Virgin Australia Velocity - If Virgin Atlantic joins Star Alliance ...?

There are credible reports that Virgin Atlantic may be joining Star Alliance:

http://www.flyertalk.com/forum/17139526-post4.html

In this case, would Virgin Australia follow suit? Wow, that would be fantastic.

While I would be more than happy if VA joined Star Alliance (or Skyteam) soon, I doubt that this would be the best strategy at the moment.

1. When you enter an alliance, you would not want to be one of the smaller players. It makes sense for VA to become a bit bigger before joining - just for the sake of the bargaining power VA will have once they have reached a point where both Star Alliance and Skyteam feel that not having VA in their alliance would be a big loss. Currently, VA is a nice-to-have player, but not a must for any of the two alliances. As VA is set to expand anyway, it makes sense to wait.

2. Being in an alliance also comes with restrictions regarding your business model. I think it makes sense for VA to continue building customized relations with other airlines across and beyond alliances, and to join Star Alliance (or Skyteam) once a large network with (codeshare and other) collaborations has been set up.

In the middle to long run (i.e. 5 to 10 years), I think VA will not be able to do without joining an alliance, but I do not expect this to happen in the next, say, 5 years.

I've been thinking about what it would take for me to actually make use of the VA plat status (matched) I now have, or what it would take more generally for me to fly on the V network over other alliances. If V was part of star alliance, they'd definitely be getting my flying preferences - all domestic, and probably a lot of my international. Without it, the program feels too fragmented and in its infancy. The lack of status credits on some flights isn't helping either. *A would change some of that.

:p:p PLEASE JOIN STAR ALLIANCE - no more having to buy Qantas flights within Australia! No more buying Qantas flights to connect with Star Alliance carriers in other states! And finally we could all get a home-based credit/charge card which earns /allows redemptions on *A flights! YAY!!!!!!!!!!!!!!!!!

:p:p PLEASE JOIN STAR ALLIANCE - no more having to buy Qantas flights within Australia! No more buying Qantas flights to connect with Star Alliance carriers in other states! I don't get it - QF isn't part of Star. DJ isn't part of Star. So they are both equally placed when it comes to providing connections with Star carriers (except as far as network coverage is concerned, and that won't change by DJ joining Star) - you already have the option.

Dave

What is there to get? If DJ is in the star alliance then I earn status points towards *A elite status on domestic DJ flights - that is not at al lthe case with ANY Qantas operated flight!;);););)

What is there to get? If DJ is in the star alliance then I earn status points towards *A elite status on domestic DJ flights - that is not at al lthe case with ANY Qantas operated flight! What is stopping you flying on DJ now? Why will DJ joining Star make you switch your Australian domestic flights? QF/DJ, you don't earn points now, what is keeping you on QF rather than DJ?

Dave

At least i get reasonable points with Qantas and at least there are many many qantas FF based credit cards - so my domestic travel is ofte ncheap or upgraded to biz with the QFF points I earn - not to mention LX LH allow international (and domestic on LX fares) QF sectors on many of their fare products so at least Ill get some useable point when it is not posssible to get a seat on a *A carrrier on the same route
eg LX Global fare ex AU^^^

Anyone else think excessive use of emoticons should be a hanging offence?

Dave

Air New Zealand pounces on Virgin shares

Air New Zealand has taken advantage of Virgin Blue's falling share price and and lifted its stake in the company.

http://www.abc.net.au/news/2011-09-27/air-nz-ups-stake-in-virgin/2946284

There are credible reports that Virgin Atlantic may be joining Star Alliance:

http://www.flyertalk.com/forum/17139526-post4.html

In this case, would Virgin Australia follow suit? Wow, that would be fantastic.

Most POINTLESS topic EVER. Virgin Atlantic and Australia are not connected at all, so drawing any comparisons to them in this reference is irrational.

Second of all, it's not going to happen. Virgin Australia is not going to destroy their Joint Venture with Delta over joining Star Alliance. They had a chance to work with United and doing a joint venture with them instead of Delta, and that didnt happen.

If Virgin Australia joins any alliance, it will be SkyTeam, and most likely sooner than later.

Most POINTLESS topic EVER. Virgin Atlantic and Australia are not connected at all, so drawing any comparisons to them in this reference is irrational.

Second of all, it's not going to happen. Virgin Australia is not going to destroy their Joint Venture with Delta over joining Star Alliance. They had a chance to work with United and doing a joint venture with them instead of Delta, and that didnt happen.

If Virgin Australia joins any alliance, it will be SkyTeam, and most likely sooner than later.

Hmm. Well, not pointless.

I think your view is very US centric and misses some of the larger dynamics. The Virgin Australia CEO attended the last Star Alliance CEO's meeting. VA has JV/ Code share agreements in place with NZ (which owns 20% of Virgin Australia) and SQ (pending) both in star - in addition to the relationships with EY and DL which i don't doubt are significant factors.

VA and VS are separate airlines however they have significant joint interests, reciprocal FF benefits, and a common large shareholder in SRB. Just because one joins *A it doesn't necessarily follow that the other will ... But it would increase the likelihood that the other would do the same.

My money is on VA moving towards Star eventually if they do join an alliance. I don't see any value in SkyTeam down here whatsoever - i think their choice is between Star and going it solo not star and SkyTeam.

Hmm. Well, not pointless.

I think your view is very US centric and misses some of the larger dynamics. The Virgin Australia CEO attended the last Star Alliance CEO's meeting. VA has JV/ Code share agreements in place with NZ (which owns 20% of Virgin Australia) and SQ (pending) both in star - in addition to the relationships with EY and DL which i don't doubt are significant factors.

It is very US Centric, but thats due to the nature of where they've placed an emphasis on their business. Virgin Australia's joint venture with AirNZ on the Tasman routes dont conflict with any carrier or alliance what-so-ever, so there's no worry that any Alliance would have any objections to them continuing with this partnership, even if they joined OneWorld or Skyteam. On the other hand, their Joint Venture with Delta would disrupt their ability to connect with Star Alliance's biggest member, United/Continental along with hurting some of AirNZ's TransPacific business. I cant imagine they would just sit there and allow their newest member to feed traffic to their biggest competitor's domestic network along with helping them financially with their TransPacific business. And its not like they can just reverse the JV with Delta either, if *A wanted them too - they're stuck for awhile.

All of Virgin Australia's other code-sharing or marketing agreements really wouldnt conflict with any alliance at this point either (even if the SQ one went through - if Virgin Australia were to join SkyTeam, I doubt they'd have too much of an objection). But it's their TransPac US JV which really muddles everything up for them if they plan on joining anybody else but SkyTeam. And let's be honest as well - Virgin Australia is no dummy. They've ran a fairly good business; my guess is that they've thought about joining an alliance for the past three years now. They had to have had an idea of their intentions way back when they were reviewing their joint venture options as well. If Star Alliance was truly the way they were heading - they would've opted out of the Delta joint venture. The CEO's appearance at the latest Star Alliance meeting, in my opinion, was nothing more of being a tease and appeasing AirNZ. I'd liken it to the pretty girl in school who already knows which boy she wants to take to the dance...but she's giggling and talking to everybody just because she knows it makes all the boy's giddy and she likes the attention (and it makes her main boy jealous - giving her more leverage with him).



VA and VS are separate airlines however they have significant joint interests, reciprocal FF benefits, and a common large shareholder in SRB. Just because one joins *A it doesn't necessarily follow that the other will ... But it would increase the likelihood that the other would do the same.


I wouldn't say they have significant joint interests - thats a little bit of an overstatement. They do have some things similar, but by and large, they are two separate airlines with little in common other than the Virgin Brand and a marketing agreement with their frequent flier program. Their networks aren't too complimentary, and neither airline relies on the other for any major business from each other's customers.
What's more interesting and more telling when it comes to VA's loyalty to the Virgin Brand is the fact that Virgin Australia is moving away from strengthening or even cementing their relationship with Virgin America. Delta operates many of the same routes that Virgin America does (LA-Orlando, LA-Fort Lauderdale, LA-NYC), however Virgin Australia has instead fed that traffic Delta's way, in addition to no longer using the same terminal/gates/counter in LAX for some of their flights (it's yet to be confirmed if this is for both outbound and inbound flights).

It is very US Centric, but thats due to the nature of where they've placed an emphasis on their business. Virgin Australia's joint venture with AirNZ on the Tasman routes dont conflict with any carrier or alliance what-so-ever, so there's no worry that any Alliance would have any objections to them continuing with this partnership, even if they joined OneWorld or Skyteam. On the other hand, their Joint Venture with Delta would disrupt their ability to connect with Star Alliance's biggest member, United/Continental along with hurting some of AirNZ's TransPacific business. I cant imagine they would just sit there and allow their newest member to feed traffic to their biggest competitor's domestic network along with helping them financially with their TransPacific business. And its not like they can just reverse the JV with Delta either, if *A wanted them too - they're stuck for awhile.

Seems even more US centric the more you type. Do you realise how small-fry the US airlines are in this part of the world? In terms of Virgin's business model DL and UA are peripheral players. SQ or NZ alone bring far more passengers in and out of Australia than do DL and UA combined. I'm not saying it's not a consideration, i'm saying you have your proportions mixed up.


All of Virgin Australia's other code-sharing or marketing agreements really wouldnt conflict with any alliance at this point either (even if the SQ one went through - if Virgin Australia were to join SkyTeam, I doubt they'd have too much of an objection). But it's their TransPac US JV which really muddles everything up for them if they plan on joining anybody else but SkyTeam. And let's be honest as well - Virgin Australia is no dummy. They've ran a fairly good business; my guess is that they've thought about joining an alliance for the past three years now. They had to have had an idea of their intentions way back when they were reviewing their joint venture options as well. If Star Alliance was truly the way they were heading - they would've opted out of the Delta joint venture.

Bare in mind that the DL arrangement pre-dates the arrival of current management and VA. Current management has not pursued a single arrangement with a single sky team carrier and has instead pursued 3 separate (and much larger) arrangements: 2 with *A airlines and one with the unaligned Etihad.

Delta have exactly one WB flight per day to all of Australia. SQ alone have 3 (i think) a day to MEL alone. Air NZ almost completely enmeshes with Virgin's domestic network and drives 20 times more domestic connections than either DL or UA ever will.

The CEO's appearance at the latest Star Alliance meeting, in my opinion, was nothing more of being a tease and appeasing AirNZ. I'd liken it to the pretty girl in school who already knows which boy she wants to take to the dance...but she's giggling and talking to everybody just because she knows it makes all the boy's giddy and she likes the attention (and it makes her main boy jealous - giving her more leverage with him).

Interesting theory. Strikes me (given it came after the NZ deal and before the SQ deal) as at least a strong sign that VA want strong relationships with *A carriers if not to join the alliance. As i believe i said above, i'm reasonably confident VA will remain outside an alliance in the short term but i will bet London to a Brick they wouldn't go with SkyTeam.

I wouldn't say they have significant joint interests - thats a little bit of an overstatement. They do have some things similar, but by and large, they are two separate airlines with little in common other than the Virgin Brand and a marketing agreement with their frequent flier program. Their networks aren't too complimentary, and neither airline relies on the other for any major business from each other's customers.

You left out "a major shareholder" you also left out that they seem to be developing strong relationships with many of the same partners. SQ, EY, and NZ being obvious examples.

What's more interesting and more telling when it comes to VA's loyalty to the Virgin Brand is the fact that Virgin Australia is moving away from strengthening or even cementing their relationship with Virgin America. Delta operates many of the same routes that Virgin America does (LA-Orlando, LA-Fort Lauderdale, LA-NYC), however Virgin Australia has instead fed that traffic Delta's way, in addition to no longer using the same terminal/gates/counter in LAX for some of their flights (it's yet to be confirmed if this is for both outbound and inbound flights).

Well, that's not really very interesting and very telling at all. It certainly says nothing about the ST v. *A situation to observe they have relegated their relationship with a tiny US carrier in order to build a relationship with a bigger US carrier.

If you look at VA's "virtual network" strategy they need to have relationships with airlines who can get their passengers to where they want to go and DL fits that much better than VX does. However, to assume the relationship with Delta is somehow massively more important than the relationship with SQ, EY and NZ is a hint that you've got your sense of scale wrong. The Delta deal is significant but not *that* significant. There are plenty of precedents in this part of the world for airlines having strong relationships with players in other alliances (see: QF and South African for example).

We could argue around in circles. The reality is that neiher of us knows, however joining ST over *A in this part of the world strikes me as somewhere between unlikely and insane. Perhaps if the other Virgin airlines did it first i could forsee it but on their own? No way.

I don't see any value in SkyTeam down here whatsoever - i think their choice is between Star and going it solo not star and SkyTeam.

While I don't want to take part in the *A versus ST speculations here (actually personally, both solutions would be absolutely fine for me), I beg to differ with respect to the statement that there is no value in SkyTeam "down here".

When it comes to connections in Asian countries close to Australia (and connections further on to Europe), ST can well be considered the better option for VA than *A. *A has only Thai and Singapore on board, while ST includes the 2 major Chinese players, Taiwan, Vietnam and Indonesia. If collaboration with Singapore airlines and Air New Zealand is not affected by joining ST (it frequently happens that airlines do not give up established codeshares when joining an alliance), ST will provide more options for VA when it comes to covering the region.

With respect to South America and South Africa, ST and *A are on par (one player with flights to Australia each), and the ST Australia-US link is already established.

In sum: Once both the SQ and the NZ partnerships are fully "secured", up and running, ST is a pretty reasonable option for VA. After all, SQ and NZ is all that VA really needs from *A. With the full board of hubs in JKT, SIN, SGN, CAN, TPE, PVG and ICN in their portfolio, VA could become a pretty dangerous competitor for QF. (In the sprit of my first post in this thread, I am just looking 10 years ahead, taking into account how the economies in Asia are emerging.)

Air New Zealand pounces on Virgin shares

Air New Zealand has taken advantage of Virgin Blue's falling share price and and lifted its stake in the company.

http://www.abc.net.au/news/2011-09-27/air-nz-ups-stake-in-virgin/2946284

I recall NZ doing that with another ozzie carrier. (Who was a full Star member FWIW.)

Never forget what happened to them. Entirely due to NZ's actions. :mad:

They were called ANSETT.

While I don't want to take part in the *A versus ST speculations here (actually personally, both solutions would be absolutely fine for me), I beg to differ with respect to the statement that there is no value in SkyTeam "down here".

When it comes to connections in Asian countries close to Australia (and connections further on to Europe), ST can well be considered the better option for VA than *A. *A has only Thai and Singapore on board, while ST includes the 2 major Chinese players, Taiwan, Vietnam and Indonesia. If collaboration with Singapore airlines and Air New Zealand is not affected by joining ST (it frequently happens that airlines do not give up established codeshares when joining an alliance), ST will provide more options for VA when it comes to covering the region.

With respect to South America and South Africa, ST and *A are on par (one player with flights to Australia each), and the ST Australia-US link is already established.

In sum: Once both the SQ and the NZ partnerships are fully "secured", up and running, ST is a pretty reasonable option for VA. After all, SQ and NZ is all that VA really needs from *A. With the full board of hubs in JKT, SIN, SGN, CAN, TPE, PVG and ICN in their portfolio, VA could become a pretty dangerous competitor for QF. (In the sprit of my first post in this thread, I am just looking 10 years ahead, taking into account how the economies in Asia are emerging.)

Asian hubs for *A:

NH: NRT
OZ: ICN
CA: PEK CTU PVG
TG: BKK
SQ: SIN

BKK and SIN also carries kangaroo routes.

These are premier cities in the region. OZ NH SQ are premier quality carriers in the region. That's where people actually go to Australia and that's why *A has the market share.

Asian hubs for *A:

NH: NRT
OZ: ICN
CA: PEK CTU PVG
TG: BKK
SQ: SIN

BKK and SIN also carries kangaroo routes.

These are premier cities in the region. OZ NH SQ are premier quality carriers in the region. That's where people actually go to Australia and that's why *A has the market share.

I am not sure if this remark is actually intended to criticize my comment or not, particularly because I do not think it makes sense to argue that one of *A or ST is definitely the better option for VA. IMHO, both alliances would make perfect sense. If I were VA, I would probably base my choice of alliance on a very simple questions: who is going to give me better conditions when negotiating?

Neverthless, I will use this occassion to emphasize my point. My comment above was a reply to the statement that "ST has no value down here whatsoever". Against this statement, I tried to argue that "ST can well be considered the better option for VA than *A" and that "ST is a pretty reasonable option for VA". When making this point I considered a scenario in which VA has already secured cooperation with SQ and NZ. That's all. So in particular, I did not claim that ST is definitely better for VA than *A.

Let's have a look at the hubs again:

1. There can be no doubt that ST covers China mainland better than *A.
2. I do not think that NRT is a highly important hub for travellers from Australia. If you have ICN in your portfolio (as both *A and ST have) most of the relevant connections should be covered. (Again: for travellers from Australia. Of course, this is different for travellers from the US, for example, but this is where DL would come in on the ST side.)
3. In my scenario, VA has covered SIN via cooperating with SQ.
4. Instead of BKK, ST can offer JKT, SGN and TPE. IMHO this is more useful for travellers from Australia in the long run.

So I can't help reiterating my point: "ST is a pretty reasonable option for VA". And this is all I wanted to say.

I recall NZ doing that with another ozzie carrier. (Who was a full Star member FWIW.)

Never forget what happened to them. Entirely due to NZ's actions. :mad:

They were called ANSETT.

Yes the connection did not escape me wither.. but 2M+ points did and a LT GW membership

I am not sure if this remark is actually intended to criticize my comment or not, particularly because I do not think it makes sense to argue that one of *A or ST is definitely the better option for VA. IMHO, both alliances would make perfect sense. If I were VA, I would probably base my choice of alliance on a very simple questions: who is going to give me better conditions when negotiating?

Neverthless, I will use this occassion to emphasize my point. My comment above was a reply to the statement that "ST has no value down here whatsoever". Against this statement, I tried to argue that "ST can well be considered the better option for VA than *A" and that "ST is a pretty reasonable option for VA". When making this point I considered a scenario in which VA has already secured cooperation with SQ and NZ. That's all. So in particular, I did not claim that ST is definitely better for VA than *A.

Let's have a look at the hubs again:

1. There can be no doubt that ST covers China mainland better than *A.
2. I do not think that NRT is a highly important hub for travellers from Australia. If you have ICN in your portfolio (as both *A and ST have) most of the relevant connections should be covered. (Again: for travellers from Australia. Of course, this is different for travellers from the US, for example, but this is where DL would come in on the ST side.)
3. In my scenario, VA has covered SIN via cooperating with SQ.
4. Instead of BKK, ST can offer JKT, SGN and TPE. IMHO this is more useful for travellers from Australia in the long run.

So I can't help reiterating my point: "ST is a pretty reasonable option for VA". And this is all I wanted to say.

Sure, JKT SGN and TPE... each have enough connections to Europe / North America ...

Sure, JKT SGN and TPE... each have enough connections to Europe / North America ...

And good luck with CI, both safety and the product itself. :D

I am not sure if this remark is actually intended to criticize my comment or not, particularly because I do not think it makes sense to argue that one of *A or ST is definitely the better option for VA. IMHO, both alliances would make perfect sense. If I were VA, I would probably base my choice of alliance on a very simple questions: who is going to give me better conditions when negotiating?

Neverthless, I will use this occassion to emphasize my point. My comment above was a reply to the statement that "ST has no value down here whatsoever". Against this statement, I tried to argue that "ST can well be considered the better option for VA than *A" and that "ST is a pretty reasonable option for VA". When making this point I considered a scenario in which VA has already secured cooperation with SQ and NZ. That's all. So in particular, I did not claim that ST is definitely better for VA than *A.

Let's have a look at the hubs again:

1. There can be no doubt that ST covers China mainland better than *A.
2. I do not think that NRT is a highly important hub for travellers from Australia. If you have ICN in your portfolio (as both *A and ST have) most of the relevant connections should be covered. (Again: for travellers from Australia. Of course, this is different for travellers from the US, for example, but this is where DL would come in on the ST side.)
3. In my scenario, VA has covered SIN via cooperating with SQ.
4. Instead of BKK, ST can offer JKT, SGN and TPE. IMHO this is more useful for travellers from Australia in the long run.

So I can't help reiterating my point: "ST is a pretty reasonable option for VA". And this is all I wanted to say.

Sure, JKT SGN and TPE... each have enough connections to Europe / North America ...

You do not really give me the impression that you are interested in having an unbiased view at VA's alliance options. As a starting point you could read my 3 posts in this thread more carefully.

Sure, JKT SGN and TPE... each have enough connections to Europe / North America ...

And good luck with CI, both safety and the product itself. :D

I doubt this would be a major point in VA's alliance decision, given ST's history of successfully supporting airlines that have managed a turnaround.

Just a little remark since this thread started with the information that Virgin Atlantic could join *A.
I just learned that they are also in talks with Delta.

"Virgin Atlantic is not yet part of an alliance but has been holding talks with potential partners about either joining one of them (apart from OneWorld) or selling a stake in itself to another carrier. Discussions with Delta Airlines are understood to have stalled, although Branson is understood to remain hopeful of a deal."

from: http://blogs.news.sky.com/kleinman/Post:8c335dc4-49f0-4334-9cb6-db90b7f450e0

We are living in interesting times!