Virgin Blue looking to Skyteam?

[DJ737]

Hi there

This from "The Australian" :

Virgin chief commercial officer Stefan Pichler predicted the arrival of Skyteam would open up opportunities for Virgin.

Is this on the cards?

Cheers
DJ737

 

[SeaWolf]

I predict a frenzy of speculation, because that comment could mean just about anything or nothing at all.
Especially when you read the rest of the article:
Delta no threat to VAustralia | The Australian

Virgin Blue also has a code-share deal with United Airlines and Star Alliance has indicated Australia's No2 airline would help fill a "white spot" in its global map. But the airlines need anti-trust immunity to negotiate a closer alliance and this is generally easier to do with a new entrant on a route. "Theoretically we could partner with either of those," Mr Pichler said, adding that VAustralia also needed a distribution network in the US.

 

[comint]

It's a Virgin Blue negotiation tactic.

It works for both UA & DL negotiations. i.e. pressuring UA into code sharing with VA in the USA, or DL taking on the VA code on their domestic services, or BOTH??!

VA can easily withdraw before ever flying to LAX if they wanted (e.g. snagged their code* on both UA & DL Transpac & US domestic)... They have acquired a small fleet of easily redeployable long range aircraft!

Also, don't discount QF moving into a relationship with DL, remember they do share codes with AF to Paris! (If you can't beat 'em join 'em.)

*or better. (maybe lounge accsess, FFpoints & status co-recognition)

Problem is Sir Richard and what he wants. I would question if the top management of Virgin Blue has what it takes to stand up to their minority shareholder, and take a path to benefit the majority.

 

[crazydave98]

I would question if the top management of Virgin Blue has what it takes to stand up to their minority shareholder, and take a path to benefit the majority.

what basis could you possibly have for such a comment? Have you ever actually met any of Virgin Blue's top management or been in a board meeting?

 

[comint]

what basis could you possibly have for such a comment?

When a majority shareholder, like Toll, exits an investment the way they did with Virgin Blue, I am quite willing to draw conclusions; pending any other perspective being made available.

 

[SeaWolf]

When a majority shareholder, like Toll, exits an investment the way they did with Virgin Blue, I am quite willing to draw conclusions; pending any other perspective being made available.

Yeah, it's an obvious conclusion. Toll never wanted an airline. They picked up Virgin Blue when they acquired Patrick and didn't know what to do with it. It had nothing to do with other shareholders at all.

 

[ANstar]

Also, don't discount QF moving into a relationship with DL, remember they do share codes with AF to Paris! (If you can't beat 'em join 'em.)

*or better. (maybe lounge accsess, FFpoints & status co-recognition)
.

I doubt QF will partner with DL. Af is different as they dont compete on that route with each other's metal. QF would only partner with DL if it were not flying the route (like they do with CO currently on the LAX routes)

As for Virgin and Skyteam, I would be happy to see that. I have also noticed a Virgin America logo on V Aus' website, so perhaps we will see that partnership first.

 

[markis10]

Yeah, it's an obvious conclusion. Toll never wanted an airline. They picked up Virgin Blue when they acquired Patrick and didn't know what to do with it. It had nothing to do with other shareholders at all.

Considering Toll have 55 aircraft already you could say they have an airline!

 

[comint]

QF would only partner with DL if it were not flying the route…

When the biggest Southern Belle in the world, comes-a-swanning into town, everyone puts on their Sunday best for the tea dance!

DL is most likely to be bringing some new loads with it when it arrives, and I would argue that the amount it may take from QF is low (but not insubstantial), however this figure might be surpassed by the business that QF could generate by connecting DL’s passengers domestically. It is also in QF’s interest to isolate DJ from Skyteam connections.

I certainly wish I had a seat on the balcony in the ball room.

I have also noticed a Virgin America logo on V Aus' website, so perhaps we will see that partnership first.

Virgin America is a major-urban point to point carrier with very limited (compartively) route structure. While sharing ground facilities with VA at T3 LAX makes sense, extending that agreement to interlining or code sharing would created added costs where they shouldn’t be, and therefore a strategic change for VX. (But if they think they can make a buck...who knows?)

 

[SeaWolf]

Considering Toll have 55 aircraft already you could say they have an airline!

I should have been more specific, Toll did not want a passenger airline. Self-loading cargo is not their business.

 

[JrFoxMN]

DL is most likely to be bringing some new loads with it when it arrives, and I would argue that the amount it may take from QF is low (but not insubstantial), however this figure might be surpassed by the business that QF could generate by connecting DL’s passengers domestically. It is also in QF’s interest to isolate DJ from Skyteam connections.

As a former Northwest Plat who moved to Aus, and I can tell you that SkyTeam loyalty in the US is insane. Many friends choose holiday destination based on where NW, DL, KL, CO fly. And business associates who fly SkyTeam would fly QF only because UA's biz product was horrible. Now that DL and UA are moving in with flat beds, I think it's going to put a lot of pressure on QF. However, I doubt much ex-Aus traffic will do DL or UA.

On the flip side, VAus is basically unknown in the US (similar to Air NZ). I always find LA an interesting destination for Aus passengers (no clue why so many people go there - not a fan of the city at all), but 90% of biz traffic will need to connect on. VAus already had a connection alliance w/ NW, but we'll see what happens now w/ the DL/NW merger.

In a nutshell, whether Velocity joins SkyTeam or not, a DJ/VAus and DL/NW partnership is practically a given. VAus is basically only going to sell tickets ex-Aus and will need a partner to ferry it's passengers around the US, and ex-US DL passengers will need an airline in Aus. It's a win-win for both airlines.

Virgin America is a major-urban point to point carrier with very limited (compartively) route structure. While sharing ground facilities with VA at T3 LAX makes sense, extending that agreement to interlining or code sharing would created added costs where they shouldn’t be, and therefore a strategic change for VX. (But if they think they can make a buck...who knows?)

Hmmm... just thinking through this... Is there any other "low cost int'l" carriers that connect two large land masses/countries? None come to mind. I think the different geographies of the US/AUS make interlining almost a requirement, vs a "nice to have" - esp if they plan to move business travellers (which VAus is clearly trying to do with both PE and Biz products).

But no matter what - I agree - it's going to be interesting to watch this one from the sidelines!!!

 

[comint]

Welcome to AFF JrFoxMN. I think it will be good to have additional input in discussions and conversations from someone with a North American SkyTeam perspective.

I think the different geographies of the US/AUS make interlining almost a requirement, vs a "nice to have"

Just to clarify - I was not trying to argue against VA interlining, rather VX.

 

[JrFoxMN]

Welcome to AFF JrFoxMN. I think it will be good to have additional input in discussions and conversations from someone with a North American SkyTeam perspective.Just to clarify - I was not trying to argue against VA interlining, rather VX.

Much thanks, mate!

And gotcha re: VX. Since I haven't been in the US for a while, it didn't dawn on me that VX was Virgin America. --Smacks hand on forehead.--

Yeah, will be interesting to see what happens there. Interline ticketing is a royal pain, from what I understand. (Though it's actually interesting how many crazy interline fares there are between QF and many US-based carriers.) Don't know why, though, but I have this sneaking suspicion that we're about to see the start of the "Virgin Alliance" now that they circle the world. And Elevate (VX's FF program - see, I learn fast! ha ha) is saying "partners are coming soon" (though that's been there for months). Time will tell...

 

[AnonymousCoward]

When the biggest Southern Belle in the world, comes-a-swanning into town, everyone puts on their Sunday best for the tea dance!

DL is most likely to be bringing some new loads with it when it arrives, and I would argue that the amount it may take from QF is low (but not insubstantial), however this figure might be surpassed by the business that QF could generate by connecting DL’s passengers domestically. It is also in QF’s interest to isolate DJ from Skyteam connections.

QF already have a major alliance partner in AA. Making AA upset just to "isolate" DJ seems something that is very unlikely to occur.

 

[comint]

Making AA upset just to "isolate" DJ seems something that is very unlikely to occur.

1./ Making AA upset - who knows what the agreement is between the two, but AA has a very close (but perhaps QF mutated) arrangement with HA, which also happens to be a close DJ partner and Qantas Group competitor - Transpac.
2./ I don’t think I said “just”, perhaps “also”. (I am only talking about the potential for QF to pop a DL code on some of their domestic Australian services, not reciprocation.)

 

[AnonymousCoward]

1./ Making AA upset - who knows what the agreement is between the two,

AA is OneWorld, DL isn't. How many DL codeshares do you see on QANTAS flights at the moment? Pretty much nothing (if not zero). How many AA etc codeshares do you see - lots. I think there's a good reason for that.

 

[JrFoxMN]

That's generally true, but as Australia is treated often as a "special market" due to its location, a lot of the normal alliance rules get thrown out the window.

For example, Asiana is a member of Star Alliance, but you can fly SYD-ICN with a Qantas ticket / QF flight number on OZ metal.

On the converse side, Qantas and Cathay Pacific are both OneWorld, but they are FIERCE competitors for OZ to HKG and OZ-Europe (I won't even repeat how one friend in Qantas described it).

Nothing like living on the far, far end of the earth, eh?

 

[comint]

AA is OneWorld, DL isn't.

I should have been more specific and used adjectives like “detailed” or “precise” to describe what we don’t know about the agreement, while trying to discuss demarcation lines. I do not see their relationship as an exclusive marriage, as pointed out there is far too much play on the sides for that.

But, let’s look at things from a different angle -
And examine the best case (VA) worst case (QF) scenario, for Transpac.



(I make the assumption, that DJ staff are currently revisiting UA and applying pressure for a “better” agreement.) So –

• VA code on all UA Transpac to/from Australia, and selected USA domestic (UA code continues on DJ domestic).
• DJ’s The Lounge signs UA Red Carpet Club as a partner, in a two-way agreement.
• VA code on all DL Transpac to/from Australia, and selected USA domestic, and DL gets its code on selected DJ domestic.
• DJ’s The Lounge signs DL Crown Rooms as a partner, in a two-way agreement.
• VA signs agreements with AC & enhances its relationship with HA
• VA enters into some kind of freight agreement with all its North American partners.

This means, VA could be selling a network & frequency of service to North America that surpasses what Qantas has on offer. It would also be leveraging both Star Alliance & SkyTeam (North American) loyalty into its domestic Australian network.

As for Sir Richard and/or a fourth global airline alliance, I would use a continuum to describe investing; from opportunistic to strategic. Branson’s investment style is at one end of that and I reckon creating an airline alliance; at the other.

 

[JohnK]

Interesting speculation and if successful could be a major boost for Virgin domestically and ultimately we could all be better off with some added competition....