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How Will The DL-VS Deal Affect BA?  
User currently offlineGonzalo From Chile, joined Aug 2005, 1996 posts, RR: 2
Posted (2 years 5 days 9 hours ago) and read 8548 times:

Is there a chance of the deal between DL and VS affecting BA revenue ? I tend to think that a lot of passengers could see a better option for connecting flights inside USA flying VS-DL instead BA-AA or similar....
And despite BA numbers are blue, the IAG group will be really unhappy if the "strong" carrier of the group starts to loose market share...

Thoughts ?

Rgds.
G.


80 Knots...V1...Rotate...Gear Up...DC-3 / EMB-110 / Fairchild-227 / Ab318-19-20 / B732 / B763
51 replies: All unread, showing first 25:
 
User currently offlineSTT757 From United States of America, joined Mar 2000, 16907 posts, RR: 51
Reply 1, posted (2 years 5 days 9 hours ago) and read 8521 times:

Quoting Gonzalo (Thread starter):
tend to think that a lot of passengers could see a better option for connecting flights inside USA flying VS-DL instead BA-AA or similar....



If you believe the value is in the US connections then the DL deal is more lucrative, however I think the value is the beyond connections from London on BA. Which means the AA/BA deal will remain mostly unopposed as VS has very little beyond London.



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineanstar From United Kingdom, joined Nov 2003, 5316 posts, RR: 7
Reply 2, posted (2 years 5 days 9 hours ago) and read 8482 times:

Quoting Gonzalo (Thread starter):
Is there a chance of the deal between DL and VS affecting BA revenue ?

It will definately affect BA in a negative way... If your main hub comeptitor gets stronger then that will have an impact.

Quoting STT757 (Reply 1):
VS has very little beyond London.

Well if you mean connecting from US flights they have

Dubai,
J'burg
Cape Town
Accra
Lagos
Delhi
Mumbai

Not quite up there with BA, but not insignificant and likely to get a boost with the new DL partnershi and the extra PAX that will bring to VS


User currently offlinepnwtraveler From Canada, joined Jun 2007, 2296 posts, RR: 12
Reply 3, posted (2 years 5 days 8 hours ago) and read 8425 times:

If you look at the volume of slots that the BA/AA has across the Atlantic compared to DL/VS the difference will be felt but minimal. And as the poster has said above onward links are also key. It however is a good move for DL in that it allows them to increase capacity between NYC and LHR, rationalize the flights, and add volume to secondary markets. One would have to crunch the numbers very carefully to determine how good a deal the cost will be, but they certainly paid substantially less than Singapore.

User currently offlineby738 From Tonga, joined Sep 2000, 2431 posts, RR: 1
Reply 4, posted (2 years 5 days 8 hours ago) and read 8409 times:

All the transfer options were previously available in some shape or form and so Im not quite sure what this adds. The BA Miles hunters will never be swayed.

User currently offlinemigair54 From Spain, joined Jun 2007, 1898 posts, RR: 1
Reply 5, posted (2 years 5 days 8 hours ago) and read 8328 times:

I don´t think this will affect to BA much, as it has said previously the issue with AA-BA is that connectivity in both ends is huge and that´s the main advantage, something like DL-AF has.

The issue with DL-VS now is that they will be able to work out the schedules from NYC-LON so they can offer a more competitive product against BA-AA, and they will be able to steal some pax and don´t do competence between them (VS-DL).

Quoting anstar (Reply 2):
Dubai,
J'burg
Cape Town
Accra
Lagos
Delhi
Mumbai

Destinations in few cases already served by DL, so no much advantage here.


User currently offlineBlueShamu330s From UK - England, joined Sep 2001, 3058 posts, RR: 23
Reply 6, posted (2 years 5 days 7 hours ago) and read 8207 times:

Oh dear, the usual suspects relishing the possibility this will have a negative impact on British Airways, thanks to their poster child Virgin Atlantic.

I'm of the opinion that in the bigger picture of this year's events, in which Virgin have lost out cataclysmically to British Airways' advance, snatching bmi from under Beardy's nose, securing a massive increase in their slot portfolio, BA will barely blink at this deal.

No change on the farm, IMO.

Rgds



So I drive a 4x4. So what?! Tax the a$$ off me for it...oh, you already have... :-(
User currently offlineanstar From United Kingdom, joined Nov 2003, 5316 posts, RR: 7
Reply 7, posted (2 years 5 days 7 hours ago) and read 8142 times:

Quoting BlueShamu330s (Reply 6):
I'm of the opinion that in the bigger picture of this year's events, in which Virgin have lost out cataclysmically to British Airways' advance, snatching bmi from under Beardy's nose, securing a massive increase in their slot portfolio, BA will barely blink at this deal.

I'd say VS have done well out of the deal by securing slots @ LHR that BA have had to pay for.

BA now also have to face a competitor at their home base that is half owned by the world's #2 carrier... so I would say it will have some effect on BA at LHR...Jusy look at Willie Walsh's bet to Branson... seems to rile WW at some level.


User currently offlinerwy04lga From United States of America, joined Jul 2005, 3176 posts, RR: 8
Reply 8, posted (2 years 5 days 7 hours ago) and read 8116 times:

Quoting anstar (Reply 7):
Just look at Willie Walsh's bet to Branson... seems to rile WW at some level.

Wasn't it the other way around? Branson bet Walsh?



Just accept that some days, you're the pigeon, and other days the statue
User currently offlinejfk777 From United States of America, joined Aug 2006, 8494 posts, RR: 6
Reply 9, posted (2 years 5 days 7 hours ago) and read 8051 times:
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Quoting anstar (Reply 2):
Dubai,
J'burg
Cape Town
Accra
Lagos
Delhi
Mumbai

Delta already flies to many of these cities using their 777-200LR fleet. Some are flown to by 767 or A330.


User currently onlinemayor From United States of America, joined Mar 2008, 10645 posts, RR: 14
Reply 10, posted (2 years 5 days 7 hours ago) and read 8024 times:

What made London and LHR in particular, the largest transatlantic market in the first place? From the states, was it just pax travelling TO London or was it connecting pax, too? If it was the former (and still might be the reason) that may be why this is still lucrative for DL. Of course, travelling westbound from LHR, obviously, connecting pax are in the mix.

For years, DL flew to LGW, flying, overwhelmingly, terminating pax. I'm guessing most were leisure pax. Now, being able to fly to LHR, they can go after the business traveler, too.



"A committee is a group of the unprepared, appointed by the unwilling, to do the unnecessary"----Fred Allen
User currently offlineIrishAyes From United States of America, joined Jan 2008, 2240 posts, RR: 15
Reply 11, posted (2 years 5 days 7 hours ago) and read 7982 times:

It really depends on how you look at it. It will matter in certain cases moreso than others.

For instance, let's analyze the impact on BA at LHR as a whole:

If we play devil's advocate here and assume VS joins SkyTeam. Even with its market presence at LHR, VS would only double SkyTeam's share of the traffic at Heathrow from 6.5 to 12%, according to sources. Star would still lead SkyTeam at #2 with a 19.5% capacity share, and OneWorld would be leaps and bounds ahead at 53.6%.

Individually, at present, BA maintains 47.5% of the capacity share at LHR and VS represents 5.6%.

So, while still significant, I don't think the VS-DL partnership would have a huge impact on BA and OneWorld at LHR.

However, if you look at it from a different angle, let's observe the NYC-LON market instead.

Right now, the breakdown is as follows:

UA: 12.6%
DL: 9.2%
AA: 16.3%
VS: 26.2%
BA: 33.8%
KU: 1.9%

That means that right now, OneWorld has 50.1% of the market share, whereas SkyTeam only holds 9.2%. With VS participating in metal neutrality with Delta, SkyTeam's share jumps to 35.4%.

Now THAT in an of itself is a BIG force for OneWorld and BA to contend with, so the impact is significant there.

In summary, the relative "impact" of the VS-DL partnership as it relates to BA has to be viewed more on a case-by-case basis rather than as a whole. However, if I were to guess in terms of big picture, I don't think it would have a huge ripple effect.

[Edited 2012-12-13 12:02:36]


next flights: jfk-icn, icn-hkg-bkk-cdg, cdg-phl-msp
User currently offlineBlueShamu330s From UK - England, joined Sep 2001, 3058 posts, RR: 23
Reply 12, posted (2 years 5 days 7 hours ago) and read 7951 times:

Beardy was the one who was riled and had his feathers ruffled. It was Beardy who placed the bet challenge.

It is the ultimate plus ca change; huge media hype, talk of a takeover, internet gossip and speculation even on whether this will increase the chance of Virgin taking A380s, yet when all is said, done and analysed, the only change is that the 49% stakeholder is now Delta instead of Singapore. Beardy still has his 51% and when ribbed by Willy Walsh that this deal spelt the end of Virgin and Beardy's involvement, Branson reacted like a dog who'd just had electrodes attached to its balls.

Branson still has 51%, has controlling share and has power of veto over anything he doesn't want or like.

BA concerned? I'm not so sure.

Rgds



So I drive a 4x4. So what?! Tax the a$$ off me for it...oh, you already have... :-(
User currently offlinebluesky73 From UK - England, joined Oct 2012, 344 posts, RR: 0
Reply 13, posted (2 years 5 days 7 hours ago) and read 7951 times:

Probably good for BA, keeps them on toes and not too complacent at LHR since taking over BMI. Competition is a good thing and DL/VS link up is good for UK/US generally and passengers.

BA/IB/IAG now need to strengthen links with AA or the possible future AA/US airways (sorry separate subject   ).

Also good to see some positive news from a US carrier looking at growing links abroad, recently been the middle eastern trio expanding networks around world, or at least it feels like it.


User currently offlinemigair54 From Spain, joined Jun 2007, 1898 posts, RR: 1
Reply 14, posted (2 years 5 days 6 hours ago) and read 7886 times:

Quoting mayor (Reply 10):
What made London and LHR in particular, the largest transatlantic market in the first place? From the states, was it just pax travelling TO London or was it connecting pax, too?

Delta flying to London terminating pax is the same example that BA flying to ATL with only terminating pax, however DL can offer something beyond ATL, the same BA offers something beyond LHR.

I understand your point, London is not like flying to other hubs like DXB, AUH or DOH where the biggest part are connecting, London is terminating poing for much of the pax.

Quoting BlueShamu330s (Reply 12):
BA concerned? I'm not so sure.

I´m sure they are concerned but the situation is not so bad.


User currently offlineLDVAviation From United States of America, joined Dec 2008, 1111 posts, RR: 5
Reply 15, posted (2 years 5 days 6 hours ago) and read 7874 times:

Quoting IrishAyes (Reply 11):
Now THAT in an of itself is a BIG force for OneWorld and BA to contend with, so the impact is significant there.

But is that 35.4% sustainable? Has Branson's ego been the only thing that has been keeping Virgin from cutting unprofitable flying between the US and LHR?

From this deal, Branson is clearly hoping that he might be able pick up traffic flows on the US side to correct the margins on the unprofitable routes. Still, I don't see that helping him much in markets such as LAX, Miami, Chicago, all markets where AA/BA could still double down on the VS/DL JV because they are not Delta hubs.


User currently offlineBD338 From United States of America, joined Jul 2010, 738 posts, RR: 0
Reply 16, posted (2 years 5 days 6 hours ago) and read 7857 times:

Quoting migair54 (Reply 5):

Quoting anstar (Reply 2):
Dubai,
J'burg
Cape Town
Accra
Lagos
Delhi
Mumbai

Destinations in few cases already served by DL, so no much advantage here.

zero advantage as the proposed JV only allows connections to UK destinations beyond LHR.

I don't see any negative impacts to BA, they may have some slightly stronger competition but (according to the DL Investor Day presentation) BA/AA still control 59% of LHR seat capacity and a combined DL/VS would be a somewhat distant second at 24%.

The deal is all about DL being able to get more revenue into/out of LHR to/from more US destinations and specifically NYC. DL gets revenue from the JV plus the ability to feed more passengers (i.e revenue) via connecting hubs into LHR. What I can't figure out is what do VS really get out of this? They share some costs with DL but also the revenue, how can a tie up with DL add more revenue when all slots are used and flights are already very full?


User currently offlinemigair54 From Spain, joined Jun 2007, 1898 posts, RR: 1
Reply 17, posted (2 years 5 days 6 hours ago) and read 7788 times:

Quoting BD338 (Reply 16):
What I can't figure out is what do VS really get out of this? They share some costs with DL but also the revenue, how can a tie up with DL add more revenue when all slots are used and flights are already very full?

Exactly, if they were planning to do this, why they don´t fight more for BD, they could have done a good domestic network and some european destinations with that planes and slots and then be able to offer something more out of LHR to even make the planes more full and get better yields.

Can VS reduce a bit NYC now and add some other destinations or more freqs to places where BA is dominating now?? IAH, ORD or MIA for example...


User currently offlineIrishAyes From United States of America, joined Jan 2008, 2240 posts, RR: 15
Reply 18, posted (2 years 5 days 6 hours ago) and read 7732 times:

Quoting migair54 (Reply 14):
Delta flying to London terminating pax is the same example that BA flying to ATL with only terminating pax, however DL can offer something beyond ATL, the same BA offers something beyond LHR.

Umm, WHAT? Absolutely not the case. DL flies to LHR from MULTIPLE US gateways: ATL, BOS, DTW, JFK, MSP, with several of those offering multiple daily frequencies on a year-round basis, whereas BA flies a SINGLE daily flight to ATL.

Quoting LDVAviation (Reply 15):
Still, I don't see that helping him much in markets such as LAX, Miami, Chicago, all markets where AA/BA could still double down on the VS/DL JV because they are not Delta hubs.

The competition is actually much more fragmented than that. In Chicago, UA flies 3x daily flights between ORD and LHR. At LAX, you have UA+ANZ. In MIA, there's a high enough volume of O&D between So.Fla and London to merit VS's market presence (as do LAX and ORD). At the end of the day, it's not just about tapping into the partner airline in a hub-to-hub route; it's the market size, the nature of the yields, and cargo which can serve as contributing factors to justify a route.



next flights: jfk-icn, icn-hkg-bkk-cdg, cdg-phl-msp
User currently offlineskipness1E From United Kingdom, joined Aug 2007, 3317 posts, RR: 1
Reply 19, posted (2 years 5 days 6 hours ago) and read 7697 times:

Quoting IrishAyes (Reply 11):
UA: 12.6%
DL: 9.2%
AA: 16.3%
VS: 26.2%
BA: 33.8%
KU: 1.9%

How do the VS and BA numbers make any sense when the rotations are :

VS 4 JFK
VS 2 EWR
Total 6

BA 8 JFK
BA 3 EWR
Total 11

Summer scheds btw

Yet you have VS at 79% of BA?? You need to quote a source for your stats I think.

[Edited 2012-12-13 12:49:15] Those numbers are well off.

[Edited 2012-12-13 12:51:36]

User currently offlinesteve6666 From United Kingdom, joined Sep 2003, 427 posts, RR: 0
Reply 20, posted (2 years 5 days 6 hours ago) and read 7656 times:

Quoting migair54 (Reply 17):
Exactly, if they were planning to do this, why they don´t fight more for BD, they could have done a good domestic network and some european destinations with that planes and slots and then be able to offer something more out of LHR to even make the planes more full and get better yields.

Being cynical, VS actually getting BD would have been very risky for them - look at the size of the BD losses BA has absorbed this year. It is questionable whether VS would have wanted to or been able to risk turning BD around from a financial perspective - it would have not been short of betting the company. Equally, the way the domestic ops are to be operated minimises risk to VS - if they turn out to be a drag on cash, then they can be terminated in the least cost way possible (doubtless some early termination penalty but still very different to having to return leased/purchased aircraft, dismiss staff etc).

Anyway, if I were a route planner/strategist at BA, I would be getting ready to have some fun. Let's see, Virgin running an A319 from Manchester/Edinburgh at XX.XX, let's put a fully depreciated newly refurbished B767 on at just about the same time and price it to fill the aircraft, see what happens. Or hmmm, Virgin and Delta to NYC, let's run an A380 with this enhanced First product on to compete with it at just that time. Could be very amusing.



eu nasci ha dez mil anos atras, e nao tem nada nesse mundo que eu nao saiba demais
User currently offlinePu From Sweden, joined Dec 2011, 765 posts, RR: 13
Reply 21, posted (2 years 5 days 5 hours ago) and read 7466 times:

Quoting IrishAyes (Reply 11):

Now THAT in an of itself is a BIG force for OneWorld and BA to contend with, so the impact is significant there

The increased share between NY and London is critical, and thanks for adding some numbers about that.

BA's European network is a stand-alone loss maker and only works when paired with overseas, largely TATL, connection options. More specifically, for every premium passenger Delta grabs, the BA hub is weakened and the more a lot of marginal cities (esp. those priced to compete with easyJet etc) become unviable. LHR is an expensive hub that subtracts ~£400 off each connection fare collected in direct tax, in addition to its other high costs.

Delta and VS have everything to gain, its all gravy to them, but BA/AA are facing an increased threat in not merely the additional competition TATL but also a threat to the viability of the LHR hub which subsidises a lot of onward connections from London with high margin premium service fliers from the states (and especially NY.)


Pu


User currently offlineIrishAyes From United States of America, joined Jan 2008, 2240 posts, RR: 15
Reply 22, posted (2 years 5 days 5 hours ago) and read 7417 times:

Quoting skipness1E (Reply 19):
How do the VS and BA numbers make any sense when the rotations are :

VS 4 JFK
VS 2 EWR
Total 6

BA 8 JFK
BA 3 EWR
Total 11

No, the numbers are 100% accurate. They are for this week. This is what I am seeing:

VS 4 JFK
VS 2 EWR

BA 7 JFK
BA 3 EWR

The reason why VS' overall seat share seems disproportional/overly high relative to their lower level of frequencies is because VS deploys higher-density configured aircraft to both JFK and EWR, whereas BA deploys LOWER density configured planes.

For example, VS 2x flights to EWR are on 1x 346 (seating 316) and 1x 744 (seating 425). Whereas BA's flights are a mix of 777s and 767s offering 250 total seats and 209 total seats, respectively.

The situation is the same at JFK: VS uses a mix of A333/A346/744 aircraft which are high-density in Y (314/316/425). BA utilizes lower-density configured 744s and 772s (312/250).

Thanks to metal neutrality with the JV agreement with AA, BA doesn't have t worry about sending Y-heavy planes to JFK because combined with AA, they offer convenient schedules and frequencies operating as one airline across the Atlantic. Virgin, on the other hand, does not have that luxury - so they send the largest aircraft possible in order to capture as much market share as they can given the number of frequencies they're allocated.



next flights: jfk-icn, icn-hkg-bkk-cdg, cdg-phl-msp
User currently offlinesevenheavy From United Kingdom, joined Mar 2004, 1156 posts, RR: 9
Reply 23, posted (2 years 5 days 5 hours ago) and read 7319 times:

Quoting IrishAyes (Reply 22):

Hate to break it to you but VS's aircraft configs are;

A333 - 33/48/185 - total 266
A343 - 34/35/171 - total 240
A346 - 45/38/225 - total 308
B744 - 44/62/261 - total 367

Not far out on the A346, but I wouldn't fancy flying on a 314 seat A333. BA would be laughing all the way to the bank  



So long 701, it was nice knowing you.
User currently offlineskipness1E From United Kingdom, joined Aug 2007, 3317 posts, RR: 1
Reply 24, posted (2 years 5 days 4 hours ago) and read 7261 times:

Can you link to the numbers you're using or are you just going on a random weeks off season capacity? Mind you I was using the standard summer sched!

25 LDVAviation : Simply not the case anymore. Aviation Week wrote an article about this, some months back. What you are describing is the situation at CDG and FRA, no
26 DeltaMD90 : I think it will feel like a punch to the stomach... annoying, kinda hurts, rather not have had it happen, but it's FAR from killing BA. I'm sure VS wi
27 Pu : I usually read the airline-related AW&ST articles, and don't remember one that talks much about BA, LHR and its European network; perhaps you can
28 commavia : Not really. Look at Virgin's schedules in those markets. Heading outbound from LHR, not a single one of those offers logical connections from the U.S
29 mayor : That was the point of my statement. I doubt if DL is going after those pax that are connecting beyond, whether it is on their metal or VS'. They've b
30 LDVAviation : Yes, AF built its business at CDG on the back of connecting traffic, BUT as they've bled more and more of that traffic to the European LCC's and the
31 jfk777 : What makes London and LHR the largest Atlantic market is the same reason Australians go to London. We all speak English so there are many commercials
32 Pu : At least we agree that LHR is especially reliant on premium traffic. But, it is incorrect we feel, (and hopelessly devoted to BA/AA) to say VS/DL doe
33 LDVAviation : Constantly growing? If that were enough to influence buying patterns, you would have a strong argument. But apparently it has not been enough. Accord
34 lucky777 : I would hope the upper echelon at BA don't suffer from the same GOD complex about their airline as you seem to. Looking at their most recent few quar
35 Post contains images steffenbn :
36 anstar : Actually Branson bet Willie $1M.... Willie turned around and said he would offer another bet - A kick in the groin rather than $1M.... Branson then r
37 sevenheavy : I would disagree. VS carry hundreds of passengers through LHR that are transferring to/from the USA to these destinations with very favourable connec
38 Post contains images sevenheavy : I didnt detect any bias from the thread starter, and I find no evidence of them viewing VS as a "poster child" Its a fair question, and when the BA/A
39 slinky09 : Wrong unfortunately, BOM is clearly timed for the morning connections but you're also excluding the VS18 and VS26 from EWR and JFK during the day tha
40 Post contains images sevenheavy : Well, you can try as many times as you like, but 45 + 38 + 225 will still equal 308. Try it if you still dont believe me. What am I missing?
41 commavia : And let us, of course, not forget how the two airlines' respective strategies have worked out. While BA may have some issues to address, it is unques
42 bobnwa : Please back up that statement.
43 Post contains links AAIL86 : I don't think that's a shocking statistic, just think intuitively about what we know about the relative sizes of both BA and VS... I'm not sure where
44 mayor : Let us hope that BA/AA aren't arrogant enough to ignore this tie up, much as DL ignored the coming of WN in the 90s and we know what happened there.
45 IrishAyes : Hmmm, I'm not so sure. Remember, VS has multiple cabin configurations for their widebody fleet. There are two configurations for the A333: the 2-clas
46 sevenheavy : I guarantee 100% that the numbers I gave are exactly correct. I also guarantee that a two class A333 has never operated to JFK, even as a sub. Even i
47 LHRFlyer : Any change in the competitive landscape has an impact but BA has been dealing with increased competition at LHR for decades, from Virgin gaining acces
48 Viscount724 : I thought Canada was the largest U.S. trading partner.
49 doug_Or : I believe you are correct. Trade =/=direct investment, however.
50 anstar : And you will also probably know that the 2 class A330's will all be converted to 3 class to match the rest of the A330 fleet starting in March next y
51 IrishAyes : Ok. Thanks for the clarifications. My apologies.
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