If you can't beat them... join them
March 2011
Never say never is how one saying goes. In opposition to the now-complete joint venture between rivals American Airlines and British Airways, Virgin Atlantic repeatedly warned of a "monster monopoly" that would result from such a union. Here's another saying: If you can't beat them, join them.
Virgin Atlantic chairman Sir Richard Branson has frequently expressed his opposition to "mega alliances." That stance seems to be softening as more joint ventures and alliances are given the go-ahead. In 2010, Branson hinted that he may consider starting his own airline alliance. Now it seems that the airline's best option could be to join an existing alliance or at least form closer ties with other alliance carriers. In January, Branson stated: "We've enjoyed being independent but we think that having some kind of alliance attached to Virgin Atlantic will make us that much stronger. We're going to need a big brother to take us through the next 30 years." Virgin Atlantic has appointed Deutsche Bank to explore business options for the airline, including a sale or strategic alliance.
The strategic review requested by Virgin Atlantic will assess market conditions and the viability of Branson's 51 percent stake in the company (Singapore Airlines owns the other 49 percent). Meanwhile, Delta and Air France-KLM have instructed banking giant Goldman Sachs to study viable options for investing in or teaming up with Virgin Atlantic. All parties have kept details rather quiet but their actions give us a clear indication of where the airlines believe the path to success is clearest.
Interestingly, Virgin Atlantic already has code-share agreements with members of the Star Alliance. These include Air China, Continental Airlines, Singapore Airlines and United Airlines. A severing of ties with some or all of these airlines would be most beneficial for the SkyTeam Alliance which features founding airlines Delta Air Lines and Air France (now Air France-KLM). What about the Oneworld Alliance? Don't forget, it was the joint venture between alliance members British Airways (now merged with Iberia under the International Airlines Group) and American Airlines that Richard Branson was most critical of. It seems that Oneworld would be the least likely to add Virgin Atlantic, but stranger things have happened. Never say never.
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