Delta Air Lines ( DAL ) and Virgin
Atlantic Airways Ltd. submitted an antitrust immunity (ATI)
application with the U.S. Department of Transportation (DoT) for
their proposed joint venture. The companies are seeking antitrust
immunity for their flight routes between North America and the
United Kingdom.DELTA AIR LINES (DAL): Free Stock Analysis
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In Dec last year, Delta confirmed its plans to acquire a 49% stake
in British carrier Virgin Atlantic that is currently with Singapore
Airlines. Delta Air Lines will shell out £224 million or $360
million for the purchase and substantially gain more control over
New York to London network - one of the hottest air itineraries
across the globe.
Interestingly, the air travel network between the U.S. and United
Kingdom, including the one between the two foresaid cities, is
dominated by a joint venture of AMR Corp.'s American Airlines and
British Airways with 60% of the slots at London Heathrow Airport
under their control.
With this filing, Delta and Virgin Atlantic target to pose as
strong competitors for the American Airlines-British Airways
partnership by offering additional frequent quality travel options
for trans-Atlantic flyers. The amalgamation of Virgin Atlantic's
hefty slots at the Heathrow airport and Delta's commanding position
over the U.S. airline network are expected to work in favor of
passengers with extensive travel plans.
Per the joint venture agreement between Delta and Virgin Atlantic,
both carriers will share the expenses and revenues of the flights.
The two companies aim to operate 31 total daily flights both ways
between the United Kingdom and North America during the peak
season, with 23 flights to and from the Heathrow airport. This will
hugely benefit customers with expanded and enhanced flight
connectivity to key markets, better pricing and suitable booking
Both the companies have also applied for antitrust immunity for a
five-way coordination between the United Kingdom and North America
air network involving Delta, Virgin Atlantic, Air France, KLM, and
Further, with the approval of the antitrust immunity, Delta - the
second-biggest U.S. airline by operating revenue following
United Continental Holdings ( UAL ) - intends to
commence a new non-stop service from Seattle to London, which is a
significant business market. This move will not only strengthen
Delta's foothold on one of the busiest commercial routes but will
also broaden the international presence in Seattle.
Delta competes with the likes of Southwest Airlines
Co. ( LUV )
and JetBlue Airways Corp. ( JBLU ) within the U.S.
airline industry and carries a Zacks Rank #3, implying a Hold