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

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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.

(Want to earn more Virgin Flying Club miles?  Click here to see our recent articles on Virgin Atlantic and Flying Club and click here for our home page with the latest news on earning and spending other airline and hotel points.)

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Comments

  1. Hi Rob,
    27 years as a member of Virgin Freeway/Flying Club. Into my 9th consecutive year out of the 10 required to qualify for Flying Club Gold status for life.
    Retaining this level has already become tougher, with the changes made to earning requirements. In addition, it has become increasingly difficult to actually find Upper Class reward seats.
    Do you think it is worth pursuing the magic 10 years, or do you believe that the programme will be swallowed up by Flying Blue/Delta Sky miles?

    • BMI lifetime Golds will tell you how much BA respected that.

      But ….90% there. I would go for it.

      • Ha….yes I remember those great BMI days, with fantastically easy qualification to Gold, and great redemptions. I ended up trading for BA Gold and kept it for 18 months after BMI folded.

  2. the real harry1 says:

    just had a look on https://www.airfrance.co.uk/ and KLM’s site to see how they connect to our place in the sun

    you can change in Paris/ Amsterdam and get here in under 2 hrs worse than a direct flight

    opens up quite a few possibilities if the points are not too awful (for 2 flights) compared to 7500 Avios (peak, 1-way)

    typically about another 7 realistic (ie short) flight options a day

    • the real harry1 says:

      KLM goes from Bristol as well – just got my 2 hours back 🙂

      • the real harry1 says:

        here’s the miles calculator https://www.flyingblue.com/calculator.html

        looks like it would be 12,500 miles from Bristol (same from LHR) – not sure about any fees [‘The airport and security taxes still need to be paid separately.’]

        so compared to 7,500 Avios, pretty poor – but could give great flexibility

        • JamesB says:

          You can have a stopover in Amsterdam or Paris if you like.

        • Wally1976 says:

          Unfortunately unless they introduce an RFS equivalent I would’ve thought fees would be quite high (hope to be proven wrong).

          • They’re not actually as bad as they used to be, I’ve found. I think they dropped fuel surcharges on redemptions (at least short-haul European), but will still charge full airport taxes. So avoid flying out of Heathrow…

          • Certainly compared with flying, say, ABZ – LHR – x (which now costs twice the miles and twice the RFS surcharge), ABZ – CDG – x or ABZ – AMS – x is typically a similar amount of miles and a similar tax charge.

    • I don’t this is on anyone else’s agenda.

      • the real harry1 says:

        what? using Virgin miles on European flights?

        there must be plenty of people with 100,000 Virgin miles like me who would prefer there to be European redemption possibilities as opposed to leaving the ever-accumulating miles stuck useless in the bank

        • No – your holiday plans.

        • pauldb says:

          It would make a difference to me too: I’m happy to accumulate avios knowing that if I don’t have any longhaul plans (or don’t earn enough) I can get good value to Europe. Since that’s not true with virgin don’t tend to bother.
          But unfortunately I’m not optimistic: comparing other partners I guess a short flight will be 8k or 12.5k and a connecting flight necessary through AMS/PAR will be double: poor value.

        • JamesB says:

          The point Harry is that many of those many may be able to fly via AMS or CDG from the regions to visit you in the sun for 12500 which beats 7500+7500 via LHR with BA so stock up on those cases, we are coming to see you soon…paradise lost 🙂

          • the real harry1 says:

            good point – from bonny Scotland for example it’s going to be cheaper (not sure what fees Flying Blue charges on redemptions since I’m not a member – maybe somebody who is could do a quick check on https://www.flyingblue.com/calculator.html to see how European flights pan out?)

          • Or if you want to visit me in the sunny place in Russia flying Aeroflot using AF miles is 12500 miles +60eur vs 13000-14500 miles +22GBP with BA/S7 one way. However, if you fly from that place back to the UK, then it is 12500 miles +0 eur , which is cheaper than BA/S7 both miles and fees wise.

          • pauldb says:

            Are you predicting though that a VS redemption on AF/KL will be priced the same as a Flying Blue redemption – why? Every other VS partner redemption is priced leg by leg, like BA, so I don’t think 12.5k VS will get you beyond AMS/CDG.

          • the real harry1 says:

            just the hunch that FB will lead on points redemptions in Europe, since they will be the provider of the flights/ aircraft

            hard not to envisage a [mostly] joined-up reward flights program getting devised

            12,500 FB miles gets you both legs on the way out + taxes – we’ll just be using Virgin miles instead of FB miles

            or that is the hope!

  3. I am not a member of Flying Blue (or the Air France alternative) so I’m not sure how their redemption scheme works. Does it have charge caps for short haul flights (like BAEC)? If so, then this should open up a lot of short haul options, if not, then I can only see this as bad news for Virgin Flying Club. Redemptions will be even harder to come by and the risk of further devaluation is much higher, which would be really annoying as my wife and I have been busy collecting the Virgin miles for a 2019 trip.

    • Mikeact says:

      Generally speaking, you can’t beat Avios for short haul European trips. Whereas, we wouldn’t usually use KL/AF as you have to connect through Amsterdam or Paris. We have only done this a few times to take advantage of their monthly ‘Promos’, with 25/50% redemption discounts. We have found the ‘charges’ reasonable in most cases. ps The Air France First offering is, in my opinion, an excellent product, compared to KL, World Business Class, which is ‘OK’. As long as they get my there safely then I’m really not that bothered.

      • JamesB says:

        You can beat avios easily, particularly if you live outside the south east, they are called easyjet, ryanair, vuelling, SAS, KLM etc.

        • Mikeact says:

          I thought we were talking of redemptions…perhaps I misread.

          • JamesB says:

            Yes, but what’s the point of a redemption if you can get a revenue fare for less than the cost of miles, taxes and fees? For me it used to be flexibility but with availability all but gone on major destinations at T-3tt that no longer applies.

          • Mikeact says:

            OK, I’ll ‘ll meet you in Tenerife next month…. I’ll be on my £35 Avios redemption, with my 23kg suitcase, and you ?

          • Genghis says:

            @Mikeact Do your avios not have a cost (or opportunity cost)?

          • Mikeact says:

            Of course, but Lego for the kids etc., makes it a no brainer.

          • JamesB says:

            But when did you book it Mike, is there any availability if you want to change it, is your travel insurance going to pay out for lost avios if it goes messy? It would cost me twice as much from EDO and why would I want the hassle and stress of changing in LHR when I could be approaching the runway in Tenerife? I have not checked a bag since 1995, I prefer just to use a local laundry service or pay up at hotel.

          • Mikeact says:

            Booked last night. Two one ways, LGW, August 17th @£17.50 each. (We always book one ways for the flexibility in the event of cancellations) We’re fortunate enough to look at the return home while out there…haven’t been let down yet, but then, there’s always a first time I guess.
            Regarding insurance of ‘lost airmiles/points’ I’ve only had one experience and that was having to cancel a KL journey out of LGW to connect in AMS on our way out to Cape Town, my wife was taken to hospital from the airport around six years ago….a bolt out of the blue. After much deliberation the insurance company, with KL input, negotiated a fair settlement and in return KL returned the long haul part back, but not the hop accross to AMS. I accept that coming from EDI is not comparing like with like out of London, but even so, i would still argue that comparing apples with apples, Avios v the rest is still generally a better bet @ £35 , or it is for me. As far as the cost of Avios, I have to buy fuel ,shop..on line or actual etc. Four months touring AUS and NZ earlier this year, netted me over 45k Avios through Booking.com , when they were offering 8 per £.

        • JamesB says:

          @Mikeact, good stuff and good luck 🙂 I wasn’t trying to be so prescriptive, rather I was trying to highlight a number of factors that may or may not come into play. Everybody has different combinations of itineraries and opportunitities ard we all have to work them out on a trip by trip basis. I’ve learned the hard way that miles are not always the best way so I now always start by finding my cheapest acceptable revenue fare and then comparing it to miles options to ascertain whether the latter provide real value of not.

          • Briandt says:

            Fair do’s !

          • JamesB says:

            No criticism was intended, Mikeact got a good deal a month before peak season that meets his needs. If avios are going to be bought I cannot see much better ways than getting Lego for his kids.

          • Yes I must say I did a lot of BA RFS flights previously – including some great ones like a weekend in Luxembourg then stopping off in London on the way home for a course for a couple of days 🙂 Sadly with the doubling in RFS cost for those of us having to connect in London the economics significantly shift away from RFS. In many cases an LCC direct from EDI (with lounge access either end via PP and paying for priority boarding/extra legroom seat) works out cheaper, even with a fairly low Avios valuation. Minimum cost for a return via LON is now 9k+9k & £35+£35 (obviously higher if going further afield). It clearly depends on how you value Avios but I think most would say this means your cost with RFS is going to be at least >£200, this buys you a lot of ticket with an LCC…

  4. Clive says:

    It was interesting that in Branson’s statement he said that Brexit and the fall in the pound had been a problem for Virgin holidays and flights- I wonder how much bookings are down, how much of a problem it had become (or is projected to become), and if he has sold out under much pressure.
    (Also interesting to note that the Chicago tourist board was advertising holidays in the cinema the other day – the £/$ drop combined with Trump might have made Virgin’s US focus a big weakness if tourism has fallen drastically?)

    • JamesB says:

      It works both ways though, tourism from USA-UK should havd increased due to low pound but the combined effects of brexit and security incidents probably offset any benefits.

  5. Mikeact says:

    Bit of a lone voice here probably…..but I have generally been pretty happy with the KL Flying Blue scheme, which of course goes back to Northwest , Flying Dutchman etc. years ago. Redemptions have usually been easy to get hold of, but I accept that being a top tier, lifetime member for years has also helped in a big way. (Last big redemption, short notice Business seats to Australia) For me, and being a bit selfish, it will be disappointing if these moves degrade the FB program, putting significant pressure on redemptions. When formally available, I will try to obtain Business Virgin seats to the US, but from what I’ve heard, and read, I won’t hold my breath, unless my current tier membership will somehow open up extra seats.

    • Keith says:

      I’ll second your lone voice 🙂
      I’ve been on FB since about 2003, a couple of years as gold, and a few silver. I redeemed about 200k points for 2×5 fights (2 in business) around SE Asia on Vietnam Airlines last year. Availability was excellent, all booked online with minimum fuss. The taxes and fees were about €50 on the longer business flights, and €3.40 (yes the decimal point is in the right place!) on the shorter economy ones.
      I’ve been thinking hard about turning my efforts back to earning on FB, or *A in preference to being tied into BA with the current downward slide.

  6. It might be just me but I’ve never had a problem getting Virgin UC Seats. Much easier to find from West coast than BA. I can see that might well change. I like Virgin more than BA but what are the implications for the HKG and Shanghai flights now Delta are in the driving seat?

    • The opportunity to redeem for the Middle East and Asia impresses me.

      The other point is that FB availability is likely to be better than VS during UK school holidays, if they don’t match French or Dutch ones.

      Could make VS interesting for those outside London too.

      But ….. they really need online reward booking.

      • Fair enough but I live in London and have no need to fly during school hols! Take your point about getting to Bangkok and Singapore etc.
        I just looked at the FB points required for a J return to HKG – 200K. Scary big number. 115K FC points required. Obviously no idea of the “exchange rate”.

  7. Do etihad still have that huge stake in Alitalia?
    If so, that is pretty funny – delta indirectly working with one of the airlines they make propoganda films about

  8. Oh! Matron! says:

    For earning potential, I think this is great. There have been some great opportunities with the delta tie in (I earnt a 3rd of the tier points needed for gold last year on a BOS-JFK-DCA run for $600), and would imagine that AF/KLM will offer the same. Africa, S. America and Asia opens up incredibly well, including Bali, Jakarta, and Japan

    I’ve also never had problems redeeming. There are some great opportunities from the provincials, like Manchester (it’s 2 hours north of watford for londeners)

    • Johnny Tabasco says:

      ive never had any problems reedeming either. ive taken 5 Virgin redemption Upper Class return flights in the past 3 years, all within an orginal chosen week for flying and all with 2 seats. it always surprises me to see so many comments saying its impossible to find open seats etc

      I think the key is not to limit yourself to certain days and be as flexible as you can.

      • Oh! Matron! says:

        Indeed!

      • Clive says:

        How far in advance do you book and to which destinations? I’ve found that popular routes (and there aren’t that many routes to choose from) often come up with no results on he ‘5 week availability’ view for month after month…

        • Johnny Tabasco says:

          the destinations have been JFK, SFO, LAX, WAS, and Cancun. All booked prob at least sixth months beforehand. You’d be amazed at how quickly avaliability changes too, like i said the key is to be flexible as you can. Maybe booking early does make a difference, i dont know…

  9. Sorry off topic, but I’m a bit confused. Do flights on Qatar airways (London to Singapore via Doha) earn Avios? or just Tier points? The BA calculator shows zero avios. Thanks!

  10. Clive says:

    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

  11. 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?

      • The Dude says:

        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.

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