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Maturity and Growth in the Delta-Virgin Atlantic Partnership

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Maturity and Growth in the Delta-Virgin Atlantic Partnership

Maturity and Growth in the Delta-Virgin Atlantic Partnership
March 27
12:00 2015

MIAMI — The Delta-Virgin Atlantic partnership is maturing quickly, and thanks to upcoming schedule changes, they are beginning to show the focus that was initially described by the two carriers when Delta acquired its minority ownership stake.

The second summer of coordinated operations sees nearly 40 daily return flights between the USA and the United Kingdom in a schedule which takes effect this coming weekend. Several seasonal flights are included in the new offerings as is a “memory schedule” banking of seven nightly flights from New York’s JFK airport to London Heathrow each night.

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(Credits: via Commons)

For the transatlantic commuter the combined operation offers hourly flights departing JFK between 6:30pm and 10:30pm, plus two extra flights at 7 and 8pm. This schedule nearly matches the eight flights offered each night by oneworld partners British Airways and American Airlines; the latter pair also operates a second daytime flight compared to one from Delta/Virgin Atlantic. The New York – London market is one of the most competitive intercontinental routes in the world and the joint venture efforts are squarely focused on making it a competitive one.

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The additional routes, some of which are seasonal, fill out the overall travel options nicely for passengers. Adding an additional frequency between London and Los Angeles – the so-called Red Carpet Route – again brings the Delta/Virgin Atlantic pair close to the total frequencies of the competition, though British Airways’ use of the A380 on the route ensures that the number of available seats will remain squarely in favor of the larger pair. Virgin Atlantic is taking advantage of the opportunities presented by the new Tom Bradley International Terminal to build a Virgin Clubhouse Lounge at LAX for the first time. Upping the passenger experience game should help to keep pace even where the operations  are a bit smaller.

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(Credits: Benjamin Bearup)

The two companies are also highlighting the growing number of passengers connecting onwards between Delta and Virgin Atlantic at one of the USA gateway cities. The two see 10,000 passengers monthly making such connections and expect that the number will increase as the new routes are adjusted, particularly as Virgin Atlantic takes over some historically Delta routes such as Atlanta-Manchester or adding service to Delta hubs as is the case with the new London-Detroit route starting on 1 June 2015.

 

United Airlines lacks a transatlantic partner at Heathrow which limits the company’s ability to compete in the market. With only six US destinations offering service to London the carrier has only ~15% of the market share compared to 24% for Delta/Virgin and nearly 60% for BA/AA. United has 5 daily flights from its Newark hub to Heathrow, a far smaller market share than the other two groups offer from JFK. That said, United pushes much of its connecting traffic through other hub airports in Europe and also has more direct service to smaller UK destinations, allowing it to focus the London service on passengers terminating at Heathrow more than connections, a move which should help yields a bit.

Total frequencies and seat count into the USA still trail the BA/AA pair by a decent clip (15 destinations versus 22) but the realignment of operations brings Delta and Virgin Atlantic into a much more competitive position. Yes, Virgin Atlantic had to give up some “prestige” routes such as Tokyo-Narita service to make the new schedule work. But the coordinated effort presents solid potential for profitability and that is hard to ignore.

 

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Seth Miller

Seth Miller

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