Delta Air Lines expects to initiate joint corporate contracts through its Air France joint venture beginning April 1, with plans to complete a four-way joint venture integration that includes Air France-KLM and Delta's Northwest subsidiary by the end of the year, Delta CEO Richard Anderson told BTN
The U.S. Department of Transportation last year gave the nod to the joint venture, setting the stage for Air France, Delta, KLM and Northwest to integrate transatlantic operations and tie together two separately held joint ventures. Air France and Delta in 2007 initiated a joint venture agreement, modeled after a similar transatlantic venture KLM and Northwest established a decade ago. The four-way agreement, however, would supersede those two separately held joint ventures (BTNonline, Oct. 22, 2007)
"From a corporate customer standpoint, you'll see commencing on April 1 joint Delta-Air France corporate contracting," Anderson said. "We expect to then be going from two two-way joint ventures to having a single joint venture between Delta-Northwest-Air France-KLM completed by the end of the year."
Anderson said the carriers would be able to conduct four-way corporate deals as the Air France piece is folded in by April, even though the full four-way joint venture won't be complete until the end of the year. He said, "The sales piece, the front end of the joint venture and entering into contracts with corporations, we can already do. Remember, we have antitrust immunity with Air France-KLM now, so we can do the single contract across the whole network. The joint venture just deals with the interrelations of the financial and operating pieces and the split on the commercial side, but it doesn't stop us from going forward and entering into global sales agreements that include the networks of Delta-Northwest and Air France-KLM."
Anderson said the corporate contracting integration of the four carriers offers a value proposition to multinational corporate clients, including "more powerful discounts because you're putting more volume on one carrier."
The Delta-Northwest-Air France-KLM joint venture has a head start when contrasted with similar arrangements initiated by competing airline alliances. American Airlines and British Airways, along with Oneworld alliance partner Iberia, are awaiting DOT approval to implement their own joint venture, announced last August (BTNonline, Sept. 2, 2008)
Meanwhile, Continental Airlines last year initiated a transatlantic joint venture with United Airlines, Lufthansa and Air Canada to "pool revenue" and jointly set fares, schedules and services and negotiate with corporate clients on international routes where immunity extends (BTNonline, June 30, 2008)
. Since both the Oneworld and Star Alliance joint ventures hang in the balance as carriers await DOT approval, those carriers can make little headway to compete on joint contracting capabilities.
Department of Transportation acting assistant secretary for aviation and international affairs Michael Reynolds, who ultimately signed the decision last year to approve the Delta-Northwest-Air France-KLM, told BTN
this month that the department still is weighing those competing airline requests.
"In November, we said that the Star Alliance application essentially was complete and invited comment," Reynolds said. "After we say that an application is essentially complete, we have six months to come to a decision, so by this May we have to come to a decision in the Star case. We have collected and gone through the comments. Now the next step in the process is the order to show cause."
Reynolds said DOT last month requested further information from Oneworld and awaits feedback to "evaluate whether the record is essentially complete."