Following the approvals from the U.S. Department of Justice and European Commission last week, Delta Air Lines (DAL - Free Report) completed the acquisition of a 49% stake in British carrier Virgin Atlantic from Singapore Airlines. The remaining 51% stake is retained by Richard Branson's Virgin Group.
Delta and Virgin Atlantic agreed on a code-sharing deal across 108 routes connecting 66 destinations across North America and the UK from Jul 3. Virgin Atlantic will put up its code on 91 Delta itineraries that cover both trans-Atlantic and domestic U.S. networks. On the other hand, Delta will have its code on 17 Virgin Atlantic routes, including the ones connecting London to Manchester, Edinburgh and Aberdeen.
Following this agreement, customers of both Delta and Virgin Atlantic will enjoy each other’s expanded network as well as earn and redeem points for loyalty programs on each carrier.
However, the airlines are yet to receive the antitrust immunity permit of the U.S Department of Transportation for the proposed joint venture to operate nonstop flights between the U.S. and the UK. With the final consent expected to come in the third quarter of 2013, the Delta- Virgin Atlantic joint venture will be completed in early 2014.
In December last year, Delta confirmed its plans to buy the stake in Virgin Atlantic and gain substantial control over the New York to London network – one of the busiest air itineraries across the globe.
This partnership will entitle Delta and Virgin Atlantic to gain 36% access to the New York-London travel route, second to the 51% control exercised by a partnership of AMR Corp.’s American Airlines and British Airways. United Continental Holdings (UAL - Free Report) will have the third position with 13% of the market share.
Delta management stated that all jets flying between the U.S. and London-Heathrow will offer fully flat-bed seating arrangement, extra legroom and more reclining standard seats. There will be additional facilities like on-board on demand audio and video entertainment options. The airline aims to launch in-flight Wi-Fi connectivity on international flights next year.
We believe that Delta-Virgin Atlantic alliance will render additional frequent quality travel options for the trans-Atlantic flyers. The amalgamation of Virgin Atlantic’s hefty slots at the Heathrow airport and Delta’s commanding position over the U.S. airline network are expected to work in favor of passengers with extensive travel plans. This will hugely benefit customers with expanded and enhanced flight connectivity to key markets, better pricing and suitable booking options.
Delta operates with the likes of Southwest Airlines Co. (LUV - Free Report) and carries a Zacks Rank #3 (Hold).