Delta/Virgin Atlantic joint venture starts Jan. 1. What does it mean for LAX?

Delta and Virgin Atlantic begin their joint venture on Jan. 1. Photo credit: Delta.

Delta and Virgin Atlantic begin their joint venture on Jan. 1. Photo credit: Delta.

Delta will essentially begin flying from Los Angeles to London Heathrow on Wednesday — but not in the traditional manner.

The nation’s third largest airline company begins its joint venture with Virgin Atlantic on Jan. 1. The airlines have anti-trust immunity, which means they can coordinate on schedules and pricing across the Atlantic. They will share revenues.

A term the industry uses for these agreements is “metal neutral,” meaning Delta and Virgin Atlantic have such a tight alliance that neither airline cares which carrier passengers choose. Delta makes money whether you fly to London nonstop from Los Angeles on Virgin or whether you make a stop in New York and fly Delta all the way.

Delta already has antitrust immunity with Air France, Alitalia and KLM, but those carriers don’t help Delta in lucrative U.S.-London nonstop markets. The Delta/Virgin alliance is expected to operate in a similar manner to the American Airlines/British Airways joint venture. (A few years ago, Virgin was the No. 1 opponent of the American/British Airways venture, even going so far as to paint planes saying, “No Way, BA/AA.”

So what does Virgin get out of the tie-up in Los Angeles? For one, it has a broader network beyond Los Angeles than it had before. Notice the map:

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