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Can Sir Richard build a fourth global alliance?

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Written by editor

Richard Branson’s Virgin Group is linking its Virgin airlines together through frequent-flier programs, raising the question of whether the British entrepreneur can build a true global airline brand

Richard Branson’s Virgin Group is linking its Virgin airlines together through frequent-flier programs, raising the question of whether the British entrepreneur can build a true global airline brand or build a fourth global alliance.

Stay tuned, Sir Richard says.

Frequent fliers of Virgin Atlantic, Virgin America and V Australia will be able to earn miles on each others programs. Spending miles for awards on other Virgin airlines is being phased in through the second quarter of next year as computer systems are linked. And the three Virgin airlines will have interline agreements in place next month allowing travelers to connect within the group with one ticket and one baggage check-in

Elite status on the various airlines will be reciprocal, too, down the road. Virgin America still has to create upper tiers in its frequent-flier program.

Mr. Branson refers to the linking of his various airlines as a “quality alliance,” one that he says will “combat some of the other alliances that have taken place that generally are not quality.”

A staunch foe of alliances, particularly the linkup of American Airlines and British Airways with antitrust immunity, Mr. Branson says he would never rule out joining one, or building one. But, he adds, “I think we can create our own kind of alliance based on quality.”

San Francisco-based Virgin America, which has flown mostly trans-continental routes in the U.S. since its launch in 2007, has expanded to Canada with flights to Toronto and plans to begin service to Mexico. It recently ordered 60 new Airbus jets. V Australia is growing in the Pacific as well. Virgin carriers, Mr. Branson said while at the National Business Travel Association convention in Houston, “are filling in the gaps quite quickly.”

Virgin America is also taking the audacious step of starting flights in December to Dallas-Fort Worth, home to both American and Southwest Airlines. It’s the first mid-continent destination for Virgin America, and one the company knows well. Virgin America’s chairman is Donald J. Carty, the former chairman and chief executive of American, and its CEO is David Cush, a longtime American Airlines veteran.

Virgin America will fly to Dallas-Fort Worth International Airport from both Los Angeles and San Francisco. American dominates those routes; Southwest can’t begin non-stop service until 2014 under terms of a settlement of restrictions on its home airport, Dallas Love Field.

Mr. Cush believes the local Dallas economy is resilient enough to support new service, especially when a new airline comes in with cheap prices that will stimulate new travel.

And with its foray domestically, would Virgin Atlantic tie into the Dallas market as well from London? The route currently is served only by American and British Air, and as a condition of approval of anti-trust immunity for their alliance, the two would have to give up takeoff and landing slots at London Heathrow to a carrier that wanted to start London-Dallas flights. Virgin would be the likely contender.

Mr. Branson said the airline is studying that. A key question will be timing of slots made available, and what the cost would be since a new airline isn’t given slots under terms of the deal, but would lease them from AA-BA.