Delta announces deal with Virgin

Delta Air Lines and Virgin Atlantic jointly announced a new alliance yesterday. The press release from both companies unveiled Delta’s purchase of a 49 percent stake in the British carrier for $360 million. The airlines will remain separate but will share costs and revenues from joint venture flights. The 49 percent share to be purchased by Delta was previously owned by Singapore Airlines.

There will be 31 peak day round trip joint venture flights between the U.K. and the U.S., Canada and Mexico. There will be nine flights daily between Heathrow and the U.S. Seven flights will go to New York’s John F. Kennedy International Airport and two will fly to Newark, N.J.

Passengers will be able to connect to U.S. destinations through Delta’s hubs and to the U.K. through Virgin’s base in London-Heathrow. U.S. passengers will have access to other European destinations through Delta’s alliances with Air France, KLM, and Alitalia in Paris, Amsterdam and Rome. Members of Delta Skymiles and the Virgin Atlantic Flying Club will earn miles on both airlines. Members of Delta Sky Clubs and Virgin Atlantic Clubhouses will also receive reciprocal access.

The alliance will require approval from the U.S. Department of Transportation, the Department of Justice, and agencies in the European Union. The companies expect approval by the end of 2013.

According to the press release, “The partnership allows both carriers to offer a greatly expanded network at Heathrow and to overcome slot constraints, which have limited the growth and competitive capability of both airlines.”

Sir Richard Branson is the President and principle owner of Virgin Atlantic. Branson is also a minority shareholder in Virgin America, a Virgin brand airline headquartered in Burlingame, Calif. with a hub in San Francisco. Virgin America is a separate company from Virgin Atlantic and is unaffected the new alliance.

 

Originally published on Examiner.com
http://www.examiner.com/article/delta-to-purchase-49-percent-share-virgin-atlantic-1?cid=db_articles

Delta to Comair: ‘Drop dead’

Delta Air Lines recently announced its decision to shut down its regional airline subsidiary, Comair. In a July 30 press release Delta announced that, as part of Delta’s overall plan to reduce the number of regional jets in its network, Comair’s 50-seat jets would be removed from Delta service. Its remaining 70-seat jets will most likely be transferred to other Delta Connection carriers.

According to the press release, Delta intends to drastically reduce the number of regional jets in its network from “nearly 350 to 125 or fewer in the upcoming years.” Delta further said that they did not plan to reduce service in Comair’s Cincinnati base from current levels. Comair will cease operations on September 29.

A major factor in the decision was the price of oil. "The economics just simply do not work," said Delta CEO Richard Anderson in the Wall Street Journal. "The 50-seat RJ fleet was purchased with a fuel-price assumption of $20 a barrel." Oil is currently trading near $100 per barrel.

According to Airline Pilot Central, Comair has 654 active pilots with 147 pilots currently on furlough. The company started in 1977 and was purchased by Delta, which already owned a 20 percent stake, in 1999. Since Delta declared bankruptcy in 2005, Comair has seen its fleet decline and its bases at New York’s John F. Kennedy airport, Orlando, and Greensboro, N.C. close.

The company also owned a flight school in Sanford, Fl., Comair Aviation Academy. After the Delta purchase, the school became known as Delta Connection Academy. The flight school was sold in 2009 and is now known as Aerosim Flight Academy.

Many passengers are not aware that when they buy a ticket on a major airline, they may fly on an airplane operated by a different company entirely. The major airlines have had code share agreements with regional airlines for the past few decades. Regional airlines typically operate airliners with 70-90 seats while the major airline operates larger airplanes.

The regional airline industry has been hit hard by the wave of airline bankruptcies since September 11, 2001. Fortunes of regional airlines rose and fell as their major airline code partners renegotiated contracts for their feeders. Atlantic Coast Airlines, a United Express and Delta Connection Carrier, lost its United contract and attempted to fly solo as Independence Air, only to go out of business in 2005. In the post-2008 period, many regionals furloughed pilots. Pinnacle Airlines, formerly a Northwest carrier and now a Delta Connection carrier, is currently in bankruptcy. Mesaba Airlines, then a subsidiary of Pinnacle, stopped flying in 2012. Mesa Airlines went into bankruptcy in 2010.

Delta’s Comair decision sends a disturbing signal to other regional airlines. They are limited by fuel efficiency from expanding their fleets of 50-seat and smaller jets and by union scope clauses from expanding to larger airliners. As fuel prices increase, regional airlines may continue to shrink unless they can convince their major airline partners to grow their fleets of turboprop airliners, which are more fuel-efficient than jets.

Communities that could support 50-seat regional jets on multiple flights may not be able to fill a larger, traditional airliner. If other airlines follow the trend by eliminating 50-seat jets from service, many small airports across the country might see the number of airline flights decline. Others may lose airline service entirely.

Read this article on Examiner.com:
http://www.examiner.com/article/delta-to-shut-down-comair