Alitalia Booted From Delta’s Joint Venture With Air France-KLM and Virgin Atlantic
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Air France-KLM, Alitalia, Delta Air Lines and Virgin Atlantic have long been working on an expanded trans-Atlantic joint venture agreement. However, an amended application was filed to the US Department of Transportation on July 20, dropping Italian carrier Alitalia from the agreement.
Joint ventures are meant to combine strengths from each airline’s resources to create a more comprehensive route network within a certain market — in this case, flights between the US and Europe. The goal is to offer passengers convenient flight schedules, competitive fares and reciprocal frequent flyer benefits such as the ability to earn and redeem miles across all carriers.
Delta currently has separate transatlantic joint venture agreements with Air France-KLM and Virgin Atlantic and hopes to consolidate them into a single partnership through this agreement. Alitalia was supposed to be included in the expanded agreement when it was first announced, but none of the airline’s executives participated in media events and its hubs were left out of initial promotional material. And now we know that Alitalia won’t be joining it after all.
“Although the parties hope to implement metal-neutral cooperation with Alitalia in the future Alitalia is currently undergoing restructuring through the Italian bankruptcy process, and its future ownership structure is uncertain,” the applicants say in the amended filing.
Etihad Airways bought a 49% stake in Alitalia in 2014, but has suffered huge losses and stopped subsidizing the airline. Now, either the Italian government would need to step in, or the airline may cease operations if a new buyer isn’t found.
This announcement does not change Alitalia’s position in the Skyteam alliance. Delta flyers will continue to be able to earn Skymiles when flying the partner airline, though earning rates may be devalued once the joint venture is fully implemented.
Delta and its partners claim that this agreement would allow them to better counter the joint venture between American Airlines, British Airways, Iberia and Finnair, as well as the rise in competition from European low-cost carriers like Norwegian and WOW Air.
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