Delta Air Lines (NYSE: DAL) and Virgin Australia Airlines (ASX: VBA) today welcomed the U.S. Department of Transportation’s final approval of antitrust immunity for the airlines’ trans-Pacific alliance, which will allow the carriers to implement a joint venture on service between the United States, Australia and the South Pacific.
The grant of antitrust immunity will expand travel choices and competition for consumers by allowing the airlines to provide a seamless product and coordinate flight schedules for maximum convenience. The airlines will collaborate through codesharing, coordinating products and services and extending frequent flyer program benefits and lounge access to customers of both carriers.
“This final ruling by the DOT will expand competition and enhance customer service and travel options for passengers flying between the U.S. and Australia,” said Delta CEO Richard Anderson. “We thank the DOT for their thorough review of our application and welcome their conclusion that consumers will benefit from a strong partnership between Delta and Virgin Australia.”
Virgin Australia CEO John Borghetti said the ATI is a key enabler for an integrated alliance between Delta and Virgin Australia Airlines.
“We are extremely pleased that the way is now cleared for us to work together with Delta Air Lines to deliver a more attractive and competitive service for travelers in Australia and North America,” Borghetti said.
“We have been operating a successful partnership with Delta for the past three years, however today’s approval will allow us to work together far more efficiently to achieve better schedules, connections and network coverage for our guests.
“The Delta alliance is a key plank in our strategy to build an international network of airline partners that offers global coverage. Now that we have DOT approval, we will move quickly to implement the joint venture and plan to have it up and running by the end of the year,” Borghetti said.
The alliance will create a comprehensive, fully integrated network able to serve thousands of city-pairs in North America and the South Pacific, providing numerous destinations which otherwise would not be accessible to customers. Delta alone serves a single point in Australia, Sydney, and Virgin 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 economic study conducted by Compass Lexecon estimated annual consumer benefits of up to $54 million would be produced by the joint venture.
Antitrust immunity is the latest step in an enhanced alliance between Delta and Virgin Australia, which began with their first codesharing flights in January 2010. On May 21, 2011, the codesharing arrangement was expanded to add five new destinations in Australia and New Zealand to Delta’s network. Delta customers can now connect in Sydney on Virgin Australia flights to Brisbane, Melbourne, Perth, Adelaide and Canberra in Australia, and to Auckland and Christchurch, New Zealand. Virgin Australia customers can connect in Los Angeles to Delta flights to San Francisco, Las Vegas, Atlanta, Detroit, New York-JFK and Orlando, Fla.
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