MARTIN COLLINS: John Durie |
July 10, 2009
Article from:
The Australian
Virgin finds ideal partner
VIRGIN will terminate its code-share agreement with United Airlines after signing a deal to create a trans-Pacific joint venture with Delta.
It will be a strategically brilliant deal if Brett Godfrey and his Delta comrade, Glen Hausenstein, can win antitrust approval.
The ACCC in Australia should not pose a problem, but the attitude of the new zealots within the US Justice Department is unknown.
The joint venture is basically a cross between a code-share agreement and full equity swap, which means the two airlines operate as one on the Pacific route without having to complete marriage vows.
Both sides reap benefits because Virgin can channel its domestic passengers on to either its own or Delta planes and offer them more choices once in the US.
The ACCC has knocked back code-sharing deals between Air New Zealand and Air Canada, and Qantas and Air New Zealand, but in both cases the end result would have been one dominant airline.
In this case, the end result is at least two stronger airlines and arguably more competition.
All that is needed now is someone who wants to buy a ticket and everyone will be happy.
The ACCC will certainly take a close look at the deal to ensure that it is not a ruse to free up capacity for other routes, for example, and to test what might happen to the services if the deal doesn't go ahead.
The joint venture announcement came after Delta announced its services to Australia.
Godfrey showed admirable foresight in lining up this deal after the wretched launch of his international aspirations.