With stake sale complete, both Delta and Virgin Atlantic can focus on seriously challenging American Airlines and British Airways on trans-Atlantic routes.
Delta Air Lines Inc. and Virgin Atlantic Airways Ltd. will begin joint ticket sales on more than 100 routes starting next month as they work toward fully integrated trans-Atlantic operations beginning next year.
Virgin Atlantic will place its code on 91 routes across the Atlantic and within the U.S., with Atlanta-based Delta doing likewise on 17 Virgin flights, including new shuttle services from London to Scotland, the carriers said in a joint statement.
Code-sharing will commence on July 3 after Delta completed its purchase of a 49 percent stake in Crawley, England-based Virgin today, eased by the receipt last week of regulatory approval from the U.S. Justice Department and European Commission. Antitrust immunity is likely to be granted by the U.S. Transportation Department in coming months, paving the way for a joint venture to be introduced in the first quarter of 2014, Delta President Ed Bastian said on a conference call.
“The DoT review of ATI is going quite well from our understanding,” Bastian told journalists. “The joint venture will be much more significant than what the code-share provides. It will allow us to schedule, to plan, to provide price offerings to customers and to approach the market as a single carrier between the U.S. and London Heathrow airport.”
Twenty-three daily code-share flights will be on North American routes from Heathrow, Europe’s busiest airport, including nine daily services to New York.
By linking itself with Virgin, Delta is targeting North Atlantic flights that generate about one-quarter of all global revenue from first- and business-class fares — more than twice as much as second-placed trans-Pacific routes, according to figures from the International Air Transport Association.
The move is a challenge to British Airways and AMR Corp.’s American Airlines, which control more than half of that market.
U.S.-U.K. passenger volumes are 20 times the size of those for flights between Britain and Singapore that former investor Singapore Airlines Ltd. had sought to tap before the $360 million sale of its stake to Delta agreed Dec. 11, Bastian said.
Singapore Air separately said today that it had completed the exit of the 49 percent holding, adding in a statement that existing commercial arrangements including code-shares and cooperation on air-mile programs and lounge access remain.
While Bastian said the primary focus will be on trans- Atlantic cooperation, Virgin Atlantic Chief Executive Officer Craig Kreeger said he expects Delta to play a full part in determining strategy at the U.K. carrier.
Still, Virgin will remain majority owned by British billionaire Richard Branson and Kreeger added that though some people questioned the company’s brand identity when the Delta deal was announced, it will remain “true to its roots.”
The Virgin CEO added: “Our unique sense for operating an airline that customers around the world love will not change. It’s one thing that attracted Delta to us.”
Bastian said he’s confident that Virgin Atlantic’s management can end losses at the U.K. company within 18 months and go on to generate positive earnings, aided by developments including an ongoing fleet-renewal process.
Editors: Andrew Noel, Chris Jasper. To contact the reporters on this story: Chris Jasper in London at [email protected]; Kari Lundgren in London at [email protected]. To contact the editor responsible for this story: Benedikt Kammel at [email protected].
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