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According to Delta’s press release and media outlets such as the New York Times, Delta Airlines and Virgin Atlantic are forming a new strategic partnership. Delta is acquiring a 49% stake in Virgin that was previously held by Singapore Airlines, who cozied up with Virgin in 2000.

On a pure deal standpoint, Delta got a cheaper price than Singapore. Singapore initially invested over $900 million to acquire the 49%. Delta is paying $360 million for that same stake. The two actually haggled over the same 49% stake two years ago but could not agree on a price.

Delta even released a promotion video on YouTube about the announcement.

http://www.youtube.com/watch?v=a2bkyldNXYc&feature=g-high-u

Anti-trust approval needs to be given by the US government, so the agreement probably won’t be officially finalized until the end of 2013. With that being said, this is potentially exciting news for travelers to Europe.

Delta is clearly trying to benefit from Virgin Atlantic’s coveted slots at London-Heathrow, which is now operating at full capacity. With that being said, it’s probably North American frequent flyers who will benefit the most from this venture.

First, and most importantly, this partnership could lead to lucrative SkyMiles redemptions on Virgin Atlantic and vice-versa. Virgin’s route map to London from the United States is far more comprehensive than Delta. Right now, Delta only offers nonstop service to London-Heathrow from five cities: Atlanta, Boston, Detroit, Minneapolis, and New York-JFK.

Virgin, on the other hand, really expands Delta’s coverage. They fly nonstops from Washington-Dulles, Miami, Orlando, Los Angeles, San Francisco, and Las Vegas, to name a few. FlyerTalkers in the Delta forum are already excited.

Is Delta’s partnership with Virgin Australia an indication of how it will relate to Virgin America?

There’s always hope!

As Tashir wrote in his post, Delta Still Not Charging Surcharges on Virgin Australia Awards and Space to Australia over Christmas, Delta SkyMiles redemptions on Virgin Australia (Virgin America’s sister airline) are a great value. The award space to Australia is surprisingly ample, even during peak travel times like Christmas and New Year’s.

If Delta can translate this availability to Virgin Atlantic, Virgin Australia’s sister airline, then getting to Europe from the United States could be quite a bit easier. More nonstops to London will be possible and the value of your SkyMiles should be a bit higher, depending on how much award inventory is released and the taxes and fees associated with the tickets.

Since Hawaiian Miles can be redeemed surcharge-free on Virgin Atlantic, we can hope the same is true with SkyMiles.

Also, if you want to see the SkyMiles earning potential on Virgin Australia flights, check out the chart below. It might give an indication on how SkyMiles will be earned on Virgin Atlantic flights.

I’ve heard about Virgin’s great lounges. What’s your take on that?

Also mentioned in the press release, Delta and Virgin will have reciprocal frequent flyer benefits and shared access to Delta Sky Clubs and Virgin Atlantic Clubhouses for elite members. Virgin’s Clubhouses are well known for their food and upscale atmosphere. I’m pretty excited at the potential to test out the Clubhouse at Washington-Dulles. For a complete list of Clubhouses in North America, check out the list here.

It’s still unclear, though, how the reciprocal agreement will work. Will Delta Medallion members have Clubhouse access when flying on Virgin Atlantic flights? Do they need to be flying Upper Class? Will SkyClub members have access anytime? We need to know more before calling this a definitive win for SkyMiles members.

Have you written about Virgin Atlantic in the past?

Actually, yes.  In my recent post, AMEX/Virgin Atlantic Transfer Bonus, I discussed the 35% bonus on Membership Rewards points transferred to Virgin Atlantic’s frequent flyer program through December 29th. Sadly, this wasn’t a great deal. Virgin imposes the dreaded sky-high fuel surcharges on all award flights, so your ticket booked with miles could end up costing over $1,000!

Scott actually wrote how to avoid this in his post, Redeem for Virgin Atlantic Upper Class without Surcharges, by instead transferring Membership Rewards to Hawaiian miles. However, this work around isn’t really a loophole anymore. As Scott detailed in his recent post, Hawaiian’s Virgin Atlantic Chart Devalued, the substantial increase in the amount of Hawaiian miles required to book Virgin awards really turns this into a poor use of Hawaiian miles.

With the newly announced partnership between Delta and Virgin Atlantic, I can see both frequent flyer programs’ miles getting a slight boost in value. Those with substantial Membership Rewards balances in particular stand to benefit, as they retain the flexibility to transfer to either airline depending on which will offer the better reciprocal redemption options.

More details will be coming in the coming months as to the exact parameters of their partnership, and I’m certainly excited to hear more.

 Recap

Delta has acquired a 49% stake in Virgin America. Details are still being hammered out and the whole deal probably won’t be finalized until the end of 2013. That shouldn’t stop us from speculating on how this impacts frequent flyers, though.

Delta SkyMiles members stand to benefit in a big way. SkyMiles are currently bringing up the rear on the Mile Value Leaderboard, but redemptions on Virgin Atlantic using SkyMiles could be big news for Delta loyalists.

The announcement of reciprocal lounge access for elites shouldn’t be overlooked, either. Virgin Atlantic elites are probably getting the short end of the stick in this deal. Delta Sky Clubs are decent but nothing to write home about. Virgin Atlantic Clubhouses, on the other hand, are renowned for their food, cocktails, and overall atmosphere.

Airline partnerships like this mean less industry competition, which almost always equates to higher airfares. However, I’m cautiously optimistic that Delta SkyMiles members will see better award redemption options to Europe.

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