APPROVED: Virgin Australia and Delta alliance to challenge Qantas

APPROVED: Virgin Australia and Delta alliance to challenge Qantas

Virgin Australia is gearing up to challenge Qantas for a larger slice of the lucrative US travel market, following final US government approval overnight for its alliance with US carrier Delta Airlines.

The partnership will see the Virgin Australia and Delta share bookings, routes, lounges and frequent flyer programs, similar to Virgin Australia's current arrangements with Etihad and Air New Zealand and the recently-inked agreement with Singapore Airlines.

Virgin Australia CEO John Borghetti has already spoken of his desire to see Los Angeles become the airline's "second international hub" (alongside Etihad's Abu Dhabi base) and says he plans to have the Virgin Australia-Delta alliance "up and running by the end of the year."

The scheme not only taps Delta’s reach into the North American market but also paves the way for Virgin Australia to open new routes into the US, with a direct service to San Francisco - abandoned earlier this year by Qantas – said to be on the shortlist.

Travellers will also have access to connections through to Canada, Mexico and New Zealand, beyond the primary Australia-USA trunk route.

Both Virgin Australia and Delta have pledged not to reduce flights below their current levels of a joint 22 weekly flights for six months of the year during the high season and 17 flights during the off-peak seasons.

The combined market share of Virgin Australia and Delta of the ANZ-US market is estimated at 21%, well behind both Qantas (at 40%) and the Star Alliance carriers United and Air NZ share (39%).

Impact analysis

The Virgin Australia-Delta alliance will likely mean changes to both flight times and destinations, with the airlines flagging their intent "to fully cooperate on network planning and distribution to deliver a more attractive and competitive service for customers".

In other words: look for the removal of duplicated routes and timetables. It's the clearest sign yet that a Virgin Australia route to San Francisco and other destinations outside Los Angeles is on the cards.

Expect also to see further codeshared flights -- Virgin Australia flights with Delta's DL code, and vice versa. The next slate of codeshares starts on May 21.

Virgin Australia's flight codes -- either the old Virgin Blue DJ code or the old V Australia VA code -- will be added to Delta's flights from LAX to San Francisco, Las Vegas, Detroit, New York JFK and Orlando.

Delta's DL flight codes will appear on Virgin Australia flights from Sydney to Brisbane, Melbourne, Perth, Adelaide, Canberra, Auckland and Christchurch.

A notable omission from the codeshares on this side of the Pacific is flights to New Zealand's capital, Wellington. Virgin Australia and its trans-Tasman partner Air New Zealand promised the Australian and New Zealand governments they would increase flights to Wellington as part of their trans-Tasman joint venture agreement.

For a clue to other possible Virgin Australia codeshares, take a look at Delta's route map from Los Angeles:

Also hidden in the ruling is a clue to the joint Virgin Australia and Delta strategy: flights across the Pacific on large Boeing 777 aircraft, rather than following Strategic Airlines' plans to fly smaller Airbus A330s across the Pacific (the same type that Virgin is using on its Sydney to Perth Coast-to-Coast service).

It would also appear to nix the likelihood of moving one of Delta's larger ex-Northwest Boeing 747-400 planes to the Australian routes.

John Walton

John Walton

@thatjohn

Aviation journalist and travel columnist John took his first long-haul flight when he was eight weeks old and hasn't looked back since. Well, except when facing rearwards in business class.
 

9 comments

  • Jack

    Jack Melon

    11 Jun, 2011 06:30 pm

    Absolutely Great News! All thats left is Singapore Airlines and virgin is gold!

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  • Daniell

    Daniell

    11 Jun, 2011 07:25 pm

    Not quite 'Gold', Jack. There's the slight issue of the $100-150m loss they are facing. You do realise that all this expansion and product upgrade costs money, that VA doesn't have, don't you? I would hope that your support equals to lots of ticket purchasing..............
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  • Jack

    Jack Melon

    11 Jun, 2011 07:38 pm

    Umm it only cost 35 Million to re-vamp, hardly anything. And if you diddnt know if they were going broke which they obviously not Richard Branson will keep Virgin flying. Every airline lost heaps of money during that time, plus look at Qantas they are nearly dead, they have lost basically everything, there planes are not equiped, there old, there staff are going on strikes, there senior members are going to virgin, they are moving offshore (spirit of Asia) virgin has partnered with the biggest airline in the world, asia and NZ . Trust me you wait virgin will be the best, qantas can not match it. And plus they have new name, livery, business class, new uniforms, menu, lounges, FFP, aircaft, sky interior, new ife soon which will be the best, new fare types, re-vamped economy class, the new seats have been voted the best in the world! and alliances with Delta, Air NZ, Skywest, Singapore Airlines and Etihad And so much more, the way virgin was it was bound to loose money, but now it will be the best airline to fly in Australia, trust me! Just wait till the whole game change product is re-vamped, trust me John Borghetti knows what he is doing, he has transformed virgin into the best airline for choice in australia, and introduced/changed so many thing that is mind bockling.  

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  • Noob

    Noob

    11 Jun, 2011 08:24 pm

    There is nothing wrong with a loss if it is paying for infrastructure critical to the future of a company. Maybe Qantas should take a leaf out of Virgin's book and instead of cutting costs and brining the brand down invest in the future and THERE STAFF! 

    The way they have been treating there staff is disgusting, and AJ's blatant disregard for their importance to the airlines success is sickening. Without good staff an airline is nothing more than a bunch of metal flying objects. Gosh I hope AJ resigns....... 

    And Daniell, you are a Qantas staff member I have seen another post on this site where you said you were - Please try and make your voice heard, if that is possible, Qantas shouldn't go down because management trying to capatalise on short term profit. 

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  • Jack

    Jack Melon

    11 Jun, 2011 10:03 pm

    I have to agree! The staff is what makes the company fly high and the best, it's what i live about virgin, there enthusiansim, passion and how friendly and nice they are, with just a bonus with their hot looks ;). But seriously, make the staff happy and give them what they want, without them a company cant run, no brainer!

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  • Chloeglow

    Chloeglow

    12 Jun, 2011 10:41 pm

    Ok. Irrespective to some of the irrevelant banter I have come across, lets just all agree that this new alliance is going to challenge Qantas in some form or another. A little competition is good in my opinion. Lets just say Qantas reigned supreme and they were the only airline of choice on offer (not withstanding their low cost carrier, jetstar) and Tiger (which i also highly doubt will be around for long). Id be a little concerned! Qantas got complacent being on the top for so long. Ansett collapsed and all the fares went up because the australian public had no other choice but to fly with them. The service standard dropped and so did alot of aspects of their aircraft maintenance. As I have read and having spoken to a few Virgin staff members in the lounge, I have been led to believe that Virgin arent trying to be number 1 in Australia, but a means to a better and alternative option to flying Qantas. Since the rise of Virgin, has anyone not noticed the upgrading of various terminals and so fourth on Qantas's part? I think its made them open their eyes a little! If u snooze too long, you lose! You will get many varying passengers wanting different things when they travel. There are the ones that will always go for the cheapest fare option, regardless of the reliability and the service.  This cannot be helped unless you want to run at a loss.  And there are the ones that purely travel on airlines that provide the most benefits for loyalty. At this point in time, Qantas has the biggest slice of the cake when it comes to these travellers. With Virgin only wanting 20% (any more is added bonus) of the corporate market, I think theyre aiming to be more of the Middle man who provides decent fare options but also providing excellent service and now, some  more added benefits for frequent travellers! Myself and my colleagues are looking forward to some exciting changes and some better quality lounges and so fourth. Qantas's club lounge and businesses are starting to get tiresome! Only time will tell how all these new alliances and terminal upgrades will pan out for the future of Virgin Australia. Until then, there will always be the critic who wants to put forward their 2 cents worth!

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  • Alex

    tm_smile

    12 Jun, 2011 11:34 pm

    I don't understand why some people are so against Qantas. Apparently its become an accepted sport to bash the living daylights out of our national carrier. While I believe Qantas are far from perfect, is it really an ideal situation where Virgin dominates Australian skies to a point that Qantas becomes the next Ansett and we are left with an airline that can rest on it's laurels (all over again)?

    Both airlines have a place in the sky and each have qualities that mean some people prefer one over the other. Personally, i think that Qantas' position in oneworld gives it the upper hand as the recognition and benefits associated with elite status is more streamlined and clear. Virgin's agreements with various airlines can sometimes lead to confusion as to what benefits one can expect.

    I quite like the service of Virgin and the processes for each flight as cabin crew from Virgin adhere much more closely to company handbook regulations while Qantas can be a bit hit and miss (they're really good when they're good, but can be attrocious if bad) and have become a bit too 'familiar'. Qantas also needs to work on streamlining their cabins as there are far too many variations - take for example this past weekend where four business flights i took involved the millenium, dreamtime and convertible seats across 4 flights). Add the recent skybed adition to PER-SYD/MEL and thats 5 domestic seat possibilities for Cityflyer flights.

    I look forward to seeing Qantas lift their hard product inflight in response to the refresh planned for Virgin planes (on demand IFE for one domestically). It will also be interesting to see Virgin maintain the current food service for flexi and premium guests as the new service process is causing significant unrest amongst cabin crew.

    If both airlines remain competitive, we the flyers end up being the winners.

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  • Daniell

    Daniell

    13 Jun, 2011 12:27 am

    Chloe, Noob assumes I'm QF staff. Apparently I said I was in a post. Incorrect. I have never worked for an airline and do not even live in Australia anymore. I have an interest in aviation and travel extensively, on MANY airlines. I am self funded and do not use Company funded travel. I was a loyal Ansett traveller, and whilst in it's heyday it was a trendsetter, the last 5 years before it's demise it was certainly not. Australians tend to forget all the bad things when a company no longer exists. I have used VA approx 12 times or so. I can't say I was overly impressed. On a nmbr of flights the check in staff were very lax and indifferent, and it remains the only carrier I have viewed a few crew members being actively rude or aggressive, as opposed to indifferent. Twice on SIA in business class the crew have been ineffectual. On one occasion I was told I couldn't have a coffee as the crew were offering refreshments in 30 minutes. Another occasion the crew were particularly officious. Then again I have encountered excellent service. I have used Virgin Atlantic numerous times, and they have certainly lost their gloss and no longer innovate. Living in the UK I can attest that many here feel the same. I would certainly fly BA in preference. I have encountered lazy crew on QF, and service typically Australian. I can, however, say that I have also encountered the most chatty, friendly and service orientated staff on this airline too. Their product, particularly on the A380, is outstanding. It wins numerous awards, yet if you listen to some of your contributors here, it's become a national pastime to criticize Qantas. Talk about the tall poppy syndrome! As for maintenance, every airline suffers mishaps. It makes headlines in Australia because it's the national airline, plus there are union/company disputes occuring at present. Where was the praise when Qantas sent aircraft to Egypt to help Australians? Very selective memory. Fly in Europe where you receive no catering or entertainment on flights of 3 hrs, and you may just appreciate Qantas. VA has lifted their game to compete. If QF did not offer a similar excellent product, they would not have done so. There would be no need. If there is a better domestic product in the World, do enlighten me, because I have not encountered it.
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  • John Walton

    John Walton

    13 Jun, 2011 01:17 am

    I've removed a number of comments that were descending into personal attacks. Please keep it civil.

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