Virgin Blue to end codeshare partnership with United

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Australia's Virgin Blue plans to discontinue its codeshare with United Airlines as it prepares to implement a more comprehensive partnership with Delta Air Lines.

Virgin Blue has been carrying United's code on domestic routes within Australia since 2002. But outgoing Virgin Blue CEO Brett Godfrey says this codeshare will end later this year and the low-cost carrier's partnership "is being reduced to an interline partnership".

Last month Virgin Blue and sister long-haul carrier V Australia announced plans to form a joint venture with Delta, which will include collaboration on routes and products as well as codesharing. Both V Australia and Delta launched services earlier this year between Los Angeles and Australia's east coast, providing new competition for United and Australia's Qantas Airways.

Godfrey says Virgin Blue plans to begin carrying Delta's code on domestic Australian routes "later this year". At the same time, Delta will start carrying V Australia's code on domestic connecting flights at Los Angeles. The two carriers will also codeshare on their flights between the US and Australia.

"Delta has an extensive route network both in and out of Los Angeles and will provide V Australia guests seamless connectivity once codesharing launches," Godfrey says in an emailed response to questions posed by ATI sister publication Airline Business Magazine. "V Australia guests will also get access to Delta lounges in the US. Finally, Delta also brings online one of the largest frequent flyer programs in the world so that guests flying V Australia aircraft with the DL code can earn miles in that program and redeem Delta miles on Virgin Blue group airlines."

Godfrey says V Australia's current US partners only provide interline connectivity "which does not have the benefits of lounge and frequent flyer program access, nor favorable pricing on connections". He says V Australia now interlines with four US carriers - Virgin America, Continental Airlines, Alaska Airlines, Northwest Airlines - with a fifth, US Airways, to be added later this month.

While Virgin Blue has been codesharing with United since 2002 this agreement was never extended to include V Australia flights. The Virgin Blue-United partnership was historic as it was the first ever codeshare involving a low-cost carrier. It was driven by United's desire to find a domestic partner in Australia following the demise in 2001 of Ansett, an Australian legacy carrier that was in the Star Alliance.

With the Virgin Blue codeshare being de-activated, United again has no codeshare partner to connect with its daily Sydney service. United will instead have to rely on interlines as it is unlikely there is any other potential Australian codeshare partner for the US major.

As with most legacy carriers United interlines with hundreds of other carriers. Virgin Blue also has been adding interline partnerships, which is something most low-cost carriers historically have avoided.

Virgin Blue says it now interlines with Emirates, Malaysian Airlines, Thai Airways, Hawaiian Airlines, South African Airways, Vietnam Airlines, Royal Brunei Airlines, Air Mauritius and Australia's Regional Express. For these foreign carriers the interlining with Virgin Blue provides an important alternative to oneworld member Qantas.

Besides United, Virgin Blue currently codeshares with three carriers: Australia's SkyWest, Airlines PNG and Virgin Atlantic Airways. V Australia currently codeshares with sister carriers Virgin Blue and Virgin Atlantic.

Godfrey says Virgin Blue is now looking to add more codeshares as it switches later this year from the Open Skies to New Skies reservation system. Both systems are supplied by Navitaire but the latter has more codeshare functionality.

"New Skies will offer us an unlimited number of codeshare and interline partnerships," Godfrey says. "We can mix and match free-sale and block-space agreements and use established technical links."

While Virgin Blue will stick with Navitaire, which specializes in reservation systems for low-cost carriers, V Australia uses the Amedeus platform, which Godfrey says "is fully compatible with all legacy airline systems" Godfrey says this will make turning on the codeshare with Delta easier as will Virgin Blue's migration to New Skies.

Godfrey says while Virgin Blue and V Australia are interested in codeshare partnerships he notes the group is not looking at joining a global alliance. He says for low-cost carriers "the overhead will simply not be worth it in terms of having to introduce lounges or modify loyalty programs and comply with all the various ticketing and IT requirements".