Delta Air Lines and Virgin Australia Airlines are poised to create a joint trans-Pacific venture after winning initial US approval.
The airlines will collaborate through code-sharing, co-ordinating route and product planning and extending frequent flyer programme benefits and lounge access.
Delta currently only serves Sydney in Australia and Virgin Australia’s international airline V Australia flies only to Los Angeles. The alliance will create an integrated network able to serve thousands of city pairs in North America and the South Pacific and provide heightened competition for established carriers such as Qantas.
The proposed antitrust immunity granted by the US Department of Transportation will allow the airlines to fully co-operate on network planning and distribution. The DOT’s ‘show cause order’ proposes to grant anti-trust immunity to the alliance but allows for a further period of public comment. It will then make a final decision.
Annual consumer benefits of up to $54 million are expected to be produced by the joint venture. VAA chief executive John Borghetti said: “The Delta alliance is a key plank in Virgin Australia’s strategy to build an international network of airline partners that offers global coverage.
“If approved, Delta customers will be able to connect seamlessly to Virgin Australia’s extensive network of destinations across Australia, New Zealand and the South Pacific and earn frequent flyer points in the process.”
Delta network, revenue management and marketing executive vice president Glen Hauenstein said: “We appreciate the DOT’s thorough review of our alliance with Virgin Australia and recognition of the important customer benefits. This alliance will bring more effective competition to the region and provide consumers greater choice of destinations, frequencies and schedules.”
Delta and VAA began code sharing in January 2010 and will expand the arrangement from May 21 by adding five new destinations in Australia and New Zealand to Delta’s network.