Delta and Virgin Atlantic have filed an application with the U.S. Department of Transportation to form a transatlantic joint venture with antitrust immunity.
The pact would enable Delta and Virgin Atlantic to coordinate their transatlantic schedules and share revenue and costs on transatlantic flights.
The airlines argue that an immunized joint venture would be a critical accompaniment to Delta’s planned $360 million acquisition of a 49% stake in Virgin Atlantic that is currently owned by Singapore Airlines. That deal, announced in December, is subject to the approval of competition regulators in the U.S. and the European Union.
Without an immunized joint venture, Delta and Virgin Atlantic said they wouldn’t be able to effectively compete with American Airlines and British Airways, the dominant players in the lucrative New York-London market. American and British Airways received government approval for their immunized joint venture, which they launched in 2010.
“Because of severe slot constraints at Heathrow, neither Delta nor Virgin Atlantic could mount a high-frequency service of its own,” the airlines said in the DOT application.
Besides enabling the carriers to optimize their New York-London schedule, the joint venture would make possible the introduction of Seattle-London service, the airlines said. Northwest Airlines briefly operated a Seattle-London flight (before the Northwest merged with Delta) in the summer of 2008, “but the flight was not viable in the face of an aggressive competitive response by British Airways,” Delta said.
Delta already has an immunized joint venture with Air France, KLM and Alitalia. Whereas that pact was about combining a large airline network, the Delta-Virgin joint venture would be about competing with British Airways and American, the carriers said.
Still, Delta and Virgin Atlantic requested permission to coordinate with Air France, KLM and Alitalia because it would “enhance the ability of both joint ventures to compete for transatlantic passengers in U.K. regional markets served via Paris and Amsterdam,” said Delta and Virgin.
The airlines noted that Virgin Atlantic “has a very limited intra-U.K. network,” but the airline is launching U.K. domestic service.