Delta and Virgin Australia Airlines receive proposed grant of antitrust immunity for their alliance

Delta Air Lines (Atlanta) and Virgin Australia Airlines (Brisbane) are supporting the U.S. Department of Transportation’s (DOT) proposed grant of antitrust immunity to their alliance, which will allow the airlines 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 provide a seamless product to customers and more options for travel between the U.S. and South Pacific. The airlines will collaborate through codesharing, coordinating route and product planning and extending frequent flyer program benefits and lounge access to customers of both carriers.

The alliance will create a comprehensive, 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’ (formerly Virgin Blue 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.

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, Fla.

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.

In other news, Delta will drop the New York (JFK)-Kiev on June 17.

Copyright Photo: Morris Biondi. Please click on the photo for additional information.