Virgin Atlantic Files For ATI JV With AF-AZ-DL-KL

LAXintl · Mon Apr 08, 2013 7:32 pm

The air carriers today jointly filed with the DOT to expand their existing JV to also include Virgin Atlantic Airways.

Carriers seek to combine their respective services across the North Atlantic under the JV to become more effective competitor on U.S.-U.K. routes, in particular into Heathrow.

The carriers state their proposed alliance would delivery important public benefits, the most critical of being a strong alternative to the AA-BA alliance which currently dominates 59% of the Heathrow-US capacity and uses this structural disparity leaving consumers with less alternatives in travel choices.

By including VS in the JV, the partner airlines will be able to strengthen their marketing presence in the UK, with the ability to compete effectively for U.K. point of sale customers, particularly for premium customers and corporate accounts. Correspondingly, VS will be able to gain benefits from access to a large corporate customer base that it does not presently have and will improve its ability to capture Trans-Atlantic customers from the US, and other European markets served by its future JV partners.

OST-2013-0068

[Edited 2013-04-08 12:38:49]

visualapproach · Mon Apr 08, 2013 7:35 pm

Now all they need to do is have joined SkyTeam by September.. I pray.

anstar · Mon Apr 08, 2013 7:40 pm

Seems VS is getting closer and closer to Skyteam

deltalaw · Mon Apr 08, 2013 7:42 pm

Filing for the JV that they spoke of when DL purchased the stake. VS still might drag their feet with entering ST for whatever reason.

MesaFlyGuy · Mon Apr 08, 2013 7:43 pm

Glad to see this finally taking flight (pun intended). Hopefully this will work out well for all involved and maybe this can help AZ with their TATL flights.

slcpdxatl · Mon Apr 08, 2013 7:51 pm

Also in the press release, Delta said it would begin SEA-LHR if ATI is approved.

sbworcs · Mon Apr 08, 2013 7:52 pm

So when BA - AA propose it it is the worst idea in the world but this time there are no problems. Double standards??

Think they deserve to get the ATI but it does smack of hypocrisy when only recently (ish) they were denouncing ATI as the work of the anitchrist.

MIflyer12 · Mon Apr 08, 2013 8:08 pm

Check the relative share of LHR-USA departures by AA/BA and proposed DL/VS.

FL787 · Mon Apr 08, 2013 8:29 pm

I thought the DL/VS JV was going to be separate from the SkyTeam one, at least at the beginning?

LAXintl · Mon Apr 08, 2013 8:32 pm

Quoting sbworcs (Reply 6):
So when BA - AA propose it it is the worst idea in the world but this time there are no problems. Double standards??

With AA-BA regulators helped create a oligopoly.

Even US DOT expressed its concerns about effects on the market such concentration might have by creating serious challenges for competitors.

Per DOT filings current breakdown of US-LHR capacity was as follows:

Seat share
AA-BA = 59%
VS = 16%
UA = 14%
DL = 8%
others = 3%

Daily frequencies
AA-BA = 54
UA = 18
VS = 13
DL = 9
US = 2
other = 2

The breakdown is even more lopsided in some large markets like New York or Boston where AA-BA have 63% and 70% respectively of the seats.

At the end, from a consumer point of view, anything that works to challenge the AA-BA position will be a good thing in my view (and I say that as an elite AA customer)

globalflyer · Mon Apr 08, 2013 8:48 pm

If VS did select SkyTeam (have they already been invited officially?), then how long would it take to get them live into the alliance. I know that the Host system for VS is EDS/SHARES.

LAXintl · Mon Apr 08, 2013 10:38 pm

I wonder in long run if the Virgin Flying Club will be folded into something like Flying Blue.

Virgin's program is a rather small one, and can probably be much more appealing to customers as part of something bigger. Seems Skyteam already has a history of helping merge smaller individual member programs into Flying Blue.

commavia · Mon Apr 08, 2013 10:40 pm

I was wondering when they were going to formally file. Good to see they are also making SEA-LHR "official" - no surprise there. I see no way that this doesn't get approved - AA-BA got approved, I see absolutely no reason this wouldn't.

AeroWesty · Mon Apr 08, 2013 10:48 pm

Delta's press release is out: http://news.delta.com/index.php?s=43&item=1950

DTWLAX · Tue Apr 09, 2013 1:51 am

Quoting FL787 (Reply 8):
I thought the DL/VS JV was going to be separate from the SkyTeam one, at least at the beginning?

The JV or ATI does not guarantee that VS will join Skyteam. It is the next logical step but you never know with VS.

If the ATI gets approved and VS does join Skyteam, it will be a huge boost for Skyteam in the LAX-LHR market where they are the weakest at this moment.
I cannot wait to earn some MQMs flying VS.

Polot · Tue Apr 09, 2013 1:53 am

Quoting LAXintl (Reply 9):

I think sbworcs was referring more to VS's (or rather SRB's) stance towards AA/BA and not the US/EU's.

goldorak · Tue Apr 09, 2013 6:19 am

Quoting LAXintl (Reply 11):
I wonder in long run if the Virgin Flying Club will be folded into something like Flying Blue

more likely into SkyPesos

anstar · Tue Apr 09, 2013 7:35 am

Quoting dtwlax (Reply 14):

The JV or ATI does not guarantee that VS will join Skyteam. It is the next logical step but you never know with VS.

Given this agreement also includes a co-ordinaiton agreement with AF/KL/AZ I would say it is definately a logical step... but I think the key thing i to get the JV up and running for the Summer 2014 ITA scheduling season. Skyteam would come afte that IMHO.

rwsea · Tue Apr 09, 2013 7:38 am

Quoting goldorak (Reply 16):
Quoting LAXintl (Reply 11):
I wonder in long run if the Virgin Flying Club will be folded into something like Flying Blue

more likely into SkyPesos

For the sake of Virgin's FFs, I hope not. FlyingBlue is easily the worst FF program of the European majors. SkyPesos is easily the worst of the US majors.

DutchBoeing · Tue Apr 09, 2013 8:53 am

Quoting rwsea (Reply 18):
For the sake of Virgin's FFs, I hope not. FlyingBlue is easily the worst FF program of the European majors. SkyPesos is easily the worst of the US majors.

Will all due respect, this is nonsense. The FB-program works very well for me. I generally always manage to get exactly the flights I want and you can use a lot of carriers. One ways are very easy and great they lowered the taxes for reward tickets in EU Y recently. My only gripes would be: no classic rewards in F and idiotic mileage required for EU C-rewards. I also use M&M and find that def a more complicated program with far less availabilty!

LHRFlyer · Tue Apr 09, 2013 8:58 am

It's interesting to note that in the regulatory filing, under the joint-venture, DL proposes to operate LHR-SEA, LHR-SLC, and a second LHR-DTW.

The question is where are these slots going to come from as neither DL nor VS have any spare slots. The answer must be from existing VS routes.

eljas · Tue Apr 09, 2013 9:41 am

Quoting LHRFlyer (Reply 20):
It's interesting to note that in the regulatory filing, under the joint-venture, DL proposes to operate LHR-SEA, LHR-SLC, and a second LHR-DTW.

The question is where are these slots going to come from as neither DL nor VS have any spare slots. The answer must be from existing VS routes.

I hope not. That would suggest that the reason DL acquired the stake in VS was merely to poach the VS slots. Maybe under the joint venture any AZ/AF/KL slots going spare at LHR could be used?

Good to see increased competition out of LHR particularly. Hopefully it will provoke BA/AA into stepping up their onboard service to keep the business passengers...(not that I think it's bad at the moment).

Quoting DutchBoeing (Reply 19):
also use M&M and find that def a more complicated program with far less availabilty!

I agree. Much harder to get reward availability on LH and other star carriers compared to BA executive club and oneworld awards, in my experience.

[Edited 2013-04-09 02:48:44]

SFOJFK · Tue Apr 09, 2013 9:50 am

Just wondering if this will give the slots back to AA/BA that had to be loaned to DL to start competitive service in BOS/MIA. That should be a point of contention for this application for AA/BA

anstar · Tue Apr 09, 2013 10:16 am

Quoting LHRFlyer (Reply 20):
The question is where are these slots going to come from as neither DL nor VS have any spare slots. The answer must be from existing VS routes.

Nope not from existing VS slots.

If you read the filing, it says that LHR-SEA WILL be started once the JV goes through and the slot has been purchased from alitalia for this.

It then says LHR-SLC is a possibility, but a second LHR-DTW is a prriority. So the slot from the only firm commitment in the JV is coming from Alitalia.

I woudl also expect that once the JV is implemented they may purchase a slot or 2 from AF/KL. KLM have some afternoon flights departing within 15 minutes of each other - these are more often than not operated by the F70... so they could easily sell one to VS/DL and upgrade the flight to a 738/9.

rwsea · Tue Apr 09, 2013 10:40 am

Quoting DutchBoeing (Reply 19):
Will all due respect, this is nonsense. The FB-program works very well for me. I generally always manage to get exactly the flights I want and you can use a lot of carriers. One ways are very easy and great they lowered the taxes for reward tickets in EU Y recently. My only gripes would be: no classic rewards in F and idiotic mileage required for EU C-rewards. I also use M&M and find that def a more complicated program with far less availabilty!

With all due respect, I disagree. Here's why:

- Most flights only earn 25% mileage so it's tough to get enough miles anyway unless travelling on business fares.
- Surcharges are outrageous! SFO-AMS-MUC return in economy is 50,000 miles + €800 in fees!!! No different than buying a ticket...
- Gold and silver members have to pay extra for exit rows, whether long-haul or within Europe. They also now have to pay extra for aisle/window seats on long-haul in plain old economy. What other airline charges its midtier elites to pre-reserve a window or aisle seat?! It's insane. Unless you're a platinum, the onboard experience for elite members is exactly the same as anyone purchasing the cheapest ticket and flying for the first time.

brilondon · Tue Apr 09, 2013 12:11 pm

Quoting MIflyer12 (Reply 7):

Check the relative share of LHR-USA departures by AA/BA and proposed DL/VS.

A comparison at this time would be irrelevant due to the fact that the JV between DL/VS has not happened yet and would be like comparing apples to oranges. VS is not the same as BA and thus makes this a skewed and therefore contributing to the comparison.

bobnwa · Tue Apr 09, 2013 12:51 pm

Quoting sbworcs (Reply 6):
So when BA - AA propose it it is the worst idea in the world but this time there are no problems. Double standards??

Think they deserve to get the ATI but it does smack of hypocrisy when only recently (ish) they were denouncing ATI as the work of the anitchrist.

Don't remember many renouncing ATI for AA/BA on this forum.

deltalaw · Tue Apr 09, 2013 4:20 pm

Also, should be interesting to see if DL takes over any of the United States gateways that VS currently serves in order to upgauge/downgauge the equipment. We have seen DL do this with AF/KL (i.e ORD, at least seasonally). Are there any US markets currently served my VS that a 763/764 might be better suited to serve?

anstar · Tue Apr 09, 2013 4:26 pm

Quoting deltalaw (Reply 27):
Are there any US markets currently served my VS that a 763/764 might be better suited to serve?

Perhaps VS/DL could go year round on LHR-ORD... use the VS 330 during summer and the DL 763 during winter?

ERJ170 · Tue Apr 09, 2013 4:31 pm

Any possibility of some JVI action at RDU? I heard DL is still very interested in the LHR market.. As well as CDG.. Could this be a possible JV with VS 787 when they get them? Just wondering.. Don't flame me....

BigGSFO · Tue Apr 09, 2013 4:47 pm

Quoting ERJ170 (Reply 29):
Any possibility of some JVI action at RDU? I heard DL is still very interested in the LHR market.. As well as CDG.. Could this be a possible JV with VS 787 when they get them? Just wondering.. Don't flame me....

I doubt there is room for two transatlantic flights at RDU let alone a second one to London.

deltalaw · Tue Apr 09, 2013 5:10 pm

Quoting BigGSFO (Reply 30):
I doubt there is room for two transatlantic flights at RDU let alone a second one to London.

I believe AA is able to operate RDU-LHR due to corporate contracts on the route. Would likely be difficult for DL to compete without the corporate backing, plus minimal to no feed on the RDU end.

deltal1011man · Tue Apr 09, 2013 5:16 pm

Quoting LHRFlyer (Reply 20):

One that should be watched is LHR-BOS. DL has the slot from BA so i could see VX going 1x and DL staying a 1x to fee up a slot.

sbworcs · Tue Apr 09, 2013 5:18 pm

Quoting MIflyer12 (Reply 7):
Check the relative share of LHR-USA departures by AA/BA and proposed DL/VS

Quoting LAXintl (Reply 9):
At the end, from a consumer point of view, anything that works to challenge the AA-BA position will be a good thing in my view (and I say that as an elite AA customer)

Was referring to the VS hypocrisy regarding JV and ATI.

Quoting Polot (Reply 15):
Quoting LAXintl (Reply 9):
I think sbworcs was referring more to VS's (or rather SRB's) stance towards AA/BA and not the US/EU's.

willd · Tue Apr 09, 2013 6:09 pm

Quoting sbworcs (Reply 33):
Was referring to the VS hypocrisy regarding JV and ATI.

Times change. Business ideas change. Nothing wrong with that. And, of course, as pointed out above the AA/BA JV was a different beast. I mean a market share of 70% ex NYC/BOS was hardly fair on all those left.

ldvaviation · Tue Apr 09, 2013 6:49 pm

Is this unprecedented?

DL and VS are asking for immunity to cross-coordinate pricing and marketing with AF/KLM/AZ, but AF/KLM/AZ are not at-risk parties to the JV?

Clearly, Delta does not want to be put in a position where both JV's are competing against each other for the same passengers from UK regional markets. But the only legal way of doing that (I think) is for Virgin to apply to join the AF/KLM/AZ joint venture. As precedent for what it wants to do, Delta cites the DOT decision to allow Continental to join the Star Alliance when Continental at the time did not codeshare with all the Star Alliance Members. Exactly how this compares is anyone's guess since Continental's addition to Star Alliance did not bridge agreements between two JV's.

If Delta wants to cross-cordinate pricing and marketing with all its partners, it should have to expose its entire European network (including that of AF/KLM/AZ) to DOT and EU scrutiny.

I expect United and American/US to oppose this part of the application.

N62NA · Tue Apr 09, 2013 7:13 pm

Quoting deltalaw (Reply 27):
Also, should be interesting to see if DL takes over any of the United States gateways that VS currently serves in order to upgauge/downgauge the equipment. We have seen DL do this with AF/KL (i.e ORD, at least seasonally). Are there any US markets currently served my VS that a 763/764 might be better suited to serve?

Maybe EWR-LHR? Wouldn't surprise me.

anstar · Tue Apr 09, 2013 7:32 pm

Quoting LDVAviation (Reply 35):
DL and VS are asking for immunity to cross-coordinate pricing and marketing with AF/KLM/AZ, but AF/KLM/AZ are not at-risk parties to the JV?

I foyu read the application it makes it clear that they are 2 seperate JV's.... however as their is some overlap ie ATL-LHR-ABZ (on VS DL) and ATL-AMS-ABZ (on DL KL) there is some overlap so the joint application allows all carriers to discuss and disclose

deltalaw · Tue Apr 09, 2013 8:12 pm

Quoting N62NA (Reply 36):
Maybe EWR-LHR? Wouldn't surprise me.

That would really signal an end to an era if that happened. VA first flight was LGW-EWR back in the mid 80s. Would be willing to bet that SRB's ego will get in the way of VA ceding too much flying to DL, regardless of the financial backlash for VA.

slcdeltarumd11 · Tue Apr 09, 2013 8:18 pm

This was from the filing:

And, potential future service between Salt Lake City and Heathrow would offer numerous connections to points in the Western United States served by Delta. The inauguration of new services would create significant public benefits. Each new route added by the Joint Venture will create in excess of $150 million in value to the U.S. economy and U.S. aviation interests.57

So clearly Delta wants to get more LHR flights going SEA, second DTW, and SLC when they can get the slots.

boysteve · Tue Apr 09, 2013 8:42 pm

Quoting deltalaw (Reply 27):
Also, should be interesting to see if DL takes over any of the United States gateways that VS currently serves in order to upgauge/downgauge the equipment. We have seen DL do this with AF/KL (i.e ORD, at least seasonally). Are there any US markets currently served my VS that a 763/764 might be better suited to serve?

Well LHR-BOS could be VS333/346 in the summer and DL B763 in the winter. Miami could use the larger VS aircraft in the Winter only.

Quoting N62NA (Reply 36):
Maybe EWR-LHR? Wouldn't surprise me.

I would not be too surprised to see this route end but only to use the slots for JFK. If VS & DL had 8 or 9 daily flights LHR-JFK between then that would be a good offering to tempt some corporate clients.

globalflyer · Tue Apr 09, 2013 9:13 pm

I doubt that it will happen but I would so love to see VS enter the ATL-LHR market. AF/KL/KE/AM do within the SkyTeam carriers but AZ does not and SU did not when DL was serving SVO nonstop. I often wonder what the rationale is as to which carriers medal is on a certain route. For example...why AF/KL on their CDG/AMS routes into ATL but AZ not on the FCO route all out of ATL? Or why KE serves the ICN route but not DL (although they used to). If it is a JV I understand the economics but just curious as to who's medal it is decided to fly.

ericaasen · Tue Apr 09, 2013 10:06 pm

Quoting anstar (Reply 28):

That's what I'm hoping for! I would love to be working a CDG and LHR flight this winter!

N62NA · Tue Apr 09, 2013 10:08 pm

Quoting Boysteve (Reply 40):

I would not be too surprised to see this route end but only to use the slots for JFK. If VS & DL had 8 or 9 daily flights LHR-JFK between then that would be a good offering to tempt some corporate clients

Yep. As was stated in the EK Milan-JFK topic, EK considers EWR "not prestigious" and it is "lower yielding" than JFK.

All the airlines most likely have a similar opinion about EWR.

[Edited 2013-04-09 15:08:42]

LHRFlyer · Tue Apr 09, 2013 10:17 pm

Quoting anstar (Reply 23):
I woudl also expect that once the JV is implemented they may purchase a slot or 2 from AF/KL. KLM have some afternoon flights departing within 15 minutes of each other - these are more often than not operated by the F70... so they could easily sell one to VS/DL and upgrade the flight to a 738/9.

Possibly, but for any new services to a success it's critical that Delta has arrival slots at Heathrow the right time and that means early morning, not off peak. It's also inconceivable that a financial turnaround of the magnitude required at Virgin won't be achieved without taking a hard look at the route network and making some possible quite tough decisions.

Also, if Delta needs to inject capital into Virgin (the money for the shares went to SQ) then acquiring VS slots is probably quite an efficient way of doing so. This is how Lufthansa kept bmi propped up.

slcdeltarumd11 · Tue Apr 09, 2013 10:54 pm

Quoting N62NA (Reply 43):

Yep. As was stated in the EK Milan-JFK topic, EK considers EWR "not prestigious" and it is "lower yielding" than JFK.

All the airlines most likely have a similar opinion about EWR

United is totally fine with airlines thinking that. They will simply support cities that even JFK can't with the hub and laugh all the way to the bank.

anstar · Wed Apr 10, 2013 6:32 am

Quoting Boysteve (Reply 40):
I would not be too surprised to see this route end but only to use the slots for JFK. If VS & DL had 8 or 9 daily flights LHR-JFK between then that would be a good offering to tempt some corporate clients.

I believe EWR does well for VS and it also gets alot of connecting India traffic, so can't see it going anywhere.

Quoting LHRFlyer (Reply 44):

Also, if Delta needs to inject capital into Virgin (the money for the shares went to SQ) then acquiring VS slots is probably quite an efficient way of doing so. This is how Lufthansa kept bmi propped up.

VS don't need a capital injection, they have an ok cash balance.

EK413 · Wed Apr 10, 2013 7:08 am

I smell "Skyteam" announcement fast approaching...

EK413

rwy04lga · Wed Apr 10, 2013 7:16 am

Quoting sbworcs (Reply 6):
the work of the anitchrist.

Now, now...no need to bring Cheney into this.

Quoting N62NA (Reply 43):
All the airlines most likely have a similar opinion about EWR.

Not just the airlines.

bobnwa · Wed Apr 10, 2013 11:36 am

Quoting globalflyer (Reply 41):
Or why KE serves the ICN route but not DL (although they used to). If it is a JV I understand the economics but just curious as to who's medal it is decided to fly.

I don't believe KE is a joint venture partner with DL

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