Virgin Atlantic Flying Club - Will VS ever join an alliance?

Hi,

A few years ago I heard that Virgin had consulted a Dutch bank to analyse VS's strategy and I am very sure I heard VS say that they wanted to join an alliance.

Does anyone have any information about VS in an alliance, I think it would be benefitial expecially if they can join the TATL anti-trust pact things that all 3 alliances have. I know BA are benefiting from the AA Joint venture agreement.

Is the lack of VS having any unique or regional destinations putting the alliances off inviting them in?

I am very much hoping that Virgin can expand their Manchester presence after the highly succesful Las Vegas launch and the long standing Orlando/Barbados routes, and maybe if they were in Star for example they could fly to LAX/SFO in co-operation with United. An alliance may also help bolster current routes.

Kind regards.

Delta was prepared to take a stake in them, but apparently balked at the asking price. SRB did state last year that virgin atlantic would join an alliance, but nothing seems to have come from it. Of the alliances, skyteam and star are the only real choices. Joining oneworld with BA would first require SRB to commit ritualistic suicide.

That is a shame that the deal with DL did not succeed, it would have given VS instant access to Skyteam and their alliance joint venture. I think Sky is better as VS compete with them on less routes.

And indeed it's safe to say Oneworld is compeltly out of the question.

If you search back in this forum there must be dozens of threads on exactly this subject.
There have been times when they DEFINITELY are and times when they DEFINITELY aren't Flyertalkers love to speculate. - some claim inside knowledge and it is all quite tedious when it comes to nothing again and again - just my twopenarth ;-)

Delta was prepared to take a stake in them, but apparently balked at the asking price. SRB did state last year that virgin atlantic would join an alliance, but nothing seems to have come from it. Of the alliances, skyteam and star are the only real choices. Joining oneworld with BA would first require SRB to commit ritualistic suicide.

SQ owns 49% of VS.

But that hasn't seen VS joining Star anytime soon.

http://www.virgin-atlantic.com/en/ae/allaboutus/pressoffice/faq/sa.jsp

But I hear that SQ wants to offload what is probably their worst investment ever..
http://www.telegraph.co.uk/finance/newsbysector/transport/8560291/Singapore-Airlines-to-consider-offers-for-49pc-stake-in-Virgin-Atlantic.html

SQ owns 49% of VS.

But that hasn't seen VS joining Star anytime soon.

http://www.virgin-atlantic.com/en/ae/allaboutus/pressoffice/faq/sa.jsp

But I hear that SQ wants to offload what is probably their worst investment ever..
http://www.telegraph.co.uk/finance/newsbysector/transport/8560291/Singapore-Airlines-to-consider-offers-for-49pc-stake-in-Virgin-Atlantic.html

Hmm... That news article about SQ wanting to sell is rather old news from last year, yes? Note: SQ invested in VS because it wanted what was supposed to be a global partnership of airlines developed under the Virgin group. For years, VS never expanded their operations to the point where they would have global hubs outside the UK. SQ got frustrated by the investment and its lack of development and therefore threatened to sell their stake for years. Then VA and DJ started under the Virgin Group. SQ at first did not want VA to be called Virgin Australia with international operations. So VA had to formally name themselves V Australia. Then recently, all of the Virgin Group airlines became more established with interline agreements, frequent flyer programmes, etc. VA/DJ and VX became more established with VS. Today, the Virgin airlines are the global airline group that SQ always wanted. IMO, SQ quieted down from making threats to building more partnering relationships with the Virgin Group. I mean, V Australia can call themselves, Virgin Australia. SQ now has an expanded partnership agreement with VA. So I don't think SQ is going to make annual threats. They finally got their deal.

SQ now has an expanded partnership agreement with VA. So I don't think SQ is going to make annual threats. They finally got their deal.

Interesting comment Tony, do you think SQ's threat to sell is off the table? If so what was Delta offering to buy a while back, some of VS's stake itself or SQ's stake?

Interesting comment Tony, do you think SQ's threat to sell is off the table? If so what was Delta offering to buy a while back, some of VS's stake itself or SQ's stake?

I think if SQ tries to make a sale, it will be on better terms than before, now that they established other partnerships with the Virgin Group compared to a year ago or even for several years, always threatening to sell. Perhaps their threats were exactly what the Virgin Group needed to push forward in developing their own worldwide airline group. Who knows, SQ might decide to layback for awhile and just enjoy their Virgin partnerships for the time being.

Don't know much about the DL moves as of current. I suspect they are in a wait and see mode at LHR. Everyone's wondering what will happen to AA and their presence at LHR by the end of this year, based on rumor mills that they will cease to exist.

Everyone's wondering what will happen to AA and their presence at LHR by the end of this year, based on rumor mills that they will cease to exist.

I don't think AA will cease to exist, it might become US Airways in the way Continental became United ... and don't forget BA used to own a slice of US Airways ...

I don't think AA will cease to exist, it might become US Airways in the way Continental became United ... and don't forget BA used to own a slice of US Airways ...

Yes, what you're saying is the latest rumor mill. Technically speaking, AA might cease to exist in its current organization, let's say. When and if they reorganize under a new organization, it will be a different airline, although the name might still be AA.

I have read in numerous articles that if a merger would happen between us airways and AA the AA name will remain in place

Thanks for that interesting insight Tony, it makes sense for SQ to aprtner with numerous Virgin airlines and I can see their thinking.

AA will not cease to exist. In the USA they have a 'get out of jail free card' where they can re-structure under a Chapter 11 ruling which allows AA to end lease obligations and if the unions can't come to an agreement a judge can force a work contract on the employees. After AA has filed for a re-organisation plan and if it get's accepted by the Creditors Committee then they can emerge. The creditors Committe replaces the board of directors and are the group of people who AA owes the most money to. Once it emerges the debt AA has accumulated can be given as shares for the new AA. This is a flawed system as it gives badly managed companies a chance to be more competitive with cheaper labour, if this system wasn't invented then AA's rivals like US and CO would have fallen years ago allowing AA to get more revenue (partiularly premium) to offset those high labour costs.

US Airways have been desperate to merge with anything that moves and they have a chance to present their plan to the Judge and Creditors Committee and if they prefer that plan over AA's re-organisation plan then a merger is likely, assuming approval is given by the authorities. As AA is such a well known brand US have said that they will keep the AA name, headquarters and will remain in Oneworld. AA CEO is against this and there have been rumours of Texas Pacfic Group buying most of AA with IAG buying a minority stake, but overall a chapter 7 liquidation filing is unlikely.

That is a shame that the deal with DL did not succeed, it would have given VS instant access to Skyteam and their alliance joint venture.

I don't think that's the case.

The joint venture involves 4 of the SkyTeam alliance members (Air France, KLM, Delta and Alitalia) but it's something totally separate to membership of the SkyTeam Alliance. Membership of SkyTeam doesn't give any of the other (or new) member airlines the automatic right to participate in the joint venture. Aeroflot, for instance, flies TATL routes to the US and Mexico and is not part of the joint venture.

If VS were to join SkyTeam, it would not thereby gain automatic admission to the joint venture. The JV would have to be renegotiated with all of the relevant parties.

Thanks for that interesting insight Tony, it makes sense for SQ to aprtner with numerous Virgin airlines and I can see their thinking.

AA will not cease to exist. In the USA they have a 'get out of jail free card' where they can re-structure under a Chapter 11 ruling which allows AA to end lease obligations and if the unions can't come to an agreement a judge can force a work contract on the employees. After AA has filed for a re-organisation plan and if it get's accepted by the Creditors Committee then they can emerge. The creditors Committe replaces the board of directors and are the group of people who AA owes the most money to. Once it emerges the debt AA has accumulated can be given as shares for the new AA. This is a flawed system as it gives badly managed companies a chance to be more competitive with cheaper labour, if this system wasn't invented then AA's rivals like US and CO would have fallen years ago allowing AA to get more revenue (partiularly premium) to offset those high labour costs.

US Airways have been desperate to merge with anything that moves and they have a chance to present their plan to the Judge and Creditors Committee and if they prefer that plan over AA's re-organisation plan then a merger is likely, assuming approval is given by the authorities. As AA is such a well known brand US have said that they will keep the AA name, headquarters and will remain in Oneworld. AA CEO is against this and there have been rumours of Texas Pacfic Group buying most of AA with IAG buying a minority stake, but overall a chapter 7 liquidation filing is unlikely.

Well said! ^ You've painted a realistic picture of what's going on.

I'm sure someone will tell me why this isn't possible but why on earth doesn't VS start by joining all the Virgin branded airlines under one FF program and align services accordingly.

Virgin Atlantic, Virgin America and Virgin Australia would cover a reasonable network if everything was seamless. One FF program, status benefits across all airlines etc.

What am I missing?

The regulators in the US. VX had to jump through all kinds of hoops because of the 'no foreign ownership' rule for US based airlines, which mean they have to tread very carefully with networking plans, in case their US competitors allege they've broken that rule.

That is a shame that the deal with DL did not succeed, it would have given VS instant access to Skyteam and their alliance joint venture. I think Sky is better as VS compete with them on less routes.

And indeed it's safe to say Oneworld is compeltly out of the question.

Skyteam and Star are the only ones that make sense. Star makes the most obvious sense since they are partially owned by SQ plus they are partners with ANA. So already star members can use miles for VS redemption.

Also, VS *A partners are NZ, Air China and SK. It would be a natural fit.

Also, VS *A partners are NZ, Air China and SK. It would be a natural fit.

VS is *A in all but name and recognition of my US elite status.

VS is *A in all but name and recognition of my US elite status.

No FF earning/redemption with UA or LH? I'd hardly call that being in *A in all but name.

No FF earning/redemption with UA or LH? I'd hardly call that being in *A in all but name.

Totally agree. Under the old continental you could argue that Virgin was quasi *A but not now with the new United Rules

*A would have made huge sense for VS before bmi was sold to BA, because bmi's feed to LHR would have been invaluable for VS' long haul operations. Now, however, *A has relatively little short haul feed at LHR. There's SAS (and mid-haul with Egyptair and Turkish) but LH and its subsidiaries, Austrian and Swiss, would generally rather feed into FRA or MUC.

So I think now it's a toss up between SkyTeam or *A for VS - but it still amazes me that they haven't chosen anyone. Perhaps it will be top of the agenda for Ridgway's successor.