Welcome to our Monday Briefing of the year for the week beginning 11 February 2019.
2019 is shaping up to be a significant year of change at Virgin Atlantic.
It’s a largely symbolic move, but when Virgin and Delta finally receive regulatory approval (subject to ongoing protests by JetBlue with eyes on slots in London) to combine their transatlantic joint-venture with Air France-KLM, Virgin Group will cede control of the airline – something Sir Richard Branson said he would never do.
Delta will become the single largest shareholder with its existing ownership of 49% of the airline, with Air France-KLM owning a 31% stake.
When Delta acquired its stake in Virgin Atlantic in 2012, this prompted a significant changes to its non-US route network at Heathrow.
And we’re starting to see signs of new changes. Yesterday, Virgin confirmed it will launch London Heathrow – Tel Aviv from September this year.
Like Virgin moving Las Vegas from Gatwick to Heathrow next month, this is likely to be driven by the need for better quality revenue on Delta and Virgin’s transatlantic routes at Heathrow.
When the combined transatlantic joint-venture launches, Virgin will not only benefit from joint-marketing by Air France-KLM, but also access to detailed passenger data on its traffic flows, so expect more changes.
SAS Launches Stansted – Copenhagen
If anyone was to compile a list of the top strategic failures of airlines, or warning signs of airlines in trouble, selling off Heathrow slots would be at the top.
The temptation is understandable. In 2008, keen to secure access to Heathrow in advance of EU – US Open Skies, Continental paid a record $209m for four slot pairs. It’s a relatively easy source of cash.
However, all the evidence points to the fact it never solves underlying problems. There is a long list of failed or still troubled airlines that sold off Heathrow slots (Alitalia, bmi British Midland, Cyprus Airways) but to no avail.
SAS Scandinavian Airlines is to transfer one of its six daily return flights to Copenhagen from Heathrow to Stansted from Monday 8 April 2019. It’s not yet clear what will happen to the slot, or whether this is the start of a broader transfer. SAS still retains a substantial presence at Heathrow. However, the more it cuts its schedule, the less competitive it becomes against a rival with ample slots at Heathrow to respond.