Could Virgin Group Start its Own Airline Alliance?

Wendy Perrin interviews Sir Richard Branson, who answers Steve Belkin’s question and says he would consider starting his own alliance.

Steve imagines a world where Virgin hooks up with “Etihad Airways, Malaysia Airlines, Alaska Airlines, El Al…”

I usually leave the industry commentary to Cranky Flier except where it touches on those things I’m uniquely positioned to speak on. But Wendy Tweeted this interview to me, and I couldn’t help but add my two pence.

Virgin really is ‘left out’ of the current alliance game. They’re not joining oneworld, anchored in Europe by British Airways. Though they are 49% owned by Singapore, Star Alliance is pretty well anchored in Europe with Lufthansa and Miles & More partners Swiss, Brussels, Austrian, and soon-to-be British Midland.. in addition to LOT and Scandinavian, Croatian, Aegean, et al.

That leaves only Skyteam as a possibility for them among the existing alliances, but Virgin doesn’t really seem like the best fit for an alliance anchored in Europe by Air France-KLM already, and they’re a cut above most Skyteam carriers (though Virgin’s frequent flyer program isn’t the most rewarding, which would help them fit into Skyteam!).

What cerainly would be nice would be an alliance of Virgin-branded carriers. In addition to Virgin Atlantic, there’s Air Nigeria, V Australia, Virgin America, Virgin Blue and subsidiaries… They own a stake in Air Asia X. If there was reciprocal earning and burning just across the Virgin brands that would be a start.

And Steve Belkin suggested ‘cherry picking’ out of existing alliances, Singapore hasn’t seen their 49% stake in Virgin as having performed well, they’ve publicly talked of divesting their stake. But Singapore always seems as though they’re a reluctant member of Star Alliance at best, they don’t like releasing premium cabin award seats to their partners for sure. If Singapore were the anchor of their own alliance, it could be fun to imagine.

And with Singapore, one could imagine bringing in an unaligned Middle East carrier.

But that’s probably as far as they could get, there just aren’t that many quality airlines left outside fo the Middle East. (And contra Steve, I’m not sure an alliance could successfully integrate El Al with a Gulf carrier.)

And while Alaska plays with anyone, they’re currently closest to Delta they also partner with American. It would be hard to imagine them joining an alliance and foresaking most others.

That would leave their only North American entry as Virgin America. And going after Frontier, Airtran, or Westjet would hardly seem to work. The pickings are jus slim, and other alliances have failed or failed to get off the ground (Wings, Qualiflyer). So I have a hard time imagining this, but I never really count out Sir Richard. It’s hard to know when he’s blowing smoke in the clouds or when he’s serious, and he just muses here, so it’s clearly far from serious at this point.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Pingbacks

  1. […] Wendy Perrin of Perrin Post recently put a reader question from Steve Belkin (you may recall my posts on his Competitours personal amazing race offering) to Richard Branson about the possibility of a future Virgin Alliance – you can see Richard talking about a Virgin alliance here.  Last week Gary Leff commented on which non-Virgin airlines might be interested in joining Virgin in a fourth major airline alliance. […]

Comments

  1. Gary, you forgot Virgin Galactic…. They’ve got a good potential stake in an untapped market ;p

  2. A Virgin Group – Singapore – US Airways tie would be a pretty good alliance, though it would be weak in Europe. Maybe Dick Branson could team up with Mike O’Deary 🙂 But seriously US is clearly the red-headed step-child of *A and SIA don’t seem too committed so could be a useful breakaway. All three of VS, SQ and US have existing partnerships

  3. Why wouldn’t Virgin join Star Alliance? While Star is quite nicely represented in Europe Virgin is not. Yes, they are hubbed in London but that’s where the Europe affinity ends. They don’t operate flights to any other European destinations. Indeed, the only routes they overlap with any *A carrier on are LHR-IAD/LAX/SFO/EWR. Being able to leverage the bmi short-haul network and the Virgin Atlantic long-haul network as part of Star Alliance would essentially make the alliance competitive with BA out of London and screw SkyTeam pretty badly.

  4. I’m with Seth. I think Virgin is a very good fit with Star. You’ve got bmi with short haul in London. Put that together with Virgin Atlantic and you have the makings of competition to BA. Virgin Atlantic alone doesn’t provide much of a challenge other than on key long haul routes.

    If Virgin tries to string together a fourth alliance with the cats and dogs, it’ll be a waste of time. The whole point of alliances is to feed traffic, right? These would all be a little too loose to really provide much feed. There’s just not enough left after the big three alliances.

  5. I really can’t see Singapore teaming up with another Middle Eastern airline, because they are directly competing (especially with Emirates on the kangaroo route).

    A Virgin alliance has been talked about for a while. There is even a Virgin around the world product which isn’t heavily promoted.

  6. @Seth, Cranky .. I get why Star could be a benefit to Virgin, I don’t get why Virgin is much of a benefit to the European Star carriers who would agree to let them in. Perhaps that’s just a failure of my imagination, but I don’t think competing in the London O/D market is enough.

  7. The European members would let them in because Lufthansa would see the benefit of giving BD feed from the international long haul, and LH could offer the other carriers something just to try and get BD profitable, or even in the worst case, a good alignment to dump BD on Virgin

  8. @Gary – I don’t think Virgin Atlantic provides any real competition to Star carriers in Europe right now. They’re primarily a threat to BA, but a mild threat. If Virgin Atlantic was willing to merge with bmi and let LH take a stake in it, then there’s a benefit to everyone.

  9. Alaska? I think Alaska is too bitter at Virgin America to ever think about an alliance with anything affiliated with the Virgin Brand.

  10. Gary, are alliance member airlines specifically precluded from partnership with individual airlines that are members of other alliances? If not, there is no reason for Alaska not to join the new alliance (or one of the existing three). Of course, it may hurt some of the partnerships, but it seems that everyone is interested in partnering with them.

    How about US Airways? Would they benefit from playing a lead role in the new alliance, or is their coverage not sufficient and therefore the alliance would be doomed? Members of their frequent flyer program certainly benefit from being part of *A, but the whole airline appears kinda swallowed by United…

  11. Why not AirTran? They’re a pretty basic airline, but nicely cover eastern and central US. Get a virgin plane to ATL and MKE(serves Chicago) and you’ve got a nice little set of hubs.

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