V Australia (shortly to be rebranded Virgin Australia) and Delta Air Lines have been tentatively awarded antitrust immunity from the US Department of Transportation (DoT) to operate joint services on trans-Pacific routes. The decision now enters a public-review period before becoming final. The airlines applied for immunity almost two years ago, but in 2010 the DoT rejected the carriers’ application. DoT now states that substantial changes to the proposal have addressed previous concerns. Delta currently only operates non-stop Los Angeles-Sydney services and V Australia operates from Sydney, Melbourne and Brisbane to Los Angeles.
US tentatively awards antitrust immunity to V Australia and Delta
You may also be interested in the following articles...
The US Big 3 airlines enjoy rally in domestic & Latin markets as the Atlantic and Pacific languish
The three large US global network airlines – American, Delta and United – were reasonably positive about their outlooks in early Jan-2017 prior to the US government issuing travel restrictions for several countries. The long term effects of President Trump’s executive order remain unclear, but early indications show a curb of some corporate travel just as yields in that passenger segment were starting a slow recovery.
Those three airlines were optimistic that pricing in the US market, including business travel fares, had hit the bottom and was turning a corner. For now that is still the likely scenario, with the domestic market serving as one of the stronger entities for those three airlines prior to the travel ban. Latin America had also started a solid recovery, with American, Delta and United all posting positive passenger unit revenue results for that region during 4Q2016, and they expect Latin America’s momentum to continue into 1Q2017.
The trans-Atlantic and trans-Pacific remain the most challenging regions for American, Delta and United. Trans Atlantic flights are challenged by competitive capacity and currency fluctuations that show no signs of retrenching. But prospects for the trans Pacific look better in 2H2017 as service caps in the current China-US bilateral are met during that period.
Alaska and Delta: the end of a partnership, but the start of new competition on the US west coast
A decision by Alaska Air Group and Delta Air Lines to dissolve their codesharing partnership in late 2016 was not surprising, given that the demise of their relationship began about four years ago when Delta opted to build Seattle into a strategic trans Pacific hub. Since that time the financial benefit Alaska has enjoyed from the relationship has dwindled as Delta has built up its own network in Seattle to feed its long haul flights, rather than rely on passengers from Alaska.
After the two airlines formally announced their split: through the planned launch of seven new markets from the airport in 2017 Delta sent a clear message that it had no intention of backing down in Seattle, breaking an Alaska monopoly in several of those markets. However, Delta’s international expansion from Seattle appears to be on hold until the airport completes a new customs facility at the airport in 2019.
Even as their relationship officially ends, competitive dynamics between Alaska and Delta will intensify on the US west coast as Alaska embarks on its merger integration with Virgin America. Alaska will find itself competing with Delta and numerous other airlines in the strategic and fragmented Los Angeles market, and the merged entity retains a solid presence on numerous key routes from the airport.