Virgin Australia has finally been given the nod for its trans Pacific and network alliance with giant US carrier Delta Airlines.
The US Department of Transportation has served notice that it will make the tentative approval final in coming weeks. The deal has already been approved by the ACCC in Australia.
In its statement the DoT says:
In today’s order, the Department said Delta and its partners had made substantial changes from their previous application, addressing concerns that immunity would provide only limited benefit to consumers. In the new application, the Virgin Blue Group expanded the scope of the alliance to include service to more passengers. It also said that it had completed an upgrade of its reservation system to ensure compatibility with Delta’s system, providing consumers with a more seamless travel network. In addition, the carriers said they would serve more cities and offer more capacity at the start of their alliance than they originally proposed, providing more benefits to consumers at the outset.
This is a significant change in the competitive realities between Australia and the US, in that it ensures (barring serious commercial miscalculations) that Virgin Australia can overcome the pressures the much larger Qantas network can exert on it on the routes, where it code shares with one of Delta’s major rivals American Airlines.
Virgin Australia now has substantial alliances in the broad sense with Etihad to Europe, Air New Zealand for trans Tasman connections, and Delta for the US, and indeed, Delta beyond the US.
That leaves Asia to be finalised, something Virgin Australian CEO John Borghetti recently said would occur before the end of December. It also leaves much focus for industry observers on Singapore Airlines, just as it does concerning Hainan, its Hong Kong Airlines associate, and lots of signals from within Qantas that it is working on some sort of Shanghai break through, possibly to the annoyance of its oneworld partner and fierce rival Cathay Pacific and its China carrier, Dragonair.
So many partners, so many commercial imperatives, and so little time.
Consider the state of Australian carriers serving the UK and Euro markets, the Asia and China markets, and the North American markets, and New Zealand, to all be in a state of enhanced upheaval until further notice.
Also consider Qantas surrounded on the route by carriers using Boeing 777s to great effect, namely Virgin Australia, Delta and Air New Zealand.
Plus of course Airbus A380s for Virgin Australia in the higher gross weight versions now coming over the horizon for later in this decade, which is inevitable if growth continues at anything like the pace of the previous decade, and Sydney Airport remains slot gridlocked.