Virgin Atlantic is expected to increase its corporate travel business from the US as part of its deal with Delta to run a joint venture across the Atlantic.
Delta said that Virgin would be included in the US carrier’s corporate agreements when the two carriers begin the joint venture agreed yesterday (December 11). Delta is also buying Singapore Airlines’ 49 per cent shareholding in Virgin.
Delta CEO Richard Anderson said that Virgin should benefit from “significant corporate traffic flows” when the UK carrier is included in Delta’s agreements with the biggest firms in the US.
“We have corporate agreements with all of the Fortune 100 companies in the US and we can add Virgin to them,” said Anderson. “Some of these can be done before we secure ATI (anti-trust immunity). This will be an immediate opportunity for us.”
Delta and Virgin’s proposed joint venture will create the second biggest operation between the UK and US after the existing British Airways-American Airlines business which accounts for around 60 per cent of flights. Delta-Virgin would have a 25 per cent market share based on their current 31 flights per day.
The airlines have to secure approval from regulators in the UK, European Union and the US but both companies expressed confidence that they would be given clearance considering the dominance of the BA-AA venture. Virgin and Delta hope to start operating the joint venture “by the end of 2013”.
“BA-AA has 60 per cent of the market between the UK and US which is a significant concentration of flights and that was approved by the government,” said Anderson.
Julie Southern, Virgin’s chief commercial officer, said the two airlines could begin co-operating immediately on codeshares and frequent flier programmes while they wait for regulatory approval.
She added that Virgin would also “evaluate” potential membership of the Skyteam alliance, which includes Delta as a member.
“We will look at alliance membership to see if it’s the right thing to do for the business,” said Southern. “There’s a lot of work to do to evaluate Skyteam – we will engage with that work and reach a conclusion over the next few months.”
Southern added that the long-term plan for the two airlines was to bring them together at Heathrow’s Terminal 3 where Virgin is already based. Delta currently flies out of Terminal 4 at Heathrow.
“This is not something we will be able to achieve immediately because of the constraints at Heathrow,” said Southern. “But we will be working hard to make that happen over the coming years.”
The two airlines already share Terminal 4 at New York’s JFK airport.