US approval for the Virgin Australia, Delta Airlines joint venture on flights and domestic connections between each carrier on their flights between Australia and America was finally granted overnight.
The official statement, as usual in such announcements, is a sugar overdose. However the important question, from the Australian traveller perspective, is what Virgin Australia will do with Delta’s Boeing 777-200LRs, since its ambitions appear to involve more 777-300ERs, the model it uses, than it is likely to have between now and say 2014, and which could be unchanged at a total of five of the jets, which are already fully committed to flights to Los Angeles and the Abu Dhabi, where they connect with the European, Asian and African services flown by Etihad.
The 777-200LR is for all its brilliance, a less economic jet on the flights to Los Angeles than the larger capacity but lesser ranged -300ER. However for Melbourne-Los Angeles flights, even under the worst conditions of heat or headwinds in either direction, the -200LR is considered a jet that is never likely to have payload restrictions either in freight or passenger numbers. In the form in which Delta has ordered the -200LR it may experience payload restrictions flying between its Atlanta hub and Sydney, however it could still deliver a very impressive service between the major Australian and US hubs for the respective joint venture partners and one that in terms of equipment would outperform the problematical Qantas use of Boeing 744ERs to Dallas Fort Worth.
It is a possibility well worth watching.
The now approved Virgin Australia-Delta joint venture, which could devise its own joint ‘service marks’ according to the terms of the agreement, is pitched against the Qantas-American Airlines joint business agreement granted interim approval by the ACCC on Thursday.
It is important to keep the subtle, or not really subtle, differences between alliances and joint ventures or joint business agreements in mind. These ‘joint’ activities can be considered as route or region specific consolidations , or ‘closed’ consolidations that airlines can engage in without resolving the immense difficulties that still stand in the way of full trans border consolidations.
How they work in the real world will prove of critical importance to Qantas, Virgin Australia, Delta, American or any carrier that is alert to the future prospects of full consolidation.
These route or region specific deals will attract continuing scrutiny by aviation regulators, by organised labor, and by sovereign states juggling the demands of international trade reform and their ‘national interests’ as the very notion of flag carriers runs into the rise (or fall) of globally owned portfolios of airline brands.
For those who want sugar without substance, here is a taste of the official joint PR release: