Delta Air Lines and Virgin Atlantic Airways Ltd. have applied to the U.S. Department of Transportation (DOT) seeking antitrust immunity for their new joint venture on flights between North America and the United Kingdom.
The airlines say an antitrust-immunized joint venture would allow Delta Air Lines and Virgin Atlantic to be more effective competitors on routes between North America and the U.K., particularly between the U.S. and London. They also claim the joint venture will expand the quantity and quality of travel options for customers of both airlines.
In their DOT filing, Delta and Virgin Atlantic Airways say nearly 60 per cent of the slots at London Heathrow Airport are controlled by the American Airlines/British Airways joint transatlantic business. (The joint business also embraces the transatlantic flights operated by Iberia and Finnair.)
As a result, say Delta and Virgin, the AA/BA joint business dominates air travel between the U.S. and the U.K., including the New York-London market, which is the most important business market in the world.
By combining Virgin’s Heathrow slots and U.K. brand strength with Delta’s powerful U.S. network, these airlines say their joint venture will offer significant competition in the market.
“Our proposed joint venture will mean an expanded schedule with more frequencies and destinations for customers traveling between the key business markets in the U.S. and the U.K.,” says Ed Bastian, president of Delta Air Lines. “Approval of antitrust immunity would allow travelers to take full advantage of all the aspects of the Delta-Virgin joint venture and enjoy the benefits of increased competition, particularly on flights to and from London Heathrow Airport.”
Under the proposed joint venture, Delta and Virgin Atlantic would coordinate schedules, network planning, pricing and revenue management functions, sales and other aspects of their services between North America and the U.K.
Through the joint venture, the carriers would together offer a greatly expanded network at London Heathrow Airport despite slot constraints, which Delta and Virgin say have limited their growth in the U.K.-North America market.
The two carriers would operate a total of 31 peak-day round-trip flights between the U.K. and North America, 23 of which would operate to and from London Heathrow.
According to Virgin Atlantic and Delta, the enlarged network will benefit customers of both carriers by providing greater access to key markets, improved connectivity and convenient booking options. The airlines plan to implement codesharing, frequent flier program reciprocity and shared lounge access.
In addition, if antitrust immunity is approved, Delta plans to begin new non-stop service between Seattle-Tacoma International Airport and London Heathrow, expanding competition in that business market. The new service would complement Delta’s growing international gateway in Seattle.
Delta already operates a transatlantic joint venture with fellow SkyTeam Alliance members Air France KLM and Alitalia.
In their DOT filing, Delta and Virgin are also seeking antitrust immunity for five-way coordination on U.K.-North America traffic flows among Delta, Virgin Atlantic, Air France, KLM and Alitalia to facilitate the operation of the two joint ventures.
Last year, Delta and Virgin Atlantic announced an agreement under which Delta will acquire a 49 per cent equity stake in Virgin Atlantic’s parent company.