Delta Air Lines and Virgin Atlantic Airways have filed an application with the U.S. Department of Transportation for antitrust immunity for their new joint venture on flights between North America and the United Kingdom. The airlines 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 effective operation of the two joint ventures.
In their DOT application, filed on April 8, Delta and Virgin Atlantic pointed out that almost 60 percent of the slots at London Heathrow Airport are controlled by the American Airlines-British Airways alliance. For his part, Willie Walsh, chairman of International Airlines Group, parent of British Airways, has previously cast doubt on the future of Virgin Atlantic in an alliance with Delta. Indeed, he recently bet Virgin Atlantic founder Sir Richard Branson “a knee in the groin” that Virgin would not exist in its present incarnation in five years if Delta buys a 49 percent equity stake in Virgin as planned.
Craig Kreeger, Virgin Atlantic’s new chief executive, himself an alumnus of American Airlines, told Travel Pulse that the Delta connection would strengthen Virgin’s network but not weaken or diminish its unique “ethos.” He said the connections would help Virgin move away from dependence on a variable British economy and would support Virgin’s other goals, such as bringing in new, fuel-efficient aircraft. In his public statement on the filing, Kreeger said that “consumers will reap the rewards of the joint venture on services between the U.K. and the United States, Canada and Mexico through … the highest standards of customer service and much more effective competition to and from Heathrow.”
If the joint venture does get antitrust immunity from the DOT, Delta and Virgin Atlantic will 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 say they will be have a greatly expanded network at Heathrow despite slot constraints, which have limited the growth of both airlines in the U.K.-North America market.
The two carriers plan to operate a total of 31 peak-day round-trip flights between the U.K. and North America, 23 of which would operate at London-Heathrow. Delta and Virgin also said they plan to codeshare on flights, have reciprocity on frequent-flyer programs, and shared access to each other’s airport lounges.
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