ALTA: Delta chief sees future in bilateral partnerships

Panama City
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Delta Air Lines chief executive Richard Anderson sees bilateral partnerships between airlines as the solution to foreign ownership restrictions.

"Once the world ends up consolidated to a rational organisational construct [in each region], then these bilateral relationships with anti-trust immunity will give us the same commercial value," he says on cross-border consolidation at the forum yesterday. "It will be the next way our industry continues to return its invested capital to its shareholders."

Latin America is a global leader of crossborder consolidation. Brazil's TAM and Chile's LAN merged to create LATAM Airlines Group in June and Colombia's Avianca and El Salvador's Taca merged in 2010.

Foreign investment in US airlines is restricted to an up to 25% equity stake.

Atlanta-based Delta's partnerships with Alaska Airlines, Gol, Virgin Australia and WestJet are just as important - if not more - to it than its membership in the SkyTeam alliance, says Anderson.

He anticipates that the large global alliances will become more "umbrella" organisations for global co-operation, while carriers develop their bilateral relationships in key markets.

"[With] eight or 10 really strong, deep relationships in the important markets where Delta is committed professionally and economically to our partners, we will be far more successful in building our hubs and our global network," says Anderson.

Delta will begin codesharing with Gol to 36 destinations in Brazil and Latin America from December, according to a US Department of Transportation filing earlier this month. The move comes after it made a $100 million equity investment in the Brazilian airline at the end of 2011.

Anderson says that the two carriers will "continue to connect" their networks.