Air France KLM buys 31% of Virgin Atlantic – and you will be able to redeem Flying Club miles on them

A complex merry-go-round of corporate activity was announced last night which will lead to …. well, it isn’t fully clear.

You can find full details on the Virgin Atlantic website here.

In the first transaction, Delta Air Lines and China Eastern Airlines have each agreed to buy a 10% stake in Air France KLM for a combined total of €750m.

Back to back with this, Air France KLM will buy a 31% stake in Virgin Atlantic from Sir Richard Branson.  The price is £220m.

The new Virgin Atlantic shareholding structure will be:

Delta Air Lines 49% (the legal maximum for a non-EU company in an EU airline)

Air France KLM 31%

Sir Richard Branson / Virgin Group 20% – and he remains chairman

delta airline virgin atlantic

What next for Virgin Atlantic?

The next steps are not clear.  There are bound to be some changes, however, now that Branson no longer has a controlling shareholding.  Delta will be effectively calling the shots as long as it has Air France KLM on its side.

There are two things which we know as fact.

Air France KLM will become a Virgin Atlantic earning and redemption partner.  This was confirmed yesterday.  It will massively improve the value of Flying Club miles even without full SkyTeam membership.

(You will also be able to redeem Flying Blue miles for Virgin Atlantic flights.)

Don’t expect to be able to redeem for the acclaimed Air France First Class seat, however, as even non-elite Flying Blue members cannot do this.

Virgin Atlantic, Delta, Air France and KLM – together with Alitalia, if it survives – will apply to form a joint venture for their transatlantic services.  This would share revenue and profits across all four airlines.  It is difficult to see permission being refused given that BA, Iberia, Finnair and American have an identical arrangement.

These things were announced yesterday.  What was not discussed is SkyTeam.

This deal must surely put the notion of Virgin Atlantic joining the SkyTeam airline alliance back on the table.

Most people, including myself, expected this to happen after the original Delta investment a couple of years ago.  Virgin Atlantic continued to plough its own furrow, however.  I would say that the chances of Virgin joining SkyTeam are now substantially increased.

It has to be said that SkyTeam has the reputation of being the ‘leftovers’ alliance.  Once you get beyond Air France KLM and Delta, you rapidly drop into less relevant – from a UK perspective – airlines.  We are talking Aeroflot, Aerolineas Argentina, AeroMexico, Alitalia (whilst it lasts), Garuda Indonesia, Kenya Airways, Saudia etc.

To be fair, SkyTeam membership would give your Virgin Flying Club miles access to 16,609 daily flights to 1,707 airports.  Virgin Flying Club status members would get access to over 600 new airport lounges.

Any application to join SkyTeam would take at least 18 months to complete so we are unlikely to see any immediate changes.

In the meantime, we can look forward to earning and spending Virgin Flying Club miles on the global networks of Air France – KLM which can only be good news.

You can find out more in the press release here.

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Comments

  1. What we really need, in response to these joint ventures, is enough extra capacity for Norwegian and others to become what Virgin tried to be when it started, the cheeky upstart. Unfortunately the Heathrow expansion only ever seems to be delayed and now backtracking http://www.travelweekly.co.uk/articles/284482/heathrow-scraps-new-terminal-plans-to-control-expansion-costs

  2. Katy storie says:

    I will soon be BA Gold Guest List and wondered if Delta/KLM/Flying Blue would ever offer status match as most of my flying is transatlantic and the collaboration with Virgin has made this much more appealing.

    • Hannah says:

      OT. I have just been gifted a ba gold from a GGL, do I get a soft landing to silver upon expiration of the gold?

      • In theory no but it can happen.

        By the way, make sure you don’t do it in your current card year if you have status.

        Eg. You are Bronze with a card year expiring 31 July. Upgrade today, get Gold to 31/7/18.

        You are Bronze with a card year expiring 31 July. Upgrade on 1 August, get Gold to 31/7/19.

        • Hannah says:

          Thanks. So if my expiry date is 30 April 18 then the Gold will expire 30 April 18 or is it minimum 1 year and will therefore expire April 19?

      • No “soft landing” for Partner Cards! But if you initially time the gift correctly you can get 23 months as BAEC Gold.

    • Mikeact says:

      You will be very lucky, unless FB have a change of heart.

    • Alex W says:

      Virgin didna status match recently. I guess they might do it again.

  3. StevieM says:

    Cheers Rob. This makes a lot more sense now (shame about the AF 1st Class). Last night I was WHAT?!?! but today helps to explain. All remains to be seen. Cheers. S

  4. imbruce says:

    I only wished that they flew to Sydney Australia

  5. …the Virgin Clubhouses are going to be mayhem

    • Johnny Tabasco says:

      the last few times ive been to the one at Heathrown its been mayhem anyway…. people literally hovering round tables waiting to jump in as soon as people leave…the only spare seats were upstairs outside. a queue to wait for seats in the dining area….people kicking off because of a 20 min drink wait time.

      first world problems i know…but it does make it a little bit less special when its like that to be fair

      • That does sound pretty rubbish! Thankfully the Friday afternoon I flew out (a few weeks back) was lucky if it was a 1/4 full – loads of free seats everywhere and very attentive staff. I was assuming it was always like that!

  6. Klaus-Peter Dudas says:

    Seems strange that Delta can own 10% of AF/KLM which owns 31% of Virgin, doesn’t that really mean that Delta owns (in effect) 52.1% of VA?

  7. OT, does anyone know whether I’d still be able to get the sign up points for the HSBC Premier World Elite Mastercard if I’ve already got the HSBC Premier credit card or if that prohibits me?

  8. Desmond J Hunter says:

    Just wondering what changes this will mean to the customer ?

  9. OT: But as a Londoner what’s the best StarAlliance program to be part of?
    From what I’ve gathered on here it should be either Lufthansa/Singapore airlines; have a few regional/long-haul flights with ANA+Asiana so wondering where to pool my points; alt. if any status matches are around that’d be great! (BA Gold)

    • There is no best answer. Aegean is easiest to get Gold but you need 4 flights with them per year. Want LH F? M&M. Want SQ Suites? Must be Krisflyer. Check earn and burn on your preferred routes.

      • Aegean Gold is difficult to earn from scratch now, but it is easy to maintain.

        You don’t need 4 Aegean flights but the mileage requirement doubles.

        You can maintain A3 Gold with a London (or other ex-EU) to Thessaloniki plus 14 SAS shorthaul flights or 1 J/Y+ longhaul to Asia