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Premier U.S. passenger carrier, Delta Airline Inc. (DAL - Analyst Report) and leading Latin American airline, GOL Linhas Aereas Inteligentes S.A. (GOL - Analyst Report) have accomplished key milestones in their long-term exclusive alliance. The carriers have attained their immediate goal of expanding the code share agreement, providing increased benefits to their loyal customer base and offering a seamless customer experience at airports.

Notably, 20 months back, GOL had entered into a code share agreement with Della Airlines, whereby the two carriers will maximize the connecting routes in the Brazil–United States passage.

The current code share agreement allows Delta to access 23 destinations in Brazil and will continue to expand in the future subject to regulatory approvals. The union also allows Delta customers to fly to other Latin American countries of Paraguay and Uruguay.

On the other hand, GOL customers can access 5 markets that Delta currently serves, which include flights from Brasilia, Rio de Janeiro and Sao Paulo to Atlanta; and between Detroit and New York JFK. GOL customers from Belo Horizonte, Curitiba, Porto Alegre and Goiana will soon be able to fly to Detroit and New York.

In Apr 2013, Delta moved from Terminal 1, A Wing to Terminal 2 C Wing in Sao Paulo airport, achieving another important objective. The co-location of Delta and GOL’s terminals allows customers better connectivity and facilitates re-checking of bags post clearing customs regulation.

Additionally, in Feb 2013, GOL and Delta signed another agreement to support each other’s loyalty programs. Per the agreement, the SMILES Diamond clients and Delta’s top end customers will be able to avail boarding and check-in facilities on each other’s airlines on a priority basis. Also, SMILES Diamond clients can derive benefits of Delta Sky Clubs in Atlanta, New York and Detroit, while Delta’s premium customers can access the VIP rooms in the airports of Sao Paulo and Rio de Janeiro.  

These initiatives have yielded positive results for both the carriers, particularly for Delta, whose Brazilian traffic has increased 100% per cent as compared to last year. The airline traffic is only expected to increase in the future as Brazil is set to host two of the most popular sporting extravaganza the World Cup and Olympic in 2014 and 2016, respectively.

It is expected that Brazil will become the fourth largest aviation market in the world, thus fuelling Delta’s growth in the biggest Latin American nation. Meanwhile, GOL will benefit by expanding its coverage in the lucrative U.S. market, providing more international choices for customers.

GOL currently carries a Zacks Rank #2 (Buy), while Delta holds a Zacks Rank #3 (Hold). Other stocks worth mentioning within this sector are U.S. Airways Group Inc. and Bristrow Group (BRS - Snapshot Report). LCC currently carries a Zacks Rank #1 (Strong Buy) while BRS holds a Zacks Rank #2 (Buy).

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