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.
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