Delta and Virgin Atlantic to Form Strategic Alliance

Virgin Atlantic and Delta crew in New York. (Virgin Atlantic)

 

Virgin Atlantic and Delta crew in New York. (Virgin Atlantic)

Delta Air Lines and Virgin Atlantic Airways Ltd have reached an agreement for a new joint venture that will create an expanded trans-Atlantic network and enhance competition between the UK and North America, offering greater benefits for customers travelling oN those routes.
As part of this joint venture agreement, Delta will invest $360 million in Virgin Atlantic, acquiring a 49% stake currently held by Singapore Airlines.  Virgin Group and Sir Richard Branson will retain the majority 51% stake and Virgin Atlantic Airways will retain its brand
and operating certificate.
Highlights of the agreement include:
* A fully integrated joint venture that will operate on a “metal neutral” basis with
both airlines sharing the costs and revenues from all joint venture flights
* A combined trans-Atlantic network between the United Kingdom and North America with 31 peak-day round-trip flights
* Enhanced benefits for customers including cooperation on services between New York
and London, with a combined total of nine daily round-trip flights from London Heathrow to John F Kennedy International Airport and Newark Liberty International Airport
* Reciprocal frequent flyer benefits
* Shared access to Delta Sky Club and Virgin Atlantic Clubhouse airport lounges for
elite passengers
The airlines will file an application with the US Department of Transportation for antitrust
immunity, which will allow a closer relationship and coordination on schedules and operations.  The transaction also will be reviewed by the US Department of Justice and the European Union’s competition regulator and other relevant authorities.  The share purchase and the joint venture are expected to be implemented by the end of 2013.
Delta CEO Richard Anderson commented: “Our new partnership with Virgin Atlantic will strengthen both airlines and provide a more effective competitor between North America and the UK, particularly on the New York-London route, which is the largest airline
route between the US and Europe.  By combining the strengths of our two companies in a joint venture, we can provide customers with a seamless network between North America and the UK, and continue building a better airline for our customers, employees and
shareholders.”
Steve Ridgway, Virgin Atlantic Chief Executive, added: “Consumers will reap the rewards of this partnership between two great airline brands on services from the UK to the USA, Canada and Mexico through a shared ethos in the highest standards of customer service. This unique joint venture will deliver much more effective competition at Heathrow.
“Both airlines are confident that the [British Government’s] Department of Transportation will be as convinced as we are of the extensive consumer benefits arising from this joint venture, with expedited approval being granted by the end of 2013.  The trans-Atlantic market is Virgin Atlantic’s heartland – it’s where we started.  By aligning with Delta we can continue to grow our North American network and offer greatly enhanced connectivity across the USA.”
Virgin Atlantic President, Sir Richard Branson, commented: “This is an exciting day in Virgin Atlantic history.  It signals the start of a new era of expansion, financial growth and many opportunities for our customers and our business.  I truly look forward to the possibilities our partnership with Delta will offer.  We have always been known for our innovation and service and have punched above our weight for 28 years.  That is why our customers love us so much.  We will retain that independent spirit but move forward in a strengthened partnership with Delta.”
Delta and Virgin Atlantic customers will be able to earn and redeem miles across Delta’s SkyMiles and Virgin Atlantic’s FlyingClub frequent flyer programmes.  Premium  ustomers also will have reciprocal access to the Delta Sky Club and Virgin Atlantic Clubhouse airport lounges.  The two airlines say full details will be announced as services become available.
A joint statement said the partnership allows both carriers to offer a greatly expanded network at Heathrow and to overcome slot constraints, which have limited the growth and
competitive capability of both airlines.  The two carriers will operate a total of 31 peak-day round-trip flights between the UK and North America, 23 of which operate at London-Heathrow.  The airlines say their enlarged network will benefit customers of both carriers by providing greater access to a broader network, improved connectivity and convenient
booking options.