Virgin’s Branson and Delta’s Anderson

Virgin Atlantic

Suddenly there’s Sir Richard Branson of Virgin Atlantic and Richard Anderson, CEO of Delta Airlines, which owns 49 percent of Virgin, having a love fest over the car radio. A bromance on National Public Radio. With exquisite courtesy, they call each other Dull Richard. Dashing Richard. Big brother.

Richard Anderson, who doesn’t often order new aircraft, is so enamored, Delta’s announced they’re shopping for 50 new wide-body jets, according to Reuters.

Sir Richard and Mr. Anderson were both in Washington attending the U.S. Chamber of Commerce Aviation Summit last week. They discussed their global partnership on NPR after being described as two “very different airlines.”

When asked if less competitive environments mean higher fares for passengers, Sir Richard responded: “I think if we hadn’t got into bed with a bigger partner, I couldn’t actually guarantee that future Virgin Atlantic.”

Anderson answered the question by saying the traveling public will have “a real competitor against British Airways and American in the U.S.-to-U.K. market.” (The two carriers haul 65 percent of the passengers.)

By way of background, Delta bought 49 percent of Virgin Atlantic from Singapore Airlines for $360 million in 2012. Singapore paid a billion dollars for it in 1999.

So here’s the interesting thing. When asked what that 49 percent stake in Virgin is worth today, Anderson dodged and said, “the value that we pay is actually a lot less than the value we are going to be able to create together.”

Synergies, joint venture and antitrust immunity are always Anderson’s go-to words. Everything is a Russian-doll wonderland of business within business.

The conversation switched to Malaysia Airlines Flight 370 and the topic of emergency locater transponder technology. The two airline CEOs want an ELT capable of a long life sending ongoing data that can’t easily be turned off. Both agreed it’s a “solved technology” and aircraft should use it.

The final question is, do passengers make choices based on airline?

Branson responded: “If there are only two airlines flying side-by-side, and if they’re flying at roughly the same times, I would have thought as a passenger I would want to choose the airline that’s got the friendliest staff, you know, that gets all the little things right on the plane, that has taken time and trouble over the seating, the lighting, the food, you know, and that differentiates itself from their rival.”

The answer is pretty much Virgin’s business model from the get-go.

Anderson said: “I think there are probably four or five important factors in choice. One is schedule, frequency, price, frequent flyer program, quality of the operation, friendliness of the staff, importance of the brand.”

The answer is pretty much Delta’s business plan: details, details, details.

The Tarmac’s View:  Richard Anderson so enamored he’s buying 50 new jets? Delta is upgrading its ageing and fuel-guzzling 747-400 and 767-300ER jets. It’s going to be a wrestling match between Airbus and Boeing, worth more than $10 billion.

Delta bought ten A330s last year and may be considering the A330neo. Then again, conservative Anderson may expand the existing fleet of 777s. They’ve also got 18 next-generation Boeing 787s on order.

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Comments (Showing 1 of 1)

  • BearX220 at 5:49pm April 07, 2014

    Richard Anderson isn’t RFP’ing for 50 new widebodies because he’s “enamored” with Richard Branson. He’s doing it because Delta is succeeding, expanding overseas, and his 747s and 767s are aging out.

    The US-UK market is important to DL but a small component of its overall longhaul network. And even if US-UK were 100% of it, airline CEOs don’t base fleet planning on “bromance” factors.

    So… what the HECK are you talking about?

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