If Delta passengers need to connect to a destination not already served by its extensive network, they could do so more easily through one of its Skyteam partners' hubs in Europe, which, compared to Heathrow, are a breeze to connect through. And when they land in Paris, Amsterdam, Madrid, Rome or Milan, Delta passengers can take thousands of flights serving hundreds of destinations. At Heathrow, Virgin can take Delta passengers to 18 destinations, most of which it already serves. Even if Virgin wanted to join Skyteam (it never joined Singapore's Star Alliance), Virgin's limited route network would be of little benefit to the alliance.
If that weren't enough, Virgin is also hemorrhaging cash. The airline posted a pretax loss of 80.2 million pounds ($129 million) for its fiscal year ending last February. In fact, the company's losses for the last two fiscal years have wiped out all profits made in the last five. Virgin's problem is that its business model at Heathrow is basically broken. The airline relied on the British airline BMI to feed up to 25% of its U.S. and international planes with domestic travelers. BMI had a massive 11% share of Heathrow's landing slots – two to three times as many as Virgin. But British Airways blew up that cozy arrangement by recently acquiring bmi, giving the flag carrier 51% of Heathrow's landing slots. While regulators have forced BA to relinquish some domestic slots to Virgin, they could never replicate BMI's heft at Heathrow, leaving it scrambling for a domestic partner airline.
But Delta and its Skyteam partners are a poor substitute for BMI. While Skyteam's European airlines could theoretically connect their passengers through Heathrow, it wouldn't make sense as they could fly them directly to almost everywhere Virgin flies and beyond both faster and cheaper. Skyteam already operates the most flights over the Atlantic, with over 250 daily departures, so there is little need to add more flights, especially on the heavily traveled transatlantic route. Skyteam was granted anti-trust immunity by the US and the EU, allowing them to legally collude on prices. Regulators may not look too kindly on Skyteam adding yet another airline to the heap and could even go so far as to reject Virgin's entrance into the price setting cabal. That would effectively kill any minute benefit that would come from a tie up with Delta and its partners.
But probably the biggest reason Delta shouldn't get in bed with Virgin Atlantic is Sir Richard Branson, Virgin Atlantic's billionaire founder and largest shareholder. His Virgin holding company owns the other 51% of Virgin Atlantic, giving Branson total control of the airline. Steve Ridgeway, Virgin Atlantic's chief executive, told Bloomberg News that Sir Richard is unlikely to relinquish control of Virgin Atlantic as part of a possible sale of Singapore's 49% minority stake. That should come to no surprise to anyone who has ever flown Virgin Atlantic or knows anything about Sir Richard at all. This is the man who recently commissioned four designers to create lifelike ice cubes of his head for passengers' drinks in Virgin Atlantic's tony "upper class" cabin.