DWC
Topic Author
Posts: 608
Joined: Mon Nov 06, 2017 7:49 pm

Virgin Atlantic: A Skyteam hub at LHR ?

Wed Sep 18, 2019 2:08 am

Title may sound clickbait, but consider all the following :

1. In July, VA announced they wanted to become the UK's second Flag carrier, rivalling British Airways for capacity and status
https://simpleflying.com/virgin-atlanti ... ow-growth/

2. That was following VA's April declaration to the British authorities to get a sizable share of the new slots once LHR's 3rd runway is built, scheduled for 2026 if all goes well, a signal announcement that threatens BA's market share & monopolistic price-making ( i.e. they do influence the market ), fact is BA is opposed to the 3rd runway to protect their current position.

3. A few weeks ago, DL & VA announced massive transatlantic expansion :
- DL opening routes from BOS to both Gatwick & Manchester,
- VA opening Gatwick-JFK
- Both increasing frequencies on existing routes, some 15% in 2020.
For a detailed account, read https://onemileatatime.com/delta-virgin ... expansion/

4. DL not only bought SQ's 49% share in VA, it now has a JV with VA which makes it VA's strategic decision-maker, as it controls the mighty US market VA flights get to.

5. AF-KLM, also DL's best Skyteam buddy after KE, is not only joining that JV, but also buying 31% of VA, meaning AF is strategically investing into LHR via VA. And because everyone is in bed with one another, DL has 10% of AF-KLM.

6. So Skyteam now controls 80% of VA, which seems to be legally possible with a JV, but then I don't know what British law says or will say if Brexit happens. EU Law limits foreign participation to 49% ( US only 25%, so less free market ), but individual % is only one criteria, a combined 80% is a takeover by any metric.

7. Considering furthermore how LHR is important to the transtlantic market, it stands to reason that DL & AF-KLM want to dent into AA/BA virtual FSC monopoly, it's not one in terms of actors, but it is one in terms of the huge lion share AA/BA have in terms of market share & profit % overall.

8. Months ago, VA announced massive expansion too to Spanish America ( specially Mexico & Brazil ), a trendy move by UK-based airlines, following IAG's own lion share, which in itself is odd considering VA is not known in that part of the world nor did they have a public flying there yet

9. DL bought 49% of AeroMexico, not only adapting their flights into the US, but also maximizing feeds to DL's hubs, ATL & others : more pax transit via DL between LHR & Mexico, how much I don't know butpoint is that Skyteam, through DL, AF-KLM & AM, are increasing their presence into LHR at great speed, in addition to the new flights from BOS & JKF into Gatwick mentionned above.

10. DL has shown, both industry & network wide, they are seriously ramping up in every direction, e.g. :
- SEA & BOS have become two new hubs, in addition to ATL & JFK
- while dehubbing from NRT, their investment in KE & ICN is mighty
- they also paid $450 million for 3.55% minority stake in China Eastern Airlines with hub in Shanghai, China's economic powerhouse slated to take over HK
- new frame models, a hundred A220s after ordering A350s, while flogging aging models
- Delta One is industry leading in the US, Y service way better than AA's
so I was wondering what was next until :

11. Today, VA announces 84 new routes in years time, worldwide, many into the EU to serve as feeds to their LH plans, all subject to the 3rd runways, so it is years before any of that materializes, if at all. But they have confirmed they want the 3rd runway & want to defy BA's virtual monopoly :
Virgin Atlantic wants to add 84 new destinations in the UK, Europe, and across the globe, in addition to their current 19 long haul destinations.

12 would be domestic, including to Belfast, Glasgow, and Manchester
37 would be European, including to Barcelona, Dublin, and Madrid
35 would be global, including to Buenos Aires, Jakarta, and Kunming

For all the details, maps & charts, see https://onemileatatime.com/virgin-atlan ... wth-plans/


So I have 4 questions :
1. Are any of the points above wrong ?
2. What other elements could you add pointing to the title ?
3. Does anyone know if AF-KLM is buying shares in DL anytime soon ? After all, DL has 10%, investing in key airlines just like QR is with key OW partners.
4. What are the odds that with a 80% Skyteam share, VA does not actually join Skyteam in coming years ?
https://www.skyteam.com/en/about/
Last edited by SQ22 on Wed Sep 18, 2019 6:21 am, edited 1 time in total.
Reason: Title updated
 
starguy
Posts: 260
Joined: Sat Dec 17, 2005 10:44 pm

Re: Virgin Atlantic expansion : a Skyteam hub at LHR ?

Wed Sep 18, 2019 2:19 am

This subject is already being discussed on any other thread.
 
eamondzhang
Posts: 1334
Joined: Thu Sep 23, 2010 8:23 am

Re: Virgin Atlantic expansion : a Skyteam hub at LHR ?

Wed Sep 18, 2019 2:26 am

Firstly, getting your facts right, when you talk about VA you're talking about Virgin Australia. Virgin Atlantic is VS.

Second, from memory I don't believe they're currently profitable and hasn't been for a while. Committing some $100 million upwards to alliance is just like a suicide. Not withstanding all the massive expansion BS (which I highly doubt), they have to get themselves profitable.

Michael
 
maps4ltd
Posts: 376
Joined: Tue May 08, 2018 4:48 pm

Re: Virgin Atlantic expansion : a Skyteam hub at LHR ?

Wed Sep 18, 2019 2:35 am

Already being discussed.

Mods, please lock.
Delta Gold Medallion and Southwest A-List
 
DWC
Topic Author
Posts: 608
Joined: Mon Nov 06, 2017 7:49 pm

Re: Virgin Atlantic expansion : a Skyteam hub at LHR ?

Wed Sep 18, 2019 2:46 am

Whoops, I conflated again VS with VA, sorry.

But I disagree the broader subject, the BIG PICTURE in the title's second half, is already discussed :

1. I suspect a concerted Skyteam wide effort into LHR, not just DL, but with AF-KLM next door, to make it a Skyteam HUB, one more after SEA, BOS, ICN.
2. There are also increasing recent cross-participations to high levels that usually herald further expansion to recoup them.
3. True or false, I can't say, but there are signals coming from across the Channel not openly discussed in other threads on DL.
4. Last, I don't know either if DL intend the same in Skyteam as QR in OW, but they are up to something globally.
5. Add to that DL is the only US3 that flies to all continents, not that the sole one to RSA is meaningful to serve all of Africa, yet it is symbolically & economically meaningful.
 
DWC
Topic Author
Posts: 608
Joined: Mon Nov 06, 2017 7:49 pm

Re: Virgin Atlantic expansion : a Skyteam hub at LHR ?

Wed Sep 18, 2019 3:12 am

DWC wrote:
eamondzhang wrote:
from memory I don't believe they're currently profitable and hasn't been for a while. Committing some $100 million upwards to alliance is just like a suicide. Not withstanding all the massive expansion BS (which I highly doubt), they have to get themselves profitable.

Group is profitable, with ups & downs, see link for FH2019 https://news.klm.com/first-half-results ... nce---klm/
Now, the bottom line matters not, in accountancy all depends in what items above have ressources been alloted.
Airline investments in other airlines are typically in the several hundred millions, say one to three WBs at usual negotiated prices, so nothing out of the ordinary & certainly nothing AF-KLM could not do, even in present circumstances. Plus if need be, Banks can help.
Rather, I wonder what DL gets from a 10% participation in AF-KLM, for all practical purposes, these two are the core of Skyteam and do not need cross-participations for it to work, and it certainly not in view of making a profit considering DL's profitability is higher. Unless they see growth potential that would value it. If then AF-KLM also buys DL shares, I'd see a smoking gun.
 
flyinghippo
Posts: 728
Joined: Thu Aug 11, 2005 12:48 am

Re: Virgin Atlantic expansion : a Skyteam hub at LHR ?

Wed Sep 18, 2019 3:53 am

what's the purpose of Skyteam hub in LHR? To capture more O&R traffic? For connecting traffic, they're doing pretty well with AMS and CDG next door...
 
Waterbomber2
Posts: 448
Joined: Mon Feb 04, 2019 3:44 am

Re: Virgin Atlantic expansion : a Skyteam hub at LHR ?

Wed Sep 18, 2019 4:05 am

DWC wrote:
DWC wrote:
eamondzhang wrote:
from memory I don't believe they're currently profitable and hasn't been for a while. Committing some $100 million upwards to alliance is just like a suicide. Not withstanding all the massive expansion BS (which I highly doubt), they have to get themselves profitable.

Group is profitable, with ups & downs, see link for FH2019 https://news.klm.com/first-half-results ... nce---klm/
Now, the bottom line matters not, in accountancy all depends in what items above have ressources been alloted.
Airline investments in other airlines are typically in the several hundred millions, say one to three WBs at usual negotiated prices, so nothing out of the ordinary & certainly nothing AF-KLM could not do, even in present circumstances. Plus if need be, Banks can help.
Rather, I wonder what DL gets from a 10% participation in AF-KLM, for all practical purposes, these two are the core of Skyteam and do not need cross-participations for it to work, and it certainly not in view of making a profit considering DL's profitability is higher. Unless they see growth potential that would value it. If then AF-KLM also buys DL shares, I'd see a smoking gun.


I think that DL's 10% in AF-KLM gives them effective control of VS somehow.
Something like: "We buy 10% of your shares, you use that capital to buy 31% of VS."
For AF-KLM it's great because it looks good on their books both in terms of net assets and profitability.
For DL it's great because they can run VS with their partner voting with them at board meetings.
 
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enilria
Posts: 9615
Joined: Fri Feb 22, 2008 7:15 pm

Re: Virgin Atlantic expansion : a Skyteam hub at LHR ?

Wed Sep 18, 2019 5:13 am

DWC wrote:
Whoops, I conflated again VS with VA, sorry.

But I disagree the broader subject, the BIG PICTURE in the title's second half, is already discussed :

1. I suspect a concerted Skyteam wide effort into LHR, not just DL, but with AF-KLM next door, to make it a Skyteam HUB, one more after SEA, BOS, ICN.
2. There are also increasing recent cross-participations to high levels that usually herald further expansion to recoup them.
3. True or false, I can't say, but there are signals coming from across the Channel not openly discussed in other threads on DL.
4. Last, I don't know either if DL intend the same in Skyteam as QR in OW, but they are up to something globally.
5. Add to that DL is the only US3 that flies to all continents, not that the sole one to RSA is meaningful to serve all of Africa, yet it is symbolically & economically meaningful.

Delta/VS are not doing a “massive Transatlantic expansion”. Adding LGW to shaft Norwegian/JetBlue is the extent of it.

Even if VS got the majority of the slots from the new runway they can’t create a real hub. The existing assignment of slots has prevented VS from being able to cobble together slots at the same time to make connecting banks. Even with the addition of a lot of new slots from new runway they wouldn’t be able to create banks of more than 5-6 planes cross-connecting. That would still be a rather pitiful hub. The only way to get a enough slots at the same time would be a trade with BA and...LOL...more likely that the moon starts orbiting Mars.
 
skipness1E
Posts: 4512
Joined: Sun Aug 19, 2007 9:18 am

Re: Virgin Atlantic: A Skyteam hub at LHR ?

Wed Sep 18, 2019 7:33 am

There is no Skyteam hub at LHR. Air France only serves LHR to feed CDG, KLM less so with AMS but feed is a major reason for the frequency. Both are Skyteam and major global airlines, so the idea that the FOCUS would be on filling VS/DL out of LHR from their home markets is an “interesting” one. DL already has a huge presence at AMS and a lesser one a CDG, there is already a whole lot of focus right there and both remain chauvanistic minded flag carrier mentalities.

Given Skyteam are in T4 and Virgin are in T3, there are easier ways to connect to long haul from Paris and Amsterdam IMHO.
 
KFTG
Posts: 179
Joined: Sun Apr 28, 2019 12:08 am

Re: Virgin Atlantic: A Skyteam hub at LHR ?

Wed Sep 18, 2019 7:38 am

It was more of a SkyTeam hub when all SkyTeam airlines were in T-4.
So much for that.
 
RCS763AV
Posts: 3807
Joined: Mon Jun 14, 2004 1:22 am

Re: Virgin Atlantic: A Skyteam hub at LHR ?

Wed Sep 18, 2019 9:13 am

DWC wrote:
Title may sound clickbait, but consider all the following :

1. In July, VA announced they wanted to become the UK's second Flag carrier, rivalling British Airways for capacity and status
https://simpleflying.com/virgin-atlanti ... ow-growth/

2. That was following VA's April declaration to the British authorities to get a sizable share of the new slots once LHR's 3rd runway is built, scheduled for 2026 if all goes well, a signal announcement that threatens BA's market share & monopolistic price-making ( i.e. they do influence the market ), fact is BA is opposed to the 3rd runway to protect their current position.

3. A few weeks ago, DL & VA announced massive transatlantic expansion :
- DL opening routes from BOS to both Gatwick & Manchester,
- VA opening Gatwick-JFK
- Both increasing frequencies on existing routes, some 15% in 2020.
For a detailed account, read https://onemileatatime.com/delta-virgin ... expansion/

4. DL not only bought SQ's 49% share in VA, it now has a JV with VA which makes it VA's strategic decision-maker, as it controls the mighty US market VA flights get to.

5. AF-KLM, also DL's best Skyteam buddy after KE, is not only joining that JV, but also buying 31% of VA, meaning AF is strategically investing into LHR via VA. And because everyone is in bed with one another, DL has 10% of AF-KLM.

6. So Skyteam now controls 80% of VA, which seems to be legally possible with a JV, but then I don't know what British law says or will say if Brexit happens. EU Law limits foreign participation to 49% ( US only 25%, so less free market ), but individual % is only one criteria, a combined 80% is a takeover by any metric.

7. Considering furthermore how LHR is important to the transtlantic market, it stands to reason that DL & AF-KLM want to dent into AA/BA virtual FSC monopoly, it's not one in terms of actors, but it is one in terms of the huge lion share AA/BA have in terms of market share & profit % overall.

8. Months ago, VA announced massive expansion too to Spanish America ( specially Mexico & Brazil ), a trendy move by UK-based airlines, following IAG's own lion share, which in itself is odd considering VA is not known in that part of the world nor did they have a public flying there yet

9. DL bought 49% of AeroMexico, not only adapting their flights into the US, but also maximizing feeds to DL's hubs, ATL & others : more pax transit via DL between LHR & Mexico, how much I don't know butpoint is that Skyteam, through DL, AF-KLM & AM, are increasing their presence into LHR at great speed, in addition to the new flights from BOS & JKF into Gatwick mentionned above.

10. DL has shown, both industry & network wide, they are seriously ramping up in every direction, e.g. :
- SEA & BOS have become two new hubs, in addition to ATL & JFK
- while dehubbing from NRT, their investment in KE & ICN is mighty
- they also paid $450 million for 3.55% minority stake in China Eastern Airlines with hub in Shanghai, China's economic powerhouse slated to take over HK
- new frame models, a hundred A220s after ordering A350s, while flogging aging models
- Delta One is industry leading in the US, Y service way better than AA's
so I was wondering what was next until :

11. Today, VA announces 84 new routes in years time, worldwide, many into the EU to serve as feeds to their LH plans, all subject to the 3rd runways, so it is years before any of that materializes, if at all. But they have confirmed they want the 3rd runway & want to defy BA's virtual monopoly :
Virgin Atlantic wants to add 84 new destinations in the UK, Europe, and across the globe, in addition to their current 19 long haul destinations.

12 would be domestic, including to Belfast, Glasgow, and Manchester
37 would be European, including to Barcelona, Dublin, and Madrid
35 would be global, including to Buenos Aires, Jakarta, and Kunming

For all the details, maps & charts, see https://onemileatatime.com/virgin-atlan ... wth-plans/


So I have 4 questions :
1. Are any of the points above wrong ?
2. What other elements could you add pointing to the title ?
3. Does anyone know if AF-KLM is buying shares in DL anytime soon ? After all, DL has 10%, investing in key airlines just like QR is with key OW partners.
4. What are the odds that with a 80% Skyteam share, VA does not actually join Skyteam in coming years ?
https://www.skyteam.com/en/about/


This is clearly a decided push toward the expansion of LHR, and I do think it will mean better fares for customers systemwide. London deserves a 3 runway Heathrow which isn't so controlled by IAG-AA.

Also, will VS join Skyteam once and for all?

Just FYI, on your post you said Spanish America and included Brazil in the same sentence. Brazil is not a spanish speaking country nor considered part of the spanish speaking world by any metric. They speak portuguese. The term to refer to the romance-language speaking southern part of the continent is Latin America.
 
airplaneboy
Posts: 679
Joined: Sat May 15, 2004 11:59 am

Re: Virgin Atlantic: A Skyteam hub at LHR ?

Wed Sep 18, 2019 9:49 am

What benefits are there for the flying public for a large global airline to hold stakes in multiple foreign airlines? Especially when this airline not only competes in large international markets, but also in the largest domestic market in the world (maybe besides China)? I believe UA also holds stakes in foreign airlines. Is this something that is beneficial for anyone besides shareholders? I’m not very familiar with these topics- please educate (kindly) thank you.
 
MIflyer12
Posts: 5819
Joined: Mon Feb 18, 2013 11:58 pm

Re: Virgin Atlantic expansion : a Skyteam hub at LHR ?

Wed Sep 18, 2019 10:53 am

enilria wrote:
Even if VS got the majority of the slots from the new runway they can’t create a real hub. The existing assignment of slots has prevented VS from being able to cobble together slots at the same time to make connecting banks. Even with the addition of a lot of new slots from new runway they wouldn’t be able to create banks of more than 5-6 planes cross-connecting.


Thanks for the perspective check, enilria. There's nothing massive about this - it's incremental, around-the-edges stuff, and, as you point out, that's all it can be due to slot allocations.

a.netters do like their hyperbole.

DL bought its VS stake for the O&D market, not to create a duplicative connecting hub.
 
oldannyboy
Posts: 2376
Joined: Wed Jun 15, 2016 8:28 am

Re: Virgin Atlantic: A Skyteam hub at LHR ?

Wed Sep 18, 2019 11:01 am

Click bait, wishful thinking, dreams, froth.... call it whatever you like....not a grain of substance here. Pointless talk.
 
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atcsundevil
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Joined: Sat Mar 20, 2010 12:22 pm

Re: Virgin Atlantic: A Skyteam hub at LHR ?

Wed Sep 18, 2019 11:01 am

Please discuss in the existing thread.

viewtopic.php?f=3&t=1431461

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