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Sky: “Virgin Atlantic in talks to acquire Flybe”

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Sky News is reporting this evening that Virgin Atlantic is in talks to acquire Flybe.  See their report here.

As we covered last week in some detail – see here for example – the airline has invited offers of interest from other airlines or investment groups.

There is obviously some logic in a deal, although less than you might think.  Flybe sold the bulk of its Gatwick slots of easyJet in 2013 so there is a limit to how much ‘feed’ it can provide to Virgin Atlantic there.  Flybe has routes from Aberdeen and Edinburgh to Heathrow (which Virgin used to run under the Little Red brand) and will start Newquay to Heathrow next year.

Virgin Atlantic to acquire FLybe

More importantly, Flybe is already a Virgin Atlantic codeshare partner on many routes, especially out of ManchesterHere is the Virgin Atlantic / Flybe codeshare list.  I would be very surprised if other rumoured bidders such as Stobart would end these deals, although I accept that Virgin Atlantic may believe that the modest cost of buying Flybe means it is not worth taking the risk.

The codeshare only covers a small part of the Flybe route network, however.  Unless there is an opportunity to gain a large number of new slots at Gatwick it is difficult to see how much extra feed Flybe could bring if it was wholly owned by Virgin Atlantic.

Virgin Atlantic is also in the middle of a restructuring of its own, with Air France KLM in the final stages of acquiring a 31% stake.  This has already had to be overhauled once in order to deal with the carve-out of the assets of Virgin Flying Club into the new Virgin Group Loyalty Company, in which Air France KLM will have no stake.

Virgin Atlantic to acquire Flybe

We then come to Avios.  It isn’t clear how much business the use of Avios drives to Flybe, but the airline clearly believes it is worthwhile or it would not be continuing with the deal.  We can be 99.9% sure than the acquisition of Flybe by Virgin Atlantic would see it drop Avios and adopt Virgin Flying Club miles as its loyalty currency which is likely to be a minor negative.

Fun and games ….. let’s see how the situation unfurls over the next few days.

(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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  1. maybe FlyBE could be repositioned as a feeder for KLM/AF … as well as Manchester traffic for VS ?!

    or it’s just a ruse to increase the price / encourage BA to buy a loss making subsidiary !

  2. Nigel Williams says:

    I can see it working, although there would involve some upheaval. I think the branding could even survive short term, and essentially AF / KLM / Flybe / Virgin forming their own decent sized coalition to drive business from BA.

    2. Instant switch from Avios > Flying Club
    3. Earning of Tier points for Virgin 🙂

  3. From the perspective of a BA Silver FF, typically flying LON to GLA or EDI 10 times a year (Club & ET), US once or twice (WT+) and Europe 5 or 6 times (Club & ET) id quite like the chance to have a different loyalty scheme that would make sense for my travelling. Getting an incentivised status match from Virgin/Flybe could win my bookings quite quickly, as BA just aren’t quite all that anymore (and move my stubborn aversion to EZY/RYA for European trips when the prices are far lower).

  4. Did you mean “TO easyJet” rather than “of”?

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