Virgin Atlantic has launched its new transatlantic joint-business with Air France-KLM and Delta.
Virgin has had a transatlantic joint-business with Delta since 2014. It has also had a reciprocal codeshare with Air France-KLM on transatlantic routes since March 2019.
Delta has a long-standing transatlantic joint-business with Air France-KLM and the launch of the new combined joint-business allows all three airline groups to co-ordinate transatlantic routes, schedules and fares between Europe and North America.
A key principle of the joint-business is that it is “metal neutral”. This means all participating airlines much treat each other’s flights equally for selling purposes.
At first, passengers are unlikely to notice too much difference. However, the three airlines have mooted closer co-operation such as co-location at airports which could ultimately see Air France and KLM moving flights into London Heathrow Terminal 3.
The first significant change is that from Thursday 13 February 2020 members of the Virgin Atlantic Flying Club will benefit from full reciprocal frequent flyer recognition when flying on the worldwide short and long-haul networks of Air France, Delta and KLM.
Air France-KLM was due to acquire a 31% stake in Virgin Atlantic. However, this has since been abandoned and Virgin Group will retain control of Virgin Atlantic. Virgin may still explore greater co-operation with Air France and KLM on routes outside of North America, where the latter airlines have a substantially greater route network.
Air France-KLM, Delta and Virgin Atlantic have received tentative approval from the US Department of Transportation to combine the two transatlantic joint-ventures between Delta and Air France-KLM and Delta and Virgin Atlantic into one.
There had been strong objections from JetBlue which is seeking access to London Heathrow and a number of other European airports.
The Department of Transportation largely dismissed these concerns, but acknowledged concerns about the joint-venture’s presence at Amsterdam Schipol airport.
The Department of Transportation proposes that the airlines report annually on the progress of their co-operation and provide a detailed self-assessment after five years.
The next stage is for interested parties to make submissions to the US Department of Transportation before it issues a final decision.
Regulatory approval has been a long time coming. At present, Air France-KLM and Virgin Atlantic only have a limited codesharing agreement. Once regulatory approval is granted, the two airlines will pursue much greater co-operation.
This is likely to involve co-ordination of schedules and routes, co-location at airports (including possibly London Heathrow) and full reciprocal frequent flyer recognition.
Air France-KLM and Virgin Atlantic may also pursue greater co-operation on flights outside North America where clearly Air France-KLM has a significantly greater presence:
When the combined joint-venture is implemented Sir Richard Branson’s Virgin Group will also cede control of Virgin Atlantic by selling a 31% stake to Air France-KLM – a largely symbolic, but still historically significant move. This has already been approved by the European Commission and it will leave Delta as the single largest shareholder in Virgin Atlantic with a 49% stake.
Delta and Virgin Atlantic have announced that the two airlines are to jointly fly from London Gatwick to Boston and New York JFK from 2020.
There’s a curious lack of detail in the announcement. Neither Delta nor Virgin Atlantic have confirmed which airlines will operating the routes, though Delta’s press release intimates that it will operate at least one of the routes. There’s also no mention of whether this will be a seasonal or year-round route, nor which aircraft will be used. In any event, eligible passengers will benefit from Virgin Atlantic ground facilities at Gatwick such as its Clubhouse in the North Terminal.
For Delta, this will mark a return to London Gatwick which it first served on 1 May 1978 flying to New Orleans via Atlanta using a Lockheed L-1011 TriStar aircraft. Virgin Atlantic launched daily flights from Gatwick to New York JFK in September 1989, and Boston in May 1991, before transferring both routes to London Heathrow after securing access to the airport in July 1991.
It is no accident that this announcement has been made ahead of a press event next week JetBlue which is expected to unveil plans to launch transatlantic flights to Europe. JetBlue has made no secret of its plans to launch transatlantic flights. It has been lobbying US regulatory authorities for slots at London Heathrow to be released as condition of Delta merging its transatlantic joint-ventures with Air France-KLM and Virgin Atlantic into one. However, this has yet to be concluded.
Boston is currently served from Gatwick by Norwegian. New York JFK is also served by BA and Norwegian. Whilst Delta is keen to emphasise its overall strength in Boston, London – Boston is a very important route for BA. Given BA serves Boston four times daily from Heathrow it would be surprising if it did not make a similar competitive response, should JetBlue announce plans to fly to Boston from Gatwick. These moves will of course place significant competitive pressure on Norwegian at Gatwick. JetBlue’s announcement on Wednesday 10 April 2019 is eagerly awaited.
Air France-KLM and Virgin Atlantic have started to roll out reciprocal codeshares on each other’s transatlantic networks.
The two airline groups are currently awaiting regulatory approval to combine their respective transatlantic joint-ventures with Delta into one.
Ahead of regulatory approval, Virgin Atlantic is now offering transatlantic flights on its website from UK airports via Air France-KLM hubs in Amsterdam and Paris Charles de Gaulle.
This is potentially useful when wanting to fly to Canada, which Virgin Atlantic does not serve, and wanting to avoid transiting in a US airport. It also provides for substantially more options for Virgin Atlantic passengers flying from UK regional airports, where Air France and KLM coverage is extensive.
As these have only just launched it may take a few days before codeshares are fully rolled out and all route and fare class options are available. At the time of writing the Air France website is offering Virgin Atlantic flights from London, but KLM is not.
Members of the Virgin Atlantic Flying Club can also earn miles and tier points when flying on Air France and KLM flights that are sold under Virgin Atlantic flight numbers, as per guidance from Virgin Atlantic.
Delta and Virgin Atlantic have operated a joint-venture between the UK and USA since 2013 and wish to combine this with Delta’s joint-venture with Air France-KLM. Delta owns 49% of Virgin Atlantic. When the joint-venture completes, Air France KLM will acquire a stake in Virgin Atlantic from Virgin Group, making Delta the single largest shareholder.
– The airlines have expressed a desire to co-locate at London Heathrow. Given Virgin Atlantic’s significant investment at Terminal 3, this would most likely mean Air France and KLM moving from Terminal 4 to 3.
– Virgin Atlantic will codeshare on Air France and KLM flights from UK airports to their respective hubs in Paris Charles de Gaulle and Amsterdam.
– Virgin Atlantic will also codeshare on Air France and KLM flights around the world, thus offering significantly more booking options to Virgin Atlantic passengers.
– Virgin Atlantic will retain its own frequent flyer programme, but with earning and redemption opportunities on Air France and KLM flights.
In practice, this is likely to be rolled out progressively and codeshares may only be available for certain routings, eg when connecting to/from certain destinations covered by the joint-venture.
Competing Against American Airlines and British Airways
A clear theme is a desire/need for Virgin Atlantic and Delta to be a stronger competitor against BA and Oneworld at London Heathrow and in the UK market, particularly for corporate customers and frequent flyers.
The combined joint-venture sees it itself as a much stronger competitor in UK regional airports such as Manchester and Glasgow where it can offer both direct flights to the US and connections via Amsterdam and Paris Charles de Gaulle.
Air France and KLM can also compensate for Virgin’s relatively weak non-US network where it can offer codeshares to a very large number of worldwide destinations. Indeed, Air France and KLM serve very many destinations in Africa and Asia that are not served by BA.
As Virgin Atlantic reported a loss in 2017, achieving higher margin corporate revenue and cost savings from merging back office functions will be critical to its future.
There is a degree of irony in this submission in that BA and KLM did once explore a merger. This was arguably one of the greatest missed opportunities in aviation. The plan for co-operation between Virgin and Air France-KLM was very much that could have been explored between BA and KLM. It will be interesting to see how American Airlines and BA respond, both at Heathrow and at UK regional airports. Continue reading “Air France-KLM, Delta, & Virgin Atlantic’s Joint-Venture Plans”
We have to admit to being a little surprised by this news.
Virgin Atlantic and Delta, partners together in a relatively new transatlantic joint-venture, have announced that they will swap flights between London Heathrow and Los Angeles and Atlanta from 26 October 2014.
Delta will take over one of Virgin Atlantic’s twice daily London Heathrow – Los Angeles flights. Virgin Atlantic will take over one of Delta’s thrice daily London Heathrow – Atlanta flights.
Following the grant of anti-trust immunity by the US Department of Transportation, Virgin Atlantic and Delta have today confirmed they will co-ordinate their schedules to operate a nine times daily shuttle service on the London Heathrow – New York (Newark & JFK) route from 30 March 2014.
The US Department of Justice has today, 20 July 2013, issued a statement confirming that it intends to take no further action in respect of the proposed acquisition by Delta Air Lines of Singapore Airlines’ 49% stake in Virgin Atlantic and the proposed joint-venture between Delta Air Lines and Virgin Atlantic for routes between London Heathrow and North America.