Delta Airlines has announced that they will buy 49 percent of Virgin Atlantic. The Associated Press reported that Delta will pay $360 million to gain a bigger share in the New York to London travel market.
Delta's joint venture means that the airlines would share the revenue made from the two ventures under the partnership. The AP reports that this partnership is a way for Delta to get more revenue from the lucrative Heathrow to U.S market, especially New York.
Delta currently has less flights from New York to Heathrow than both United and American which are biggest U.S. competitors.
"There's no question the whole focus of this deal ... was helping Delta get more access to London,'' said travel analyst Henry Harteveldt to USA Today. "It's the most important international business market outside North America. The New York-to-London route in particular is critical to meet the needs of corporate travelers, and among them especially the people who pay for the business-class tickets, which is where Delta and other airlines earn a majority of profits.''
Delta's goal is to have the venture take place by the end of next year, reports USA Today.
51 percent of the stake would remain to Virgin Group owned by mogul Richard Branson. The 49 percent was previously owned by Singapore Airlines, which bought the stake in 1999.
If the venture is approved by regulators the two airlines would be independent airlines but it would allow for easier connections for travelers between the two airlines and frequent flier points would go towards either carrier. They would also share revenue and costs.
Delta CEO Richard Anderson said at a news conference Tuesday according to USA Today, "We actually believe that this is incredibly pro-consumer, because now you're going to have a real competition in the marketplace, and competition makes our companies better.''
This article is copyrighted by Travelers Today, the travel news leader
