Delta Air Lines, the second-largest airline in the U.S. (after United) will reportedly pay $360 million for a 49% stake in Virgin Atlantic (a stake that had been owned by Singapore Airlines).
More Business-Friendly Routes to London
What this does for Delta is it beefs its London Heathrow routes – from New York and other U.S. cities – which are prized for their popularity with the lucrative business travel trade. Slots at Heathrow, a global hub, are notoriously difficult to come by and the Virgin Atlantic stake is expected to significantly increase Delta’s slots there.
Rick Seaney: The Mystique is Gone
The push toward a bigger slice of the corporate travel market by all U.S. legacy carriers is a reflection of what air travel analyst Rick Seaney calls the “ongoing prospects of a prolonged worldwide economic malaise” which has spawned physical mergers and virtual alliances such as the Delta-Virgin Atlantic deal. “After over a decade of poor financial results,” said Seaney, “airlines are throwing in the towel on the era of the mystique in air travel for the relative safety of being too-big-to-fail, and a 12% return on capital.”
British Airways to Virgin: ‘Knee in the Groin’
The latest Virgin Atlantic news has revitalized its ongoing feud with dominant Heathrow carrier British Airways. Willie Walsh, the CEO of British Airways, said earlier this week that if the Delta deal went through, Virgin Atlantic would disappear in five years. Virgin founder Richard Branson then bet Walsh a million pounds that that would not happen. Walsh volleyed back that instead of betting money, how about a “knee in the groin”?
Branson’s Outrageous Insult to British Airways
The antagonism dates back at least to the year 2000 – as FareCompare reported earlier, that’s when “British Airways was holding a live televised press conference to announce sponsorship of the London Millennium Wheel when a sharp-eyed Virgin employee noticed the giant Ferris wheel lying on its side. Branson quickly hired a blimp to fly over the site bearing a banner proclaiming, ‘BA Can’t Get It Up’.”