Much rumored the past few weeks, now it’s official, Delta is acquiring a 49% stake in Virgin Atlantic. Here are my initial thoughts.
There were also rumors that Virgin would be joining an alliance soon. Since Singapore Airlines owned 49% of Virgin, Singapore is a member of Star Alliance, and Singapore has been tying itself up with Virgin Australia, most guesses were that Virgin would join Star Alliance.
That’s clearly no longer in the cards, and any alliance talk is likely to shift to Skyteam.
Many of the rumors the past week or so had Delta buying Singapore Airlines’ 49% stake in Virgin and Air France KLM buying a small portion of Richard Branson’s 51%, giving the two Skyteam airlines a controlling stake in Virgin Atlantic. That hasn’t happened yet, as now Branson’s interests still retain majority control of the airline.
The deal involves Delta and Virgin entering a joint venture across the Atlantic, and offering reciprocal frequent flyer benefits.
- That’s a plus for the most part for Virgin Atlantic’s frequent flyer members, which currently have a weak scheme such that even access to Delta’s program is a positive (and eventual presumed access to other Skyteam partners is a benefit as well).
- For Delta’s frequent flyers it’s a huge plus, since Virgin has an outstanding premium cabin business class product and very cool lounges especially at Heathrow but also in New York, San Francisco, and Hong Kong. Virgin’s award availability has been historically quite good, amazing by Delta standards, although it remains to be seen how the redemption of Delta miles for those seats and a Delta significant investment may change that in the future.
Delta and Virgin Atlantic are not merging. There’s no opportunity to combine Delta and Virgin miles towards the same award tickets, and in fact Delta doesn’t offer one-way award tickets for half the roundtrip cost so that can’t even be done on a do-it-yourself basis.
But Virgin’s miles become incrementally more valuable, and something that U.S. frequent flyers may want to pay more attention to. Both Virgin and Delta are American Express Membership Rewards transfer partners. Virgin’s fuel surcharges are extortionate. I accumulate most of my Virgin miles on one-day Avis rentals, even a one-day car rental nets me 1000 miles in their program and eventually it stacks up to be a worthwhile balance for redemption.
Delta is already in a tie-up with Virgin Australia, acquiring a big Virgin Atlantic stake brings them closer to the Virgin group.
With Singapore closer to Virgin Australia, an historical relationship (since-ended) between Singapore and Delta, and now a big financial transaction between them — and Singapore often thought of as being least tied into Star of any member airlines — one gets into wild speculation of about a future relationship between them. Although at the same time Singapore’s Virgin Australia relationship could be truly one-off and Singapore may just be finally done with their U.K. investment.
Bottom-line for most frequent flyers is that this is of marginal interest, but for Delta and Virgin frequent flyers this is of some benefit — although not as big a benefit for Virgin’s members compared to what it would have meant for them had Virgin joined Star Alliance myriad additional partners and better award availability generally that Star provides.