DOT Gives Final Approval for Delta-Virgin Australia Transpacific Venture

The U.S. Department of Transportation has granted final approval of antitrust immunity for a transpacific alliance between Delta Air Lines and the Virgin Australia Airlines group. This will allow the carriers to implement a joint venture on services linking the United States, Australia and the South Pacific.

The two airline groups plan to launch their transpacific joint venture by the end of 2011.

Delta Air Lines and Virgin Australia Airlines claim the grant of antitrust immunity will expand travel choices and competition for consumers, by allowing them to provide a seamless product and coordinate flight schedules to maximize convenience. The airlines will collaborate through codesharing, coordinating fare products and services and extending frequent-flyer program benefits and lounge access to customers of both carriers.

“This final ruling by the DOT will expand competition and enhance customer service and travel options for passengers flying between the U.S. and Australia,” says Delta CEO Richard Anderson. “We thank the DOT for their thorough review of our application and welcome their conclusion that consumers will benefit from a strong partnership between Delta and Virgin Australia.”

V Australia, the long-haul arm of the Virgin Australia Group of airlines, operates a fleet of Boeing 777-300ERs, outfitted in three-class seat configuration

Virgin Australia CEO John Borghetti says the antitrust immunity is key to enabling an integrated alliance between Delta and Virgin Australia Airlines.

“We are extremely pleased that the way is now cleared for us to work together with Delta Air Lines to deliver a more attractive and competitive service for travelers in Australia and North America,” says Borghetti.

“We have been operating a successful partnership with Delta for the past three years. However, today’s approval will allow us to work together far more efficiently to achieve better schedules, connections and network coverage for our guests,” adds Borghetti. “The Delta alliance is a key plank in our strategy to build an international network of airline partners that offers global coverage. Now that we have DOT approval, we will move quickly to implement the joint venture and plan to have it up and running by the end of the year.”

According to Delta and Virgin Autralia, the alliance will create a fully integrated network able to serve thousands of city-pairs in North America and the South Pacific, providing numerous destinations which otherwise would not be accessible to customers.

Delta itself serves a single point in Australia, Sydney, and Virgin Australia flies only to Los Angeles. However, the carriers say the antitrust-immunized alliance will allow the airlines to cooperate fully on network planning and distribution to deliver a more attractive and competitive service for customers. A detailed economic study conducted by Compass Lexecon estimated annual consumer benefits of up to $54 million would be produced by the joint venture.

The Boeing 777-200LR is the longest-haul aircraft type in Delta Air Lines' huge fleet. Delta operates 10 of the ultra-long-haul widebodies

Antitrust immunity is the latest step in an enhanced alliance between Delta and Virgin Australia, which began with their first codesharing flights in January 2010. On May 21, 2011, the codesharing arrangement was expanded to add five new destinations in Australia and New Zealand to Delta’s network.

Delta customers can now connect in Sydney on Virgin Australia flights to Brisbane, Melbourne, Perth, Adelaide and Canberra in Australia, and to Auckland and Christchurch, New Zealand. Virgin Australia customers can connect in Los Angeles to Delta flights to San Francisco, Las Vegas, Atlanta, Detroit, New York-JFK and Orlando, Fla.

Formerly the Virgin Blue Group of airlines, Virgin Australia Airlines was launched in 2000 as the first sustainable low-fare airline in Australia.  Starting out as a single airline operating a single route with just 200 team members, the group employs over 7,000 people today and includes domestic airline Virgin Australia (formerly Virgin Blue); international long-haul airline V Australia; international subsidiary Pacific Blue, which has routes throughout the South Pacific; and Polynesian Blue, a joint-venture airline with the Government of Samoa.

Virgin Australia Airlines is currently in the process of re-launching its domestic and short-haul international product, and both V Australia and Pacific Blue airlines will operate as Virgin Australia by the end of 2011. The group also includes the frequent-flyer and loyalty program Velocity and Virgin Australia’s package-vacation arm, Blue Holidays.

Today Virgin Australia operates a fleet of 89 Boeing 737NG, 777-300ER and Embraer E-Jet aircraft flying to 32 Australian and 16 international destinations including the United States, Abu Dhabi, New Zealand, Fiji, Samoa, Tonga, Vanuatu and the Cook Islands.

The Virgin Australia Group has an alliance with Abu Dhabi’s Etihad Airways, providing guests a one-stop service to Europe, and has recently announced partnerships with Air New Zealand, Skywest Airlines and Singapore Airlines which will see it expand its footprint in the South Pacific, Asia and regional Australia.