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Delta, Virgin Blue Plan Pacific Joint Venture

July 9, 2009 By: George Dooley

Competition on routes between the U.S. and Australia is sure to increase if a newly proposed joint venture between Delta Air Lines and the Virgin Blue Airlines Group is approved. The two airlines said they plan to seek regulatory approval to form a joint venture that will expand both carriers’ reach between the U.S. and Australia and the South Pacific. The deal will require U.S. antitrust immunity. The airlines already signed a interline agreement in March.

The alliance will allow Delta and the Virgin Blue Airlines Group to compete more effectively in those markets, the airlines say, by collaborating on route and product planning, codesharing on their respective networks and extending frequent flyer program benefits, and lounge access to customers of both carriers.

“Together, Delta and the Virgin Blue Airlines Group will be a stronger and more effective competitor by offering consumers greater choice of destinations, frequencies and schedules, all on leading-edge aircraft,” said Glen Hauenstein, Delta’s executive vice president for network and revenue management. “For Delta, this agreement is a significant milestone in the expansion of our global network in the Australia and South Pacific region.”

“Virgin Blue and Delta make a tremendously exciting fit,” said Brett Godfrey, chief executive officer and co-founder of Virgin Blue Airlines Group. “Not only will we offer travelers many new benefits and possibilities, but also the alliance of two new entrant operators will ensure that vital competition is sustained on the trans-Pacific route.”

In advance of their joint venture, the carriers report they are moving forward to implement codesharing, frequent flyer program reciprocity and lounge exchange privileges. Delta and the Virgin Blue Airlines Group today will file antitrust immunity applications with the U.S. Department of Transportation (DOT) and with the Australian Competition and Consumer Commission.

Delta began daily nonstop service between Los Angeles and Sydney on July 1 with a Boeing 777-200LR equipped with 180-degree, full-flat beds in its BusinessElite class. V Australia, a Virgin Blue Group airline, operates a daily nonstop Boeing 777 service between Los Angeles and Sydney, and service three times weekly between Los Angeles and Brisbane.

A new, three times weekly service between Los Angeles and Melbourne is planned for September 2009. The three-class airline offers 33 International Business Class fully lie-flat beds, 40 International Premium Economy Class seats and 288 International Economy Class seats plus two in-flight bars.

From its hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo-Narita, Delta, its Northwest subsidiary and Delta Connection carriers offer service to 382 destinations in 69 countries and serves more than 170 million passengers each year.

Nine-year old Virgin Blue Airlines Group carries 18 million guests annually and comprises Australia’s domestic airline Virgin Blue, Long Haul international airline V Australia, New Zealand-based Pacific Blue and Polynesian Blue, a joint venture airline with the government of Samoa. Together the airlines operate a fleet of 80 modern Boeing 737-NGs, Boeing 777 and Embraer E-Jet aircraft flying to 28 Australian and 13 international destinations in the U.S., South Pacific and Southeast Asia


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