covers LHR-US routes pretty well, so there wouldn't be so much network upside there for the alliance (and more competition for Virgin). VS would also face intra-alliance competition to India, S Africa and Japan.
Conversely, VS isn't competing much with Skyteam carriers on its existing network. No competition to India, S Africa or Japan. And some scope to codeshare with Aeroflot on LHR-SVO and as a consolation prize pick up some of the Russian traffic which the recent scarce capacity hearing denied them.
I can't judge whether DL would end up paying over the odds for the share of VS. But I do find myself wondering: if DL invested in Virgin Atlantic, would the next step be for them to buy out Virgin America?
I wouldn't see a DL/AF-owned Virgin killing off any tried-and-tested routes as long as they were profitable; similarly, though, I wouldn't see VS basing its network on long-haul connecting feed through LHR. AF/KL have far stronger hub operations in CDG/AMS (as you rightly say) and won't dilute those. So IMHO the main rationale for Delta and AF to buy Virgin is to compete effectively with BA for (especially UK-originating) point-to-point traffic on the more lucrative long-haul routes.
To be honest, a Skyteam-aligned VS makes much more sense to me than a Star-aligned one. In Star, United already covers LHR-US routes pretty well, so there wouldn't be so much network upside there for the alliance (and more competition for Virgin). VS would also face intra-alliance competition to India, S Africa and Japan.
Conversely, VS isn't competing much with Skyteam carriers on its existing network. No competition to India, S Africa or Japan. And some scope to codeshare with Aeroflot on LHR-SVO and as a consolation prize pick up some of the Russian traffic which the recent scarce capacity hearing denied them.
I can't judge whether DL would end up paying over the odds for the share of VS. But I do find myself wondering: if DL invested in Virgin Atlantic, would the next step be for them to buy out Virgin America?
) then they need to then buy further slots on behalf of Virgin, since VS long haul route network trails behind BA's long-haul route network, which cannot be fixed when you only hold 3% of LHR's slotsThe only good reason that I see is that DL gains extra TATL frequencies and additional slots for AFD, maybe for DL they might take on VS's A330s and 747s as well
Lastly, I doubt if AF has the financial resources to finance the deal, DL might, but the EU would not let them do it alone
As for Delta buying Virgin America, I don't see it happening, VA are getting burned at SFO by UA and their LAX base is little better, I see them entering BK and shutting down, I suppose DL might take their A319s/A320s however (DL have a habit of taking on very good used planes)
If there is any airline in America (or even anywhere), that DL should by, then it is AA (which would be a great benefit to Delta, though UA is still a better merger partner for American)
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Why in the hell would they do that? Especially when they still have a code share with BA...
The Virgin brand is non-existent between Ireland and the UK. Aer Lingus on the other hand is very well known. If it does turn out to be Virgin, I could still see Aer Lingus having some type of brand presence, even if its just an "operated by Aer Lingus" logo on the aircraft.
The Virgin brand is non-existent between Ireland and the UK. Aer Lingus on the other hand is very well known. If it does turn out to be Virgin, I could still see Aer Lingus having some type of brand presence, even if its just an "operated by Aer Lingus" logo on the aircraft.
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Well I am sure over the coming days we will be finding out if it's aerlingus and avion express that are both going to be operating the virgin Atlantic domestic flights from LHR to MAN, EDI & ABZ.
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If AFD (Air France-KLM + Delta) want to establish a proper hub (for medium/long haul + O&D) at LHR (good luck with that one! ) then they need to then buy further slots on behalf of Virgin, since VS long haul route network trails behind BA's long-haul route network, which cannot be fixed when you only hold 3% of LHR's slots
The only good reason that I see is that DL gains extra TATL frequencies and additional slots for AFD, maybe for DL they might take on VS's A330s and 747s as well
Lastly, I doubt if AF has the financial resources to finance the deal, DL might, but the EU would not let them do it alone
As for Delta buying Virgin America, I don't see it happening, VA are getting burned at SFO by UA and their LAX base is little better, I see them entering BK and shutting down, I suppose DL might take their A319s/A320s however (DL have a habit of taking on very good used planes)
If there is any airline in America (or even anywhere), that DL should by, then it is AA (which would be a great benefit to Delta, though UA is still a better merger partner for American)
) then they need to then buy further slots on behalf of Virgin, since VS long haul route network trails behind BA's long-haul route network, which cannot be fixed when you only hold 3% of LHR's slotsThe only good reason that I see is that DL gains extra TATL frequencies and additional slots for AFD, maybe for DL they might take on VS's A330s and 747s as well
Lastly, I doubt if AF has the financial resources to finance the deal, DL might, but the EU would not let them do it alone
As for Delta buying Virgin America, I don't see it happening, VA are getting burned at SFO by UA and their LAX base is little better, I see them entering BK and shutting down, I suppose DL might take their A319s/A320s however (DL have a habit of taking on very good used planes)
If there is any airline in America (or even anywhere), that DL should by, then it is AA (which would be a great benefit to Delta, though UA is still a better merger partner for American)
If AFD (Air France-KLM + Delta) want to establish a proper hub (for medium/long haul + O&D) at LHR (good luck with that one! ) then they need to then buy further slots
) then they need to then buy further slots
The only good reason that I see is that DL gains extra TATL frequencies and additional slots for AFD, maybe for DL they might take on VS's A330s and 747s as well
Lastly, I doubt if AF has the financial resources to finance the deal, DL might, but the EU would not let them do it alone
If there is any airline in America (or even anywhere), that DL should by, then it is AA (which would be a great benefit to Delta, though UA is still a better merger partner for American)
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With Singapore Airlines touting the possibility of selling its stake in Virgin Atlantic, what are the chances that Etihad may want to buy the 49%.
They do have a stake in Virgin Australia and they are looking at Jet Airways.
They do have a stake in Virgin Australia and they are looking at Jet Airways.
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I have not suggested that AF/KL/Delta want to establish a hub at LHR. On the contrary: AF/KL each have a large and functional hub already. Why would they want another? The UK point-to-point market is enough of a prize.
What I meant was that as an O&D based focus city for long haul flights, AFD would have to buy further slots after buying VS, because VS in its current form simply does not have the long haul route network that can compete with BA and they can’t do anything about that with 3% of LHR’s slots
Also do you think they DL would reroute their AMS-BOM service from LHR?
Reports state that DL would acquire SQ's 49% and AF would possibly take a further stake (potentially much less - it could be just a few percent).
Air France/KLM does not need more slots in LHR. DL does not need to "take on" VS's A330s and 747s. I appreciate that you are a fan of the "the bigger the better" approach but in the real world, there is no clear benefit to Delta taking over VS routes and aircraft. VS has a strong brand in the UK and this brand (along with its LHR presence) is a large part of its attraction to a potential investor.
Remember also that DL operates both the A330-300 and 747-400 and is well known for buying quality used aircraft of types they already have or are of similar type (most recently buying additional MD-90’s and 717’s), they could the VS A330 fleet for international expansion or replace older 767-300/300ERS and as for the 747-400s, well DL could use them for either international expansion or replace their older 747s (DL fleet includes some of the oldest 747-400s flying)
Lastly (this coming from VS several times and thinks they are a great airline), VS might have a great brand, but they are falling behind BA long-haul wise, for that to change (if they want to keep VS as a going concern) they would have to invest quite a lot and all that would do is drive yields down for both BA and VS
Frankly all I can see out of this (unless they shut VS down and take on its 747s, A330s and LHR slots) it’s that DL/AF-KL would spend money on VS, restructure the airline and then they would see that all that was for nothing and they would sell up, by then the only airline willing to buy VS is BA
Which would be similar to what LH did to BD, LH is a very profitable airline and they could cope with the losses that came from the LH/BD/BA deal (along with buyouts of LX, OS and SN), but would the same apply to DL and AF-KL? (Depending on how much of a stake they take on)
If AF-KL took on a small stake in VS (so that a DL takeover would be legal under EU law), then they would just about cope with a VS belly-up, but if they took a 51% stake for example then it could put the whole airline in trouble and unless the French and Dutch governments are prepared and allowed to bail-out the airline, if not then they would either:
1: Sell assets such as CityJet (maybe retain the Paris ops), Transavia and cargo ops
2: Put themselves up for sale
3: Shut down (this would be only as a last resort)
As for DL however, they would face a massive blow to their operations and they would become a takeover target (the last time DL was in trouble, US make an unsuccessful bid for the airline) or maybe even enter BK again or survive as an independent airline but face hard times ahead (when the US economy is not exactly thriving)
DL are better off buying AA or AS (or even both), because both those airlines would be of benefit overall for DL
As for your claims that I have a “the bigger, the better approach”, it’s not as simple as that, I feel that it’s not just about size, but yields, management, labour relations, route network, capacity and maybe other factors that makes a airline
The reason why I am suggesting a UA and DL are better merger partners for AA is that it would work out better for AA than merging with US, that airline would be of no benefit for AA and would not fix the problems AA are facing (lack of Trans-Pacific, Labour Relations), which would be mostly fixed by merging with UA or DL
Hint: pretending that regulatory and antitrust constraints don't exist doesn't actually make those constraints go away.
You have to remember that America has too much competition in their aviation market for their airlines to be sustainable financially (even after reducing their service, undercutting their staff and BK), America needs to see this sooner rather than later.
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I understood that Avion Express were going to be operating for Virgin? They have been recruiting for LHR based crews for several weeks now with a start date of March 2013 which ties in with the Virgin timing for their domestic services.
Wonder who Avion Express are going to be operating for if its correct that EI are going to do all of the Virgin Domestic uk services then.........
Wonder who Avion Express are going to be operating for if its correct that EI are going to do all of the Virgin Domestic uk services then.........
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Avion
Well I can say that its not VS but of course they had to make a bid for the franchise , wet lease and that means proof of crew, equipment etc.
But on this occasion they lost out .
But on this occasion they lost out .
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so what competition problem do you see in a DL-AA merger?
It's a behemouth of an idea. Have your years in commercial business management taught you nothing? Oh wait....
Last edited by Skipness One Echo; 7th Dec 2012 at 18:49.
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So lets say AF KLM was successful, would this be an opportunity for Cityjet to operate the domestic ex LHR and not EI as previous hinted? A return to Virgin Atlantic by Cityjet!!
May give a life line to Cityjet.? I am not so confident that AF KLM is the right partner 1. I sense that it will be similar scenario as LH + bmi, 2. Don't AF KLM have enough of their own worries to deal with now financially, rather than investing in VS.
May give a life line to Cityjet.? I am not so confident that AF KLM is the right partner 1. I sense that it will be similar scenario as LH + bmi, 2. Don't AF KLM have enough of their own worries to deal with now financially, rather than investing in VS.
Last edited by EI-BUD; 9th Dec 2012 at 13:15.
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I think it's unlikely that SRB will sell up VS completely. I'm still of the opinion a Middle East carrier (EY my best guess) will be a surprise buyer for SQ's stake. I may be wrong but I don't see AF/KLM coming in to this.
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So lets say AF KLM was successful, would this be an opportunity for Cityjet to operate the domestic ex LHR and not EI as previous hinted? A return to Virgin Atlantic by Cityjet!!
May give a life line to Cityjet.? I am not so confident that AF KLM is the right partner 1. I sense that it will be similar scenario as LH + bmi, 2. Don't AF KLM have enough of their own worries to deal with now financially, rather than investing in VS.
May give a life line to Cityjet.? I am not so confident that AF KLM is the right partner 1. I sense that it will be similar scenario as LH + bmi, 2. Don't AF KLM have enough of their own worries to deal with now financially, rather than investing in VS.
Second, if you look at the proposed VS deal structure, Delta would be doing the heavy lifting in terms of buying 49% of VS - AFKL would theoretically only need to acquire a couple of percent. AFKL do indeed have their own worries, but nor can they afford to put strategy on hold while they sort out their house.
And in any case the announcement about VS/EI should appear in the next couple of days.
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Willie Walsh: Virgin Atlantic brand could soon be history
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He's making a very good point. What would be the value to Delta of almost owning one of your competitors?
Think of the difference in the cultures between Delta, a *very* particular culture, certainly before taking over NWA and Virgin Atlantic. There are no fleet synergies worth mentioning. The temptation to reduce VS to a LGW based beach fleet and allow DL to take on AA/BA with a proper sized LHR operation would be an awesome prospect in ATL. Remember some 10/38 Virgin aircraft are on leisure routes from LGW and MAN / GLA, Delta could happily keep Virgin Atlantic going as a concern, possibly flying the ten A330s on these routes. The aging B744s and remaining A340s could be rolled over as more DL capacity is added into LHR. SRB's mantra of competition is maintained as DL and BA/AA are very much competitors in the same markets.
It's like BMI Baby. Why buy it to run it when you could do it better yourself, except in this case you need to buy it for the slots. Virgin have ~ 22 daily departures out of LHR, very tempting but not overwhelming for any operation to take over and run.
Tempting options would be replacing Virgin capacity to EWR and JFK to give a properly competitve offering on the very lucrative LHR-JFK, up against, again, AA/BA.
Think of the difference in the cultures between Delta, a *very* particular culture, certainly before taking over NWA and Virgin Atlantic. There are no fleet synergies worth mentioning. The temptation to reduce VS to a LGW based beach fleet and allow DL to take on AA/BA with a proper sized LHR operation would be an awesome prospect in ATL. Remember some 10/38 Virgin aircraft are on leisure routes from LGW and MAN / GLA, Delta could happily keep Virgin Atlantic going as a concern, possibly flying the ten A330s on these routes. The aging B744s and remaining A340s could be rolled over as more DL capacity is added into LHR. SRB's mantra of competition is maintained as DL and BA/AA are very much competitors in the same markets.
It's like BMI Baby. Why buy it to run it when you could do it better yourself, except in this case you need to buy it for the slots. Virgin have ~ 22 daily departures out of LHR, very tempting but not overwhelming for any operation to take over and run.
Tempting options would be replacing Virgin capacity to EWR and JFK to give a properly competitve offering on the very lucrative LHR-JFK, up against, again, AA/BA.
Last edited by Skipness One Echo; 9th Dec 2012 at 23:08.