Game on … Virgin Flying Club ‘earn and burn’ on Air France and KLM coming as US approves deal

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At long last …. and this saga has been going on for over two years …. the final box has been ticked.

Late last week, the US Department of Transportation approved the creation of a joint venture for transatlantic flights between Virgin Atlantic, Delta Air Lines, Air France and KLM.  This is despite strong lobbying by JetBlue which was hoping to acquire Heathrow landing slots as part of a trade off to improve competition (it failed).

This was the last hurdle delaying the acquisition of a 31% stake in Virgin Atlantic by Air France – KLM.

Virgin Flying Club redemptions on Air France KLM

With European Union approval already granted, the final agreements can now be implemented.  Going forward, the shareholding of Virgin Atlantic will be:

  • Delta Air Lines 49%
  • Air France – KLM 31%
  • Virgin Group 20%

The transatlantic JV replaces an existing joint venture between Delta, Air France, KLM and Alitalia.  Alitalia has been dumped, which is another blow to its already weak financial position.

The deal allows the four airlines to co-operate on transatlantic routes.  This means that they can legally work together to fix flight schedules, fares and frequent flyer benefits.

All revenue from transatlantic flights by any of the four airlines goes into a pot and is shared out.  If you fly Virgin Atlantic to New York, a chunk of your money will be given to Delta and Air France – KLM, and vice versa.

Virgin Flying Club redemptions on Air France KLM coming soon

What does this mean for Virgin Flying Club?

This agreement was the last hurdle before Virgin Flying Club could begin offering Air France and KLM flight redemptions.

These are now expected soon – how soon I don’t know.

At the same time, I would expect all Air France and KLM flights to earn miles and tier points in Virgin Flying Club.  Alternatively, you should be able to credit Virgin Atlantic flights to Flying Blue if you wish.

I know that a lot of UK-based Head for Points readers have Flying Blue accounts, especially those based outside the South East.  You now have an interesting decision to make – should you drop Flying Blue and start crediting your flights to Virgin Flying Club?

Until we know the exact ‘earn and burn’ rates there is no easy answer.  It will also depend on how much flying you do on other SkyTeam partner airlines.  Whilst you will be able to credit Air France and KLM to Virgin Flying Club, you won’t be able to credit Korean, Alitalia etc.

We’ll give you our advice as soon as we know what is happening, and when.  It will be an interesting 2020, and if Virgin Flying Club gets this right it will substantially increase its attractiveness versus British Airways Executive Club.

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Comments

  1. “This agreement was the last hurdle before Virgin Flying Club could begin offering Air France and KLM flight redemptions.”

    How so? Flying Club already had agreements with a large number of partner airlines without joint ventures, why not AF/KLM?

    • Because they wanted a much deeper financial relationship between the 4 of them rather than just being ‘partners’.Also approval of the Joint venture gives them legal immunity against anti trust laws on both sides of the Atlantic.

      This is more than just slapping a code share number on a flight or offering earn opportunities.

      Many of the VS partnerships have limitations on spending VS miles such as SQ limits not only what cabin you can buy miles with but also excluded flights based on the plane type flying the route,

      Some only permit earning on specific routes not all routes.

      Some partners only have earn not spend.

      • None of this stopped them offering flight redemption before. Any pre-exidting partnership could simply have evolved to reflect the deeper partnership of a joint venture.

      • Total BS. You won’t be able to redeem virgin miles on Air France Le Premiere neither. It’s exclusive to FB status holders.

        • Have to agree.

          • I’m hoping to fly Virgin upper class with an FB redemption…..as long as it won’t require another mortgage.

          • As long as VS continue charging their massive fees etc, I’ll continue putting my miles and points into (and flying on) DL and FB programs.

            I’ve just a booked a FB business return on DL for 40 something thousand AMEX points (with 25% transfer bonus into FB) and about 20 USD. VS want 60,000 and about $600 in fees for the same exact seat. No thanks….

        • It’s La Premiere not Le… 🙂

    • Perhaps not as clear as possible. The 31% purchase was reliant on the JV going through. The frequent flyer deal was reliant on the equity investment.

  2. What’s your assessment of whether Virgin will ‘take the opportunity’ to devalue already-earned Flying Club miles by increasing the miles needed for redemptions on Virgin’s own metal? Seems likely to me. Any reason to think otherwise?

    • Competition from BA, that’s why.

      • Not sure I see the argument there 😉

        If I’ve got my numbers correct, BA Club World LHR-HKG for example is 150k Avios return, off-peak. The same trip in Virgin Upper Class is 115k Flying Club miles (also off-peak/standard season). Surely Virgin could increase that to 150k without losing out to BA? So if, say, a Flying Club redemption on AF/KLM on the same route came out at, say, 140k FC miles (that’s an assumption, granted, but for argument’s sake), why wouldn’t Virgin increase their own-metal redemption to the same? Still 10k less than BA, but 25k more than now…

        What am I missing?

    • Neil Donoghue says:

      I don’t see devaluation on the cards as this is going to be Virgin’s best shot to compete with BA on a global level…However, I don’t see this becoming a cheeky back door for KLM / Air France redemption’s either. Time will tell

  3. I just see higher fares and reduced competition. I have never liked the IAG agreements and this further reduces genuine competition

    • Shoestring says:

      it’s not all one way/ strangling competition

      what about?:
      – new transatlantic travel options to and from North America
      – more opportunities to earn frequent flyer miles
      – easier for customers to build their ideal trip by combining flights operated by Air France, KLM, Virgin Atlantic and Delta
      – customers booking on a codeshare benefit from seamless connections
      – additional frequencies to in-demand destinations
      – more opportunities to redeem frequent flyer miles

  4. The question for me is whether Virgin will recognize Flying Blue / SkyPriority status. I’m current gold with KLM and am not going to give that up by crediting to Virgin instead…

    • It has to, or the whole process won’t work.

    • I guess Premium will be the minimum….I’m just waiting for the final bits to fall into place, and then we’ll know, maybe.
      We’re holding off on a FB US redemption until it’s clearer, apart from the new BA offering to Atlanta.

  5. joe bloogs says:

    So not “GAME ON” at all, just another step

    The only place I’ve been seeing this “SAGA” for over 2 years is on Hfp.

  6. It’ll be interesting to see how this develops. It puts Delta in a strong position, the largest Virgin shareholder, and about 9% ownership of AF-KLM in addition. Will Virgin change for the better, for me a fur coat and no knickers airline, most of their customers seem intent on 6 hour clubhouse visits.
    I’d love to see JetBlue competing across the Atlantic, the few flights I’ve done in the US with them have been very good, I still want to try the Mint seat coast to coast.

  7. Graham Temple says:

    I have a stack of KLM flying blue miles built up over a while, some of which have less than a year to run. Will I be able to book Virgin redemptions with Flying Blue miles do you think? Do you see FB and Virgin miles merging at anytime with transfer of points into the combined scheme? Finally one of the great things about Virgin miles is that as long as you keep adding miles e.g. via a credit card, they never expire. This would be a real blow if this disappeared.

    • Who knows? (Re FB awards on Virgin) I’m hoping to get 2 x Upper Class redemptions, but as Virgin make that very difficult for their own members, what chance for us Premium FB members ?
      And as for merging programs …. no way.

    • Spaghetti Town says:

      flying blue miles don’t expire as long as you have qualifying account activity every 24 months

  8. NickAnon says:

    Ive got a couple of flights coming up in about 3 weeks on KLM and Air France, if I cant credit these to Virgin at the time, could I do so a few weeks (or months) later, when everything is finalised?

    • I guess, in this type of case, there is probably a ‘from this date’ flights are authorised to be credited.

      Let say for example flights taken from the first of february 2020 are authorised to be credited and the announcement is made in april 2020.

      Or the annoncement is made in may 2020 and that’s only for flights taken from the fisrt of june 2020.

  9. Hi,
    I have a virgin credit card and I’m on course to get the companion voucher.
    My question is whether the companion voucher can now be used with Air France/KLM?
    Thanks

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