U.S. OKs expanded Delta, Air France, KLM, Virgin Atlantic pact

Air France, Delta Air Lines, KLM and Virgin Atlantic Airways have received a green light from U.S. authorities to expand their partnership.

The Department of Transportation approved the tie-up Thursday, a move that allows the airlines to operate as essentially one under a "joint venture" between Europe and the U.S. The approval includes conditions proposed in August when the DOT gave tentative approval to the deal, which now has been given a final sign-off by regulators. Conditions include reporting on the consumer benefits of the partnership annually, and a regulatory review of the pact every five years.

"This is the final regulatory step for the airlines to begin to work together to offer customers the best streamlined travel experience across the Atlantic," Delta spokeswoman Susannah Thurston told TPG. She said the carriers plan to implement the expanded pact in the "near future."

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The partnership will mean more flights — particularly to one of the partners' hubs — for travelers. However, it is also likely to include easier award redemptions, more reciprocal elite frequent flyer benefits, and better functionality across each airline's technology platforms.

The new pact replaces two separate tie ups between Delta and its European partners. Of those currently in place, one involves Delta and Air France, Alitalia and KLM, covering flights between the U.S. and the European continent. The another is between Delta and Virgin Atlantic and covers flights between the U.S. and UK.

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The joint venture is one of three big groups across the Atlantic. American Airlines has a similar partnership with British Airways, Iberia, Finnair, and soon Aer Lingus. United Airlines is part of its own joint venture that includes Air Canada, Austrian Airlines, Brussels Airlines, Lufthansa, and Swiss International Air Lines.

Delta and its partners have already announced many of their transatlantic route plans for 2020. The U.S. carrier will add flights between its Boston Logan (BOS) hub and both London Gatwick (LGW) and Rome (FCO), while partner Virgin Atlantic will connect Gatwick and New York John F. Kennedy (JFK). KLM plans new service to Delta's Austin (AUS) focus city from its Amsterdam (AMS) hub.

Combined capacity on Air France, Delta, KLM and Virgin Atlantic between Europe and the U.S. is scheduled to increase nearly 4% year-over-year in the first six months of 2020, according to Cirium schedule data.

Related: Delta, Air France, KLM, Virgin Atlantic Transatlantic Pact Gets Tentative Nod

The future role of Alitalia in the new partnership remains a question. The Italian carrier, which was part of Delta, Air France and KLM's prior pact, was not included in the expanded deal with Virgin Atlantic, though executives at several carriers said Alitalia could be added as an "associate" member at a later date.

Bas Gerressen, senior vice-president of North America at Air France-KLM, described the future addition of Alitalia as an associate member as "plug and play, and Alitalia would be the first one to plug on."

Any possible associate membership in the joint venture is understood to be separate from Delta's potential interest in an up to 10% stake in Alitalia as part of the carrier's restructuring.

Delta is a leader in forming joint ventures with foreign carriers. In addition to its transatlantic deal, it has similar partnerships with Aeromexico, Korean Air and Virgin Australia, is seeking approval for one with WestJet. Most recently, Delta announced plans to form another with LATAM Airlines — a deal that surprised the industry and upended LATAM's longstanding alliance with American and the Oneworld Alliance.