Delta, Air France, KLM, Virgin Atlantic Transatlantic Pact Gets Tentative Nod
US authorities have tentatively approved an expanded partnership between Delta Air Lines, Air France, KLM and Virgin Atlantic across the North Atlantic.
The Department of Transportation plans to grant the four carriers antitrust immunity to form a joint venture. The partnership would allow the airlines to operate as essentially one between Europe and the US, including coordinating schedules and fares, jointly marketing and selling flights, as well as other commercial benefits.
The new partnership will replace two separate joint venture agreements: one between SkyTeam Alliance members Air France, Alitalia, Delta and KLM, and a second between Delta and Virgin Atlantic.
Delta spokeswoman Susannah Thurston says the airlines "welcome" the preliminary decision and expect final approval "shortly."
The DOT's approval comes with minor conditions. Alitalia and CSA Czech Airlines are dropped from the pact, something that is likely to have little effect as neither was part of the application filed in July 2018. Alitalia may seek to rejoin as an “associate member” in the future once it completes its restructuring, executives said in May.
In addition, the regulator will require the four airlines to make annual reports on the public benefits of the partnership. The DOT will also review the tie-up every five years.
The conditions are comparable to those placed on American Airlines and Qantas Airways, who received final approval of their long-sought joint venture between Australia and New Zealand and the US in July.
Air France, Delta, KLM and Virgin Atlantic argued that the joint venture will generate roughly $85 million in public benefits in their 2018 application. Benefits include an expansion of reciprocal frequent-flyer benefits and redemptions across the four carriers.
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The airlines also said they are committed to continuing to add routes across the Atlantic. In 2019, they have added five new routes, including between Amsterdam (AMS) and Tampa (TPA) on Delta, Manchester (MAN) and Los Angeles (LAX) on Virgin Atlantic, and Paris Charles de Gaulle (CDG) and Dallas/Fort Worth (DFW) on Air France, according to Diio by Cirium schedules.
The four carriers combined capacity between Europe and the US is scheduled to increase 3.4% year-over-year in 2019, Diio data shows.
More growth is planned for next year. Air France-KLM senior vice-president of North America Bas Gerressen told TPG in July that, while details were not finalized, the airlines planned to grow capacity to the US in 2020, including potentially to one of Delta's five focus cities. Austin (AUS), Cincinnati (CVG), Nashville (BNA), Raleigh/Durham (RDU) and San Jose (SJC) in California are focus cities for Delta.
Comments on the DOT's preliminary decision are due by Aug. 16, with any further responses due by Aug. 27.