Key changes to the proposed anti-trust alliance between Delta and Virgin Blue (now Australia) convinced the US Department of Transportation to overnight tentatively approve the alliance for five years, saying the two carriers “have made every effort to achieve efficiency-enhancing integration at the outset”.
The DOT had two main concerns, which Virgin and Delta quelled last month–a testament, perhaps, to Virgin Australia chief executive John Borghetti’s serious management of his carrier. First was “barriers to integration”, namely making Virgin Australia’s domestic reservation system, Navitaire, compatible with Delta’s and capable of supporting automated codesharing. An upgrade last month to New Skies 3.3.1 extinguished the concern the airlines could not, or not in the short-term, seamlessly handle passengers flying on both networks. “We tentatively find that the harmonization of the systems and business processes enables the applicants to achieve their stated goal of ‘metal neutrality’ in the joint venture, which, in turn, will offer consumers a more seamless network on which to travel,” the DOT says.
Second was the DOT’s concern that combined marketing power and permission to coordinate schedules could see the two carriers decrease their number of flights. Last month’s capacity commitment from Virgin and Delta allayed those concerns.
The approval comes nearly two years since the alliance was proposed by Virgin’s former management in an application that is still relevant and hints what can eventuate from approval.
Virgin and Delta plan to coordinate routes, schedule, and–interestingly–product planning (read: 777 cabin re-vamp coming?). They expect the alliance to lower costs, reduce fares for passengers, and bring passengers more and improved travel options.
Delta, having been very pleased with its Los Angeles-Sydney service, has for a number of months been interested in opening a Los Angeles-Melbourne route pending the JV, according to sources familiar with the matter.