The Joint Venture (JV) between Virgin Atlantic, Delta, and Air France-KLM has finally been approved by the U.S. Department of Transportation (DOT).
In my story published last August, I spoke about Delta, Air France-KLM, and Virgin Atlantic getting approved on a provisional basis by the U.S. Department of Transportation. Now, this process has become final, meaning that the joint venture is now official.
A battle over transatlantic routes
The Virgin-Delta-Air France-KLM venture approval has also set off the fight with the other officially approved joint venture, consisting of American Airlines, British Airways, and Iberia.
What does the Joint Venture (JV) consist of?
Delta and Virgin Atlantic’s joint venture is separate from their separate transatlantic joint venture with Air France-KLM and Alitalia.
AP presentation of the Delta, Air France-KLM, and Virgin Atlantic transatlantic joint venture agreement (video)
This includes some equity investments, as explained here:
- Delta now owns a 49% stake in Virgin Atlantic. It was previously announced that Air France- KLM would acquire only a 31% stake in Virgin Atlantic. As of now, that sale won’t go forward.
- Delta owns an 8.8% stake in Air France-KLM.
What happened to Alitalia?
To form a joint venture with Air France, Virgin Atlantic, and Delta would have seriously undercut the ailing Alitalia’s business.
UPDATE: To read more about Alitalia’s transatlantic exception read here.
What are the benefits of the JV between Virgin Atlantic, Delta, and Air France-KLM?
Joint venture cooperation means passenger benefits
When booking tickets, you will be able to fly Virgin Atlantic one way and Air France in the other direction. This is great, especially if you want to mix tickets and fare classes. On the airline lounge-front, expect cooperation between Flying Blue (Air France-KLM) and the Flying Club (Virgin Atlantic) and expect to be able to redeem miles on each other’s airlines!
The U.S. Department of Transportation just eliminated three airlines from “competition,” which is detrimental to keeping down prices in the NYLON (New York-London) route-system.
By not being faced with competition (not even a virtual competition) drawbacks on ticket prices, as a result of the two joint ventures being consolidated into one. It can certainly increase ticket prices on this particular route. Prices could rise to unaffordable levels, which first-time travelers through the NYLON route and beyond would not be able to afford.
More than 90% of the transatlantic route system is now being compressed into six airlines. These six airlines are virtually merging into two. This will create an impact on transatlantic revenue pricing beyond what we have seen in the last two decades.
Opinions of the Author
If you’re looking for an affordable price to and from North America into Europe, you’d better get the tickets within the next couple of weeks. Tickets will most certainly become unaffordable. Or, carefully take a look at international airlines that can give you more bank for your money to the same destinations.
What do you think about the JV between Virgin Atlantic, Delta, and Air France-KLM being final DOT approved? You can leave your comments here.
Featured Image: Joint Venture partner Air France-KLM inflight. Unsplash.