EY buys stake in DJ. Now what?

[leemin]

With news that EY has completed the purchase of a 4% stake in DJ, it got me thinking about what that means for Velocity.

At the moment, as far as reciprocal status benefits are concerned, EY is not the best of the international partners.

The fact that the lounge we can use is in a different terminal at AUH than you transit to/from Australia is a PITA; but a somewhat side issue.

Does anyone else agree that DJ need to push EY to recognise velocity status across a larger range of benefits? Priority baggage is one area I can think of..

 

[Moopere]

As a general comment, rather than a reflection of EY or the 4% buy-in. I'm not a big fan of partnership arrangements. Better than nothing at all, sure, but far short of proper alliances insofar as guaranteed bennies go.

The problem, in my mind anyway, seems to be that each individual partnership has its own quirky T&C. Its almost impossible to actually plan out a reasonable itinerary making use of what initially looks like partnership perks. Its pretty much smoke and mirrors in my view. Appearing to offer something whilst in reality offering almost nothing useable. I don't travel to the USA so perhaps I'm missing the main thrust of most of this.

In any case, I reckon Virgin would serve its customers better, and help sanity to prevail if they put together their own "claytons" alliance. Write up a list of bennies that they know their customers would enjoy and that would, by extension, add to VA's bottom line, then invite partners to sign up to that known quantity. Easy to administer, easy to manage, easy for customers to understand and use, presumably then translating into more customer revenue for VA + partners.

 

[QLD'r]

Interesting article today on this topic Fear for Qantas future if Virgin takeover flies | News.com.au

 

[Moopere]

... my goodness what a fear mongering article that is. Etihad buy 4%, a mere 4% of DJ, and the alarm bells are ringing "by allowing a foreign-controlled Virgin Airlines to dominate the domestic market with predatory pricing"

A 4% stake by EY will allow foreign control? Seriously? SRB owns something like 23%, he's not Australian so far I know ...

As for giving QF a good hard wake-up-and-smell-the-coffee slap to the face, well, good; the current modus operandi is not going to see them successful and they need to change.

 

[dajop]

A 4% stake by EY will allow foreign control? Seriously? SRB owns something like 23%, he's not Australian so far I know ...

And neither are NZ who own what 15% of Virgin? If one wanted to start scaremongering, if history is anything to go by, NZ's owning Virgin could be far worse for Australian jobs than EY.... (putting aside the fact that NZ are of course are very different beast to what they were in 2000/1).

 

[Jarrodbooth]

... my goodness what a fear mongering article that is. Etihad buy 4%, a mere 4% of DJ, and the alarm bells are ringing "by allowing a foreign-controlled Virgin Airlines to dominate the domestic market with predatory pricing"

A 4% stake by EY will allow foreign control? Seriously? SRB owns something like 23%, he's not Australian so far I know ...

As for giving QF a good hard wake-up-and-smell-the-coffee slap to the face, well, good; the current modus operandi is not going to see them successful and they need to change.

This goes to the perception that Qantas are competing against state subsidised carriers in the international market. True or not (I could have no way of knowing), an Etihad controlled Virgin would bring that same state sponsored discounting to the domestic market.

Of course 4% is not Etihad controlled, neither is their intention of 10% or even further than that. With Branson and Air NZ holding significant stakes in Virgin, Etihad's influence will always be limited.

But yes, Branson and Air NZ are also both foreign investors, but they're from white English speaking countries so the (foreign controlled) News Ltd is cool with that.

Edit: Sorry, to answer the OP, I think the 4% buy was more of a symptom of Etihad and Virgin's recent collaboration than a signal for it to go further. Etihad say that they buy small stakes in partner airlines as a matter of course. Yes it opens up questions of further collaborative efforts, which is the intention, but I think that will come later.

 

[Justchecking]

And yet, it is true that a controlling interest buy up and the ability for a full takeover are now possible for the domestic arm. Why anyone would want to though, is a different matter. Of course if DJ ever got to a profitability stakes close to QF in the domestic market then I suppose the why would be answered.

 

[moa999]

Amazing where Etihad gets the money.
This is a 10-yr old airline that has never made a profit...
EDIT--- a very small profit in 2011 - Etihad Airways’ bright profit result against a dark background | CAPA

Etihad could buy most of AirNZ off the NZ govt, mop up the rest of Virgin Australia and Air Berline, pickup Virgin Atlantic which is for sale, somehow get something in the US and presto... worldwide domination.

Ignoring pesky things like air rights etc...

 

[Moopere]

But yes, Branson and Air NZ are also both foreign investors, but they're from white English speaking countries so the (foreign controlled) News Ltd is cool with that.

I hate to have to agree, but I think there is a whiff of truth to this. I thought so too when I read the article.

 

[The Rok]

EY have stated that they want to take their stake in DJ to 10%, the maximum they can currently hold due to the current allocation of shares.

They are currently purchasing shares from the open market.

I have always said that I thought that if any airline was in the position to or indeed had the desire to purchase Virgin Atlantic then Etihad would be it. Perhaps this is all a part of a long term goal to take over the Virgin group airlines globally? Start with stakes in the key Virging airlines to feel out the market before slowly gobbling them all up. That would allow EY extended access to 3 important markets for them…… LHR, North America & South Africa