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Delta to Purchase 49% Stake in Virgin Atlantic, SkyTeam Addition Imminent?

by on December 11, 2012 · 12 comments

in Delta, skyteam, Virgin Atlantic

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The NY Times reported today that Delta is going to acquire a 49% stake in Virgin Atlantic, acquiring Singapore Airlines’ stake that they’ve long been trying to sell due to dismal returns. Apparently, Delta and Sinagpore found a price that works for both of them – $360 million, which is a huge loss for Singapore since they purchased the stake for $966 million in 2000.

This deal will give Delta more access to London Heathrow, where it currently flies to from Atlanta, Boston, Detroit, Minneapolis and New York. Even though Delta’s SkyTeam partners have hubs in Paris, Amsterdam and Rome, Delta has aggressively targeted London passengers, outfitting all of their London flights with their lie-flat BusinessElite seats and even trying to launch new routes like Miami-London, which did not last very long.

SkyTeam?
Virgin Atlantic has hinted in the past about joining an alliance and since their arch-enemy British Airways is in oneworld, the logical choices were Star Alliance or SkyTeam. When I blogged about it in September 2011 and included a poll, most of you thought Star Alliance was the obvious choice (and I was right along with you). This deal certainly makes it all but certain for them to join SkyTeam if they do indeed join an alliance. Even if they don’t, or they take a while to do so, I imagine reciprocal benefits between Virgin Atlantic and Delta frequent flyers are soon to come. I just hope that Delta does not include huge fuel surcharges on Virgin Atlantic flights. On a New York-London roundtrip in business class, Virgin Atlantic charges 80,000 miles and a whopping $1,112 in taxes/fees. Delta, on the other hand, charges 100,000 miles and only $284, though finding low level awards can be tricky on Delta.

Sample Delta business class award JFK-LHR

So which business class is better? Virgin Atlantic certainly wins on ground experience. Their Clubhouse lounges are swanky and chock-full of amenities vs. Delta’s dumpy and overcrowded lounges (I’m looking at you JFK!) that basically offer mixed nuts and cheap booze; and in-flight ambiance – Virgin Atlantic 747′s have in-flight bars that create a party atmosphere, which can be a good or a bad thing depending on what you want. I haven’t actually flown Virgin Atlantic, but from all of the reports I’ve read, the in-flight experience isn’t all it is cracked up to be, with average food and service.

Upper Class seats are 22” wide, and turn into a 33” wide, 78″ long flat bed.

Delta 767-400 BusinessElite seats are 20.5″ wide and up to 81″ long. Some feel that they are too narrow and feel like a “coffin”, but I’ve always had excellent sleep on them and I find BusinessElite meals and amenity kits to be above average for business class. Delta BusinessElite goes above and beyond on bedding as well, with large down pillows and thick comforters, beating out every carrier I’ve flown in both business and first class.

Delta lie-flat BusinessElite cabin

Premium Economy
Virgin Atlantic has a separate Premium Economy cabin, whereas Delta’s Economy Comfort are coach seats that have more legroom, recline and perks like free cocktails. The Delta SkyMiles program does not currently allow Premium Economy redemption on partners like Air France, so I wouldn’t hold my breath for Virgin Atlantic Premium Economy redemptions either, though it would be a nice enhancement.

Economy
Both carriers offer in-flight video on demand at every seat in economy and complimentary beer/wine and meals. I would probably prefer to fly Virgin Atlantic, because the service is a little more upbeat- starting with complimentary cocktails upon boarding and a more refined dining experience, including a separate dessert service after dinner.

Overall, I think this partnership could be great for frequent flyers of both airlines as it will allow for more redemption opportunities. While airline partnerships can be detrimental to consumers by decreasing competition and increasing prices, I think this will allow Virgin and Delta to compete better with British Airways, which is a behemoth in the UK market after acquiring bmi airlines earlier this year.

There are a lot of different variables at play here- whether Virgin Atlantic will join SkyTeam (I think so) and whether Delta will completely revamp the SkyMiles program and thus partner redemptions (I think so), so stay tuned!

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • Sfobuddy

    You keep mentioning the revamp of the DL program as if you have an insider scoop. Time to come clean ;-)

  • http://www.facebook.com/bradleysjones Brad Jones

    I was just planning to transfer Virgin Atlantic points to Hilton, but should I hold off now as I will likely be able to use them on Delta flights? I need domestic flight miles right now more than I need hotel points.

  • Jetstream007

    From what I learned AF/KLM is up to buy the remaining 51% of Virgin, which would make it a real SkyTeam carrier.

  • Brian L.

    That’s not going to happen. Richard Branson has stated that he will continue to be in control of VS.

  • Matt C

    Will this also be effective for Virgin America or is that a differently owned subsidiary?

  • http://www.facebook.com/karl.l.mitchell Karl Mitchell

    Virgin America and Virgin Australia are separate organizations, but if Virgin Atlantic go into SkyTeam it may be that the others would be tempted to follow.

  • http://www.facebook.com/karl.l.mitchell Karl Mitchell

    Interesting development. The Virgin Atlantic Upper Class experience is not perfect, but it’s better than almost all alternatives on transatlantic routes, certainly equivalent to first class among their competitors, and their lounges are exceptional. Sure, the fees are steep, but for that you get excellent availability. Personally I’m hoping for the possibility of redeeming without paying the fees through Delta, but I do hope that the availability doesn’t suffer too much.

    Another point of interest is that the BoA Virgin Atlantic credit card may be more valuable to many if they enter SkyTeam, as it is quite easy to earn tier points and achieve silver status, and even get most of the way to gold. Plus, the miles/$ earn rate is good compared with Delta’s offerings (1.5/$, or $3.0/$ for Virgin bookings, plus bonus 15,000 for $25,000 spend).

  • thepointsguy

    If you wanted to redeem for Delta flights, transferring directly to Delta might make the most sense. I doubt you’ll have more options/flexibility by doing it to Virgin, even though they do have the bonus right now.

  • thepointsguy

    I’ve written about my thoughts.. and while they aren’t official, they weren’t plucked out of thin air ;-)

  • thepointsguy

    Virgin America is separate, but I wouldn’t be surprised to see a linkup down the road if the Virgin Atlantic partnership goes well

  • http://twitter.com/benbrooksny Ben Brooks

    Interesting deal for sure, but then again DL is all about non-traditional moves as of late (e.g. oil refinery, buying MD90s and 717s). Are VS and DL in same terminal at LHR? How about at other airports in US? Lounge access will be interesting and I bet they won’t let Delta Skyclub members go to Virgin Lounges unless they are on a VS flight. Based on what slots at LHR were going for just four years ago this is a steal, assuming they can transfer them between the carriers.

  • Linus

    Your assessment of Deltas economy product is off. DL is actually far from offering on-demand IFE in Y at every seat. Beer and wine are complimentary on select international flights of 6 hours or longer and intra-Asia flights, otherwise $6 if not seated in Economy Comfort. Not all Economy Comfort seats feature all of what you have stated, some have no extended legroom (such as 11D on any A332), some have limited recline.

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