Mooted seriously for a few weeks and predicted tactically by many for years, Delta and Virgin Atlantic have agreed a major joint venture in a bid to put pressure on their transatlantic rivals.
Delta will invest $360 million in Virgin Atlantic by acquiring a 49% stake in the company from previous part-owner Singapore Airlines.
A joint statement by the pair says the Virgin Group will retain its 51% stake in the company and – despite speculation over the weekend – operate with its own aviation certificate and maintain its existing (and well known) brand.
The pair will file an application with the US Department of Transportation for antitrust immunity.
The move is a clear shot across the bows of their respective rivals, American Airlines and British Airways, with plenty of talk in the JV details focusing on the busy London to New York routes.
The combined network will include 31 peak-day return flights from the UK and North America and the integration of frequent flyer benefits as well as shared access to various passenger lounges.
Singapore Airlines revealed it was in talks to sell its 49% stake earlier this month, with Delta tipped as the likely suitor given that it has eyed a partnership of some kind with Virgin for a number of years.
The South East Asian carrier is said to have valued its investment in Virgin at close to $1 billion in the 12 years since it bought a 49% stake in the company for $884 million.
On the tech side of the relationship, Delta has a relationship with Farelogix for direct-connect services and uses Datalex to provide ancillary distribution tools.
Virgin uses HP for hosting, while Delta is a Travelport customer. The HP deal was signed in 2008 and is scheduled to run for five years.
Delta CEO Richard Anderson says:
“By combining the strengths of our two companies in a joint venture, we can provide customers with a seamless network between North America and the UK, and continue building a better airline for our customers, employees and shareholders.”
Steve Ridgway, Virgin Atlantic CEO, adds:
“Consumers will reap the rewards of this partnership between two great airline brands on services from the UK to the USA, Canada and Mexico through a shared ethos in the highest standards of customer service.
“This joint venture will deliver much more effective competition at Heathrow.”
NB: Delta aircraft image via Shutterstock.
Related posts:
About Kevin May
