Delta, Virgin Australia Say Joint Venture Will Expand Reach Between U.S., Australia

Delta and Virgin Australia Airlines (not surprisingly) welcomed the U.S. Department of Transportation's proposed grant of antitrust immunity to their alliance on Tuesday. The airlines say the partnership will allow them to implement their joint venture, expanding their reach between the U.S., Australia and the South Pacific region.

Antitrust immunity will enable Delta and Virgin Australia Airlines to collaborate through codesharing, coordinating route and product planning and extending frequent flyer program benefits and lounge access to customers of both carriers. "We appreciate the DOT's thorough review of our alliance with Virgin Australia and recognition of the important customer benefits," said Glen Hauenstein, Delta's executive vice president of network, revenue management and marketing. "This alliance will bring more effective competition to the region and provide consumers greater choice of destinations, frequencies and schedules."

The alliance will create a fully integrated network able to serve thousands of city-pairs in North America and the South Pacific. Delta alone serves a single point in Australia, Sydney, and Virgin Australia's international airline, V Australia, flies only to Los Angeles. The antitrust immunized alliance will allow the airlines to fully cooperate on network planning and distribution to deliver a more attractive and competitive service for customers. A detailed econometric study conducted by Compass Lexecon estimated annual consumer benefits of up to $54 million would be produced by the joint venture.

The alliance with Delta is a centerpiece of Virgin Australia Airlines' product development and international expansion strategy, led by CEO John Borghetti. Under Borghetti's leadership, Virgin Australia Airlines has developed a market-leading international airline, V Australia, which offers direct flights between Los Angeles and Australia. Virgin Australia also operates an extensive network throughout Australia and the South Pacific. Through its alliance with Delta, V Australia has created a network with the scope and breadth to take on larger rivals serving the U.S. - South Pacific marketplace. 

Virgin Australia Airlines CEO John Borghetti said: "We welcome the Department of Transportation's proposed approval of our application for antitrust immunity with Delta, which will enable our airlines to deliver a more attractive and competitive service for travelers in Australia and North America."

"The Delta alliance is a key plank in Virgin Australia's strategy to build an international network of airline partners that offers global coverage. If approved, Delta customers will be able to connect seamlessly to Virgin Australia's extensive network of destinations across Australia, New Zealand and the South Pacific and earn frequent flyer points in the process," Borghetti said.

Antitrust immunity is the latest step in an enhanced alliance between Delta and Virgin Australia Airlines, which began with their first codesharing flights in January 2010. On May 21, the codesharing arrangement will be expanded to add five new destinations in Australia and New Zealand to Delta's network. Delta customers will be able to connect in Sydney on Virgin Australia Airlines flights to Brisbane, Melbourne, Perth, Adelaide and Canberra in Australia, and on Pacific Blue (Virgin Australia's Pacific airline) to Auckland and Christchurch, New Zealand. V Australia customers will be able to connect in Los Angeles to Delta flights to San Francisco, Las Vegas, Atlanta, Detroit, New York-JFK and Orlando, FL.

The DOT's Show Cause Order proposes to grant antitrust immunity to the alliance and allows for a further period of public comment, after which the DOT will issue a final determination.

FMI: www.delta.com, www.vaustralia.com