Delta Gains from Virgin Atlantic Tie Up - Analyst Blog

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It seems Delta Airlines Inc. ( DAL ) is reaping the benefits of its tie up with Virgin Atlantic as it is picking up in the New York-London travel route − one of the world's popular itineraries. Looking back, in Jun 2013, Delta acquired a 49% stake in British carrier Virgin Atlantic from Singapore Airlines.

The deal received the approval of the Department of Transportation (DOT) in September the same year. The Atlanta-based premier U.S. passenger carrier currently carries a Zacks Rank #2 (Buy).

Both carriers are trying to complement each other's services and are prioritizing customer convenience by aligning slots at London's Heathrow airport. From Apr 2014, Delta will have 9 non-stop flights between New York and London. However, the figure lags 17 daily flights between the same route offered by American Airlines Group Inc. ( AAL ) and its partner British Airways.


Currently, the New York-London route is the most lucrative business opportunity for passenger carriers as executive are ready to pay high fares for last minute travels. Carriers are also enhancing air travel experience in the route with Wi-Fi and flat-bed convertible seats.

Owing to the enhanced presence in U.S. and Europe, Delta-Virgin passengers will have more flight options from New York and London. Delta's improved schedule along with Virgin's enhanced flight features is keeping it ahead of rival United Continental Holdings Inc. ( UAL ) in terms of market share. Delta's expanded presence in New York airports like John F. Kennedy (JFK) and LaGuardia (LGA) is also helping it to gain a stronger foothold in the transatlantic route.  

However, post its merger with U.S. Airways, American Airlines is striving to gain a greater share within the transatlantic route. American Airlines has renovated its fleet of The Boeing Co. 's ( BA ) 777-300 aircrafts for the route by installing separate cabins for first and business class passengers along with reclining seats and power outlets.

America Airlines also gains from British Airways' extensive short-haul connectivity within Britain and Europe. Further, U.S. Airways' strong corporate customer base in the eastern coast of U.S. will strengthen America Airlines' corporate portfolio.

Thus, despite the transatlantic route boosting Delta's passenger service revenues from the Atlantic region, the carrier has lesser market share than American Airlines. We believe Delta will have to increase its share to counter competition in the market.



AMER AIRLINES (AAL): Free Stock Analysis Report

BOEING CO (BA): Free Stock Analysis Report

DELTA AIR LINES (DAL): Free Stock Analysis Report

UNITED CONT HLD (UAL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: DOT , AAL , BA , DAL , UAL

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