Vrigin Blue-Delta Deal Approved
Virgin Blue-Delta joint venture approved by Australian regulators
Australian regulators have approved a joint venture between Delta Air lines Inc. and Virgin Blue Airlines Group that would give the carriers greater flexibility in coordinating flights between the U.S. and Australia and to share revenue.
U.S. regulatory approval is pending, Delta said Thursday.
Delta already has immunity from antitrust laws to cooperate closely with Air France-KLM across the Atlantic.
A joint venture allows airlines to share cost and revenue on certain flights regardless of which airline owns or flies the aircraft. It differs from a simple codesharing agreement in which one airline bears all the cost but another airline might get a share of the revenue for booking a customer on a flight.
Delta started service to Australia over the summer. Virgin Blue Airlines Group operates V Australia.
Demand for air travel has been under intense pressure from the global economic slowdown, but U.S. carriers that compete internationally believe it will be important to have a strong presence overseas when things rebound. Airlines can reap a premium for long-haul seats, particularly in business and first class.
Delta, the world's biggest airline in terms of traffic, is hoping to increase its global prowess through alliances and joint ventures. It has a strong presence in Europe, and it is trying to broaden its footprint across the Pacific.
Delta, based in Atlanta, is trying to lure Japan Airlines away from its partnership with American Airlines. Delta and its SkyTeam partners have a $1 billion offer on the table to bring JAL into their alliance.
American, a unit of AMR Corp., based in Fort Worth, Texas, wants to lead a $1.1 billion investment in struggling JAL to prevent it from falling into Delta's orbit.
JAL expects to make a decision within the next few weeks.
If Delta's effort to reel in JAL works, the two carriers would likely apply for antitrust immunity to operate a joint venture like the one Delta has with Air France-KLM and plans to have with Virgin Blue Airlines Group. U.S. and Japanese officials continued talks Thursday over opening up more flights between the two countries.
Joint ventures are typically only allowed in markets with full open skies agreements between the U.S. and other countries. The U.S. has open skies pacts with Australia and the European Union
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