"Delta eyes Virgin Atlantic Swoop"

[FrugalFlyerv2.0]

Even if down the road this deal is a disaster for DL as it was for SQ, for $360 million it is worth it.

The best part is the reaction from IAG chief: http://www.bbc.co.uk/news/business-20676667

Willie Walsh has wagered a "knee in the groin" in a bet with Sir Richard Branson that the Virgin brand will still be around in five years. On Monday, Sir Richard offered a £1m bet to the boss of BA-owner International Airlines Group (IAG) over the future of his Virgin airline. Mr Walsh said he did not have £1m, so wagered something "as painful to him as it might be to me" instead.

Mr Walsh then went on to question the impact Sir Richard has had on the industry.
"I just don't see that the guy has anything that stands out in terms of what he has achieved in the industry," he said, as reported by the Telegraph.

 

[WorldTraveler]

if Branson is as insignificant as Walsh would like him to be, then there should be no need to continue to try to diminish his accomplishments.

VS and BA have had a hostile relationship for decades and that may or may not change... but VS has managed to accumulate the 2nd largest slot of long haul slots at LHR and that is all DL cares about.

Branson allowed his ego to keep him from cooperating w/ other airlines for a long time and he still might not have done anything if SQ didn't finally find a way to get rid of their investment in VS.
But the chances are really quite high that VS' will become a much more valuable franchise just by virtue of having better connectivity in the US - likely between both Virgin America (who just announced EWR service) and Delta. And DL has an ability to sell premium seats that will help both remarkably.

Walsh's reaction is no surprise and neither is the fact that DL finally found a way to increase its presence at LHR. The only real surprise was how cheap the price was after so many years of waiting.

 

[Kev3188]

Wonder if this means a code share with Virgin Galactic?

 

[robbedagain]

I DO REMEMBER SEEING SOME OF THOSE VS PLANES WITH THE SLOAGAN NO TO BA/AA THING BUT WOW THEY SURE ARE HOSTILE BETWEEN EACH OTHER, AS FOR THIS SALES THING IM REALLY SURPRISED BY HOW DIRT CHEAP DL GOT THE THING PLUS 3 SEATS ON THE BOARD

 

[FA Mikey]

Here’s the scorecard of New York to London flights, based on Wednesday’s schedule. There are 28 flights departing Kennedy and Newark Liberty International Airport in New Jersey that fly to Heathrow (and no New York-area flights to London’s Gatwick Airport.)​

-British Airways: 7 from JFK, 2 from EWR ​

American: 5 flights (All JFK)​

-Virgin Atlantic: 4 from JFK, from EWR ​

Delta: 3 flights (all JFK)​

-United: 5 flights all from EWR​

If you’re a company that sends people to London from the U.S., or from the U.K. to New York and the rest of the U.S., you likely are going to have to choose either Delta/Virgin or American/BA as your primary carrier.​

Analysts predict that Delta’s application for antitrust immunity with Virgin Atlantic will likely be
approved by government regulators. Its possible there could be some divestiture of a few takeoff
and landing slots to promote competition, though Delta and Virgin will still be smaller than
American/BA.

We shall see where the divestures will land?

 

[WorldTraveler]

there will be no divestitures. DL/VS will have about 21 flts/day US-UK which is only a couple of slots more than UA. In comparison, AA/BA has 50% of the total slots at LHR.
That is the reason AA/BA had divestitures. The number of slots AA/BA controls is more than enough to crush any competitor.... no one else has the same power.

 

[FrugalFlyerv2.0]

VS and BA have had a hostile relationship for decades and that may or may not change...

I find the hatred between them 'refreshing'. It shows, to some degree, a passion that some CEOs still have for the carriers that they run. Too bad there isn't more of that in the commercial aviation industry.

But the chances are really quite high that VS' will become a much more valuable franchise just by virtue of having better connectivity in the US - likely between both Virgin America (who just announced EWR service) and Delta. And DL has an ability to sell premium seats that will help both remarkably.

It'll be interesting to see how the DL-VS relationship on the USA-LHR works. Putting the DL code on VS flights from LAX, SFO, BOS, ORD and IAD, for example, could be beneficial for both carriers. On the other hand, if I can get skymiles from JFK to LHR and have a choice between DL and VS, hmmmmmmmmmm, I'll have to think hard on which carrier to book .....

I'm not sure that VS will be willing to swap its 'prime-time' LHR slots with DL, which really is the only asset that DL covets. The VS destinations from Gatwick, Manchaester and Glasgow are of no value to DL. Also, I can't imagine AF/KL is very happy about this deal?

 

[FA Mikey]

Sorry Wall Street Journal doesn't by in to the know it all. They say otherwise.

 

[WorldTraveler]

Not sure what point you are trying to make but the WSJ hasn't made any definite statement about any part of the deal.... but there is absolutely no reason to think that DL or VS will have to divest any slots given that DL has less than half of what UA or AA have by themselves and DL plus VS is still dwarfed by the size of AA/BA.

I'm sure you can't stand the thought that DL could manage to buy half of the UK's 2nd largest longhaul airline for $360 million but VS is really nowhere near the size of BA - and that is the reason why regulators required slot divestitures. The US and UK have Open Skies which means BA could use literally dozens of slots per day to add new capacity in the US-UK market if they wanted to - and they still could do so if they are willing to pull slots from other markets.

Further, the primary concern w/ the EU and US was that there was no competitor on one side of the Atlantic or the other - or both - in the markets where they required divestiture. At the time of AA/BA approval, there was no US carrier on BOS or MIA and no US or UK carrier to DFW.

The only potential issue that no one has raised which could be an issue is that DL's BOS flight is being operated with a slot that was divested by AA/BA as part of their ATI approval. It isn't clear if DL will have to return that slot pair since they now will have a presence at LHR via VS to make it possible for them to successfully compete on their own. however, I don't think - someone can correct me if they have documentation to show it - that the markets which the US and EU used to justify carveouts - DFW, MIA, and BOS IIRC - do not specify that the slot pair divested had to go to a limited access carrier at LHR.

There is no basis for DL/VS to divest slots; about 1/3 of VS' LHR slots are not suitable for TATL flights since they are used for Africa/Asia markets.

If you want to argue that DL/VS will be required to divest slots, then I will be happy to note your name on my list of "they said" and then check back when the final decision comes down and compare for who was right.

If you are hoping DL/VS will be forced to divest slots, I have a feeling you will be disappointed.

The media is pretty well saying that AA is the big loser in this deal since Dl will gain the size sufficient to compete at LHR against AA and UA far better... it has long been known that AA holds a large share of corporate contracts in NYC and LHR is the largest foreign market. DL plus VS will be larger than UA.

The fear that DL is overcoming one of the structural disadvantages it has had for years while minimizing one of the advantages that AA has had is the part that most concerns you, whether you say it or not.

 

[WorldTraveler]

Delta, in my opinion, is one of the great airlines existing these days. They dare to go where others don't.

kind of you to say this... DL is just running a good business... something the airline industry hasn't seen in a long time. Add in that other carriers are just running, well airlines, and not good businesses and it isn't hard to see the potential DL has to use this deal as one more step in the process of being as close to being a one-stop shop for a network airline that can exist. The airline industyr is a network business and size and coverage does matter.

I think as this deal is put into reality, you will see DL focus more and more attention on the west coast and Latin America. Adding LHR service from LAX and SFO via VS - and likely one or more of those 4 VS flights will become a DL operated flight and then letting one of the two operate SEA-LHR, and DL's position in the west looks a lot stronger. Let's keep in mind that DL doesn't operate any SFO or LAX to Europe flights on its own metal so there is great opportunity to build out that region.

DL's presence in Latin America will be expanded, in part thru the same type of equity partnerships that DL is putting in place w/ VS. Problem is that it takes so much longer to make things happen in Latin America than it does in other parts of the world.

 

[robbedagain]

why is it longer to make it happen with latin america where it is growing vs europe

 

[Glenn Quagmire]

IMHO a bold move by Ma Delta.

 

[Glenn Quagmire]

Maybe the moderators should merge the two topics about this deal?

 

[Glenn Quagmire]

Wonder if this means a code share with Virgin Galactic?

Take me to the moon!

 

[WorldTraveler]

why is it longer to make it happen with latin america where it is growing vs europe

Because most Latin countries do not have open skies w the US and lower ownership limits by foreigners
Also automation for some Latin carriers like DL,s partner Gol is not as advanced.