NEW YORK —
Delta said Tuesday that it plans to form a joint venture with Virgin Atlantic so they can sell seats on each other’s flights, share costs and profits, and set flight schedules in ways that help both airlines. American Airlines has a similar deal with British Airways.
Because Delta would be setting fares and schedules in coordination with an airline it used to compete with, it will need US and European antitrust approvals. Delta said the share purchase will happen with or without antitrust approval.
Delta is aiming to have the joint operation running by the end of 2013.
The deal won’t add flights between the United States and Britain. But travel would be more seamless. Travelers would be able to buy one plane ticket from, say, Lansing, Mich., on Delta and connect in New York to a Virgin Atlantic flight to London. Travelers from Europe would have a smoother transition onto Delta flights to US locations.
Delta said that frequent-flier programs would be linked, too.
Combined, Delta and Virgin Atlantic operate 31 flights a day in each direction between North America and the United Kingdom, including nine each way between Heathrow and John F. Kennedy International Airport in New York and Newark Liberty International Airport in New Jersey.
Delta has only three flights a day straight from New York to Heathrow. American and British Airways have 14 between them. And that’s the problem. New York to London and back is one of the world’s prime business travel routes. Delta has loads of travelers coming into its New York hubs at JFK and LaGuardia. But without more flights to bring those travelers on to London, Delta is at a serious disadvantage.
Landing rights at London’s Heathrow Airport are limited, so Delta can’t just add flights there.
A Buckingham Research analyst, Daniel McKenzie, wrote that Delta needed to fix its shortfall of London flights to win more business travelers. He estimated the deal would bring Delta hundreds of millions of dollars in added revenue, starting in 2014.
Richard Branson will still own more than half of Virgin Atlantic, which will continue to fly as a separate airline under its own name. In 2000, Branson sold a stake to Singapore Airlines for about $960 million at the time. That is the share that Delta is buying.
Virgin Atlantic reported a pretax operating loss in its most recent fiscal year, even as the number of passengers it carried rose 2 percent. It indicated in 2010 that it might be interested in some kind of tie-up with another airline.
Virgin Atlantic has 38 planes, compared to 725 for Delta. Delta carries some 160 million passengers per year, almost 30 times more than Virgin Atlantic.
Shares of Atlanta-based Delta rose 5.13 percent, to $10.66.