The US Department of Transportation (DOT) has just granted antitrust immunity for the Virgin Australia Airlines (V Australia, Virgin Australia and Pacific Blue) and Delta Air Lines, enabling them to form an alliance and coordinate flights between the United States and Australia.
The massive news for Virgin Australia follows the DOT’s announcement last month that it believed Virgin and Delta had “sufficiently addressed the Department’s concerns” and provided “all the follow up documentation requested.”
“In the second Show Cause Order, the Department found that the applicants had clarified that the Virgin Australia Carriers had restructured and now operate with one management structure,” the US transport regulator said.
The expansion of the scope of the alliance to include Canada, Mexico and New Zealand, along with providing market data, and proof that their reservation systems were aligned and automated, were viewed favourably by the DOT.
The DOT said the carriers had made commitments that addressed its previous concerns, when it initially planned to deny the alliance (in Sep last year), and that they had shown that the “immunized alliance will generate substantial public benefits not otherwise obtainable.”
“In addition, we find that the proposed transaction is unlikely to have any significant deleterious effect on competition in the US-Australia market.
“Three carrier groups, each with its own alliance, in a long-haul market, are likely to continue to operate in a competitive environment that benefits the travelling and shipping public,” the DOT said.
The airlines have 18 months to implement their indefinite joint venture, and must provide the DOT with an annual progress report and quarterly updates of a “full-itinerary Origin-Destination Survey” that includes a US point.
The green light from the DOT is the third major victory for Virgin Australia CEO John Borghetti, after last year’s approval for similar alliance hook ups with Air New Zealand and Abu Dhabi-based Etihad Airways as part of his “game change” strategy. This week Borghetti revealed Virgin Australia’s next long-term partnership was with Singapore Airlines to gain greater access into Asia.
On the Delta alliance, Borghetti said: “We are extremely pleased that the way is now cleared for us to work together with Delta Air Lines to deliver a more attractive and competitive service for travelers in Australia and North America,” Borghetti said.
“Today’s approval will allow us to work together far more efficiently to achieve better schedules, connections and network coverage for our guests,” he said, adding that DJ and DL “we will move quickly to implement the joint venture and plan to have it up and running by the end of the year.”
“We thank the DOT for their thorough review of our application and welcome their conclusion that consumers will benefit from a strong partnership between Delta and Virgin Australia,” said Delta ceo Richard Anderson.
See Tuesday’s issue of Travel Daily for further details.