Airline JVs under scrutiny in Qantas-American; Delta-Aeromexico; Alaska-Virgin America merger

Concerns over the US Department of Justice obstructing the merger between Alaska Air Group and Virgin America were laid to rest in Dec-2016: the agency cleared the tie-up through a fairly benign requirement that Alaska and American must relinquish some codesharing routes. The result is that Alaska and Virgin America will bolster their combined positions at key US markets in order to compete more effectively with larger US network airlines.

DoJ’s blessing is a major milestone for Alaska. Since the company announced its plans to acquire Virgin America in Apr-2016, it has continually stated that it expected to close the deal by YE2016, after gaining DoJ’s approval. But the initial closing date was pushed back in order for DoJ to gain more time to review the transaction. The extended review caused jitters among Alaska’s investors about potentially onerous conditions to be imposed by DoJ, but ultimately the agency’s requests were rational.

In the last weeks of 2016 US regulators have pointed a new direction for joint venture, but the message is not entirely clear. Adopting a reasoned approach to the Alaska-Virgin America tie-up while rejecting a proposed joint venture between Qantas and American, and driving Aeromexico and Delta to reconsider their JV after imposing conditions the airlines deemed to be unworkable. In part, those decisions reflect the influence smaller airlines have exerted on the current US Presidential administration.

This CAPA Premium Analysis article is 1,581 words.

To access CAPA Premium Analysis you need a CAPA Membership

Your window into the latest insights

CAPA employs an industry-leading Analyst team based in Europe, North America, Asia and Australia who offer unique perspectives and independent and accurate commentary of critical industry developments globally. CAPA Members rely on our Analysis to unlock valuable insights and actionable intelligence to keep ahead of the game.

Big picture strategic view

Our Analysts don’t just report the news - they take a big picture strategic view of aviation dynamics, issues and trends and analyse the implications of these developments for you.

Global intelligence

The CAPA Analyst team is based globally to ensure our CAPA Members have access to independent, unique perspectives covering an entire spectrum of daily, worldwide commercial aviation developments.

Customise your Alerts

CAPA Members can use CAPA Alerts to receive daily, weekly or monthly and customised updates on our Analysis.

I'm very impressed by the factual and detailed analysis CAPA is always doing.

- CEO, Airline Member
To learn more, contact us:
Phone: +61 2 9241 3200 | Email: membership@centreforaviation.com