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No deal for Delta and Virgin Blue

Feds give thumbs down to Delta-Virgin Blue alliance

JOSH MITCHELL  Sep 08, 2010

WASHINGTON — The Obama administration on Wednesday gave a thumbs down to plans by Virgin Blue Holdings Ltd. and Delta Air Lines Inc. to coordinate operations on trans-Pacific flights between Australia and the U.S.

The U.S. Transportation Department proposed to deny an application for antitrust immunity that would have allowed the alliance between Delta and Virgin Blue affiliates. The agency said it has tentatively concluded that Delta and Virgin Blue Group hadn't demonstrated that the proposed alliance would produce sufficient benefits to justify an exemption from antitrust laws.

"Delta and its partners have only recently entered the U.S.-Australia market, have not shown developed plans to operate as commercial partners, and have limited their cooperation to a handful of routes, thereby limiting the public benefits their alliance might produce," the U.S. Transportation Department said in a statement announcing the ruling. The agency added that the airlines failed to show their alliance would lead to lower air fares, increased capacity or other benefits for consumers.

The decision would become final after a public-comment period to allow the airlines and other interested parties to voice objections. The airlines already have received government approval from Australia to move forward with the alliance plans.

The Virgin Blue Group includes V Australia, Virgin Blue, and Pacific Blue Airlines affiliates in both Australia and New Zealand.

Meanwhile, British Airways PLC and its transatlantic alliance partners are planning to link their frequent-flyer programs starting next month and launch new joint services in 2011 in an effort to win more high-paying premium passengers.

BA, its merger partner Iberia Lineas Aereas de Espana SA of Spain and American Airlines will formally launch the expanded venture in the first half of October after regulators gave the Oneworld alliance members parity with carriers in the rival Star and SkyTeam groupings.

The U.K. airline and American, a unit of AMR Corp., are the largest carriers of passengers on transatlantic routes, but were previously barred from coordinating schedules, marketing and fares, limiting their ability to keep and attract higher-fare business travelers.

Simon Talling-Smith, BA's executive vice president for the Americas, said linking loyalty programs would be the first step in boosting their competitive position, followed by offering special fares allowing passengers to fly out on one of the partners and return on another.

The three airlines plan to start joint marketing to corporate clients in early 2011, closing another gap with the rival alliances, while schedule changes would take effect beginning next April.

"We are starting to tidy up the overlaps and space out some of the schedules," said Mr. Talling-Smith in an interview. The airlines want to eliminate flights that are close together, particularly to New York, Chicago and Miami.

Feds give thumbs down to Delta-Virgin Blue alliance

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