It looks like your ability to earn and spend Virgin Flying Club miles on Air France and KLM flights – or, indeed, your ability to earn and spend Flying Blue miles on Virgin Atlantic flights – is closer than ever to going live.
The US Government has approved the restructuring of Virgin Atlantic’s shareholding and the creation of a new transatlantic joint venture with Delta Air Lines, Air France and KLM. It is subject to a 14 day consultation which is now underway.
A little backstory …
Back in 2013, US airline Delta bought a 49% stake in Virgin Atlantic and secured a joint venture across the Atlantic. This allows both airlines to better compete with British Airways despite a limited slot portfolio at Heathrow and the lack of a short-haul UK feeder network.
Delta also owns a 9% stake in Air France KLM, and both groups are part of the SkyTeam alliance. It is no surprise that all three airline groups – Delta, Virgin Atlantic and Air France KLM – have been seeking to collaborate more closely.
Two years ago, Virgin Group signed a deal to sell Air France KLM a 31% stake in Virgin Atlantic, diluting Sir Richard Branson’s share to 20%. In 2018, the three companies announced that they were filing for a transatlantic joint venture. In March 2019, Virgin Atlantic and Air France KLM announced new codeshare routes, the first stage of deepening integration between the airlines as they waited for regulatory approval.
The US regulator has now given approval for the joint venture pending a fourteen day consultation period which should just be a formality. Jet Blue does not appear to have succeeded in getting any slots at Heathrow released despite running a high profile campaign which it claimed would increase competition.
What is an airline joint venture?
Joint ventures are regulatory-approved partnerships that allow multiple airlines (in this case Delta, Virgin Atlantic and Air France KLM) to act as one, co-ordinating on pricing and scheduling.
Crucially, joint ventures also pool revenue. Regardless of which particular airline’s aircraft you find yourself on, the revenue generated from you as a passenger is distributed between the co-operating airlines.
British Airways has, for many years, operated a transatlantic joint venture with Iberia, American Airlines and Finnair. Aer Lingus has also applied to join this JV. BA also has a joint venture with JAL on flights to Japan and with Qatar Airways on flights to Doha.
No matter which airline you actually fly with across the pond, British Airways receives a portion of the revenue. This is one of the reasons that British Airways maintains such a tight grip on transatlantic flying.
Whilst Delta already had joint venture agreements with Virgin Atlantic and Air France KLM individually, this expanded agreement closes the triangle and allows Virgin Atlantic and Air France KLM to co-ordinate too.
How will the joint venture benefit you as a frequent flyer?
It is obviously debatable whether allowing Delta, Virgin and Air France KLM to jointly set fares and share revenue on transatlantic routes is beneficial for the customer or not. To the extent that the BA / AA JV already exists, it arguably creates a 2nd grouping which is big enough to challenge. That said, prices would probably be lower if both joint ventures were shut down.
Ignoring any impact on ticket prices, the joint venture is hugely beneficial for your frequent flyer account. You will soon be able to earn Virgin Flying Club miles on ALL Delta, Air France and KLM flights, whilst at present your Air France KLM earning is restricted to codeshares. The reverse is true for Flying Blue and Delta SkyMiles members.
You will also have the ability to redeem Virgin Flying Club miles on Air France and KLM flights. We asked Virgin how quickly they were planning to get this live but we did not receive any comment.
This opens up Virgin Flying Club redemption opportunities and makes it a far more interesting loyalty scheme. You will be able to fly to many, many more places around the world thanks to Air France and KLM’s route networks, and it will make a radical difference to your redemption options flying to Asia, the Middle East and Africa. Short haul redemptions in Europe will also be possible, albeit with a plane change in Paris or Amsterdam.
We will keep you updated with the Virgin Flying Club news as it is announced. We have no idea what sort of mileage or taxes we can expect to pay for redemption flights with Air France KLM, which is the only potential sting in the tail. It will be interesting to see how these are calculated and whether they choose to undercut the very high taxes and fees that British Airways imposes ……
How to earn Virgin Points from UK credit cards (January 2021)
As a reminder, there are various ways of earning Virgin Points from UK credit cards. Many cards also have generous sign-up bonuses!
You can choose from two official Virgin Atlantic credit cards (apply here, one has a bonus of 15,000 Points):
You can also earn Virgin Points from various American Express cards – and these have sign-up bonuses too.
(Want to earn more Virgin Points? 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.)