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Alitalia to be 'associate' of new Delta-Air France venture

Alitalia is in talks to become an associate member of the new transatlantic joint venture being forged by Delta Air Lines and Air France-KLM.

The associate membership will change the way revenues are split among the four primary members – Air France, Delta, KLM and Virgin Atlantic Airways – and the Rome-based SkyTeam Alliance carrier while leaving their joint operations across the Atlantic unchanged, says Alitalia chief business officer Fabio Lazzerini at an event to mark the launch of the airline's new Washington DC service today.

"Nothing is changing from an operational point of view – from a commercial point of view it's just changing the way we remunerate each other on our flights," he says.

For example, Alitalia planned its new flight to Washington Dulles from Rome Fiumicino with its SkyTeam partners, says Lazzerini. The airline will operate the route five-times weekly with a 249-seat Airbus A330-200 through the summer, dropping to three-times weekly this winter.

Joint ventures are lucrative commercial agreements that allow carriers to operate as one in specified markets. The pacts allow airlines to share revenue and costs, jointly market and sell flights and - arguably touted as the most beneficial to passengers - jointly coordinate schedules and growth that allow for better flight times and more routes.

Delta, Air France-KLM and Virgin Atlantic applied for US antitrust immunity for a new joint venture without Alitalia in July 2018. The agreement essentially swaps the Italian carrier for Virgin Atlantic, which Delta has a separate joint venture with between the UK and USA.

The US Department of Transportation continues to evaluate the new partnership. At the end of April, the regulator ruled that it would consider the application on a public docket and not privately as the four carriers sought.

Alitalia expects to conclude negotiations on its associate membership during the week of 6 May, with a finalised agreement concluded by the end of the month, says Lazzerini.

Once the agreement is in place, Alitalia and its SkyTeam partners will seek DOT approval of the deal concurrently with the existing Air France-Delta-KLM-Virgin Atlantic application, he adds.

The inclusion of Alitalia in the joint venture comes as Delta continues to consider an investment in the beleaguered Italian carrier. Ed Bastian, chief executive of the Atlanta-based Delta, said in March that it was considering "incremental support" for the airline without providing further details.

Delta already owns an 8.8% stake in Air France-KLM and a 49% stake in Virgin Atlantic.

Lazzerini confirms the interest by Delta and Italian rail operator Ferrovie, plus a third unnamed potential investor, in Alitalia's restructuring process that hit the two-year mark this month.

Air France, Delta, KLM and Virgin Atlantic combined carried 26.5% of passengers between Europe and the USA during the year-ending in October 2018, DOT data shows. Alitalia boosts this share to 28% of transatlantic passengers.

The other major joint ventures in the market – Air Canada, Austrian Airlines, Brussels Airlines, Lufthansa, Swiss and United Airlines; and American Airlines, British Airways, Finnair and Iberia – carried 22.9% and 22.8%, respectively, of passengers during the period.

The American-British Airways partnership is seeking regulatory approval to add Aer Lingus to their venture. The Irish carrier would boost their share of passengers to 25.9% for the year ending last October, the data shows.

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