Delta and Virgin Atlantic apply for alliance immunity

Washington DC
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Delta Air Lines and Virgin Atlantic applied for an immunised alliance across the Atlantic with the US Department of Transportation (DOT) today.

The alliance is part of the Atlanta-based SkyTeam alliance member's acquisition of a 49% stake in the UK carrier for $360 million from Singapore Airlines, which they announced in December. The carriers expect the deal to close in the third quarter.

"Approval of antitrust immunity would allow travellers to take full advantage of all the aspects of the Delta-Virgin joint venture and enjoy the benefits of increased competition, particularly on flights to and from London Heathrow airport," says Ed Bastian, president of Delta, in a statement.

The metal neutral alliance would cover all flights between North America and the UK operated by Delta and Virgin Atlantic, and allow passengers to transfer on to any of their flights elsewhere in the world.

The partnership would be separate from Delta's existing trans-Atlantic joint venture with its SkyTeam partners Air France, Alitalia and KLM, however, Delta and Virgin would coordinate with the three carriers on traffic flows across the Atlantic, according to their application with the DOT.

Delta and Virgin claim that immunity would allow them to be a "more effective" competitor against American Airlines and British Airways existing immunised alliance, and increase competition, in their application.

The alliance would allow the carriers to launch a new flight between London Heathrow and Seattle, which is a growing focus city for Delta, following approval, they say. It would also make new flights between London and Delta's Salt Lake City hub, as well as additional frequencies between London and Boston, Detroit and Newark possible.

Delta and Virgin estimate $15 million in annual operating expense savings from the partnership. This would come from joint marketing efforts in markets, co-location of airport facilities and other operational synergies.

The airlines will not implement the alliance if immunity is not granted, they say in their application.

Bastian said in March that he expects the alliance to be approved in the third quarter and in place by the end of the year.