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IATA: Delta, Virgin build on JV despite 'flattish' demand

Delta Air Lines and Virgin Atlantic Airways describe demand as “flattish” across the Atlantic this summer, as they roll out their largest joint schedule yet this year.

“We’re seeing a little bit of a mix of pressure on yield and load factor although the summer generally is a great period for us,” says Craig Kreeger, chief executive of Virgin Atlantic, at a joint briefing with Delta. “I’d describe [the revenue environment] as kind of flattish.”

His comments come as the carriers are offering 39 daily flights between the UK and USA, up from 31 during the peak summer period a year ago. New flights include seasonal Glasgow-Las Vegas and Belfast-Orlando services, and new year-round London Heathrow-Philadelphia service.

Delta and Virgin Atlantic are not the only carriers growing in the market this year. Their combined seat capacity will increase more than a fifth, American Airlines and British Airways combined capacity by more than 3% and United Airlines capacity by 4.4% in June, July and August compared to the same period in 2014, Capstats data shows.

Kreeger and Delta president Ed Bastian still expect a record summer, despite the competitive capacity and strong US dollar.

“With fuel prices down and a flattish revenue environment, that’s still not a bad equation,” says Kreeger.

Delta and Virgin Atlantic are working behind the scenes to move the latter carrier to the former’s passenger service technology system. Bastian describes this as “one of the most exciting things” that they are doing at the joint venture this year.

“It’s going to allow us to provide the functionality for the Virgin Atlantic employees, as well as customers, so that they can seamlessly operate our schedule, our flight pass [and] our travel between the two companies that’s never been able to be accomplished in international aviation before,” he says.

This move will be a big step forward for Virgin, says Kreeger echoing Bastian’s comments. He adds that the airline has “probably under -utomated backoffice non-customer facing things” in the past.

Virgin plans to move to the AIR4 passenger service system, which uses Delta’s Deltamatic platform, in 2016, the executives say.

Delta and Virgin Atlantic’s joint venture is built on a 49% equity stake that the Atlanta-based US carrier made in the latter in 2013. The immunised partnership began 1 January 2014 following the necessary regulatory approvals.

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