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Air France and Delta Air Lines sign Trans-Atlantic Joint Venture Agreement

Search ASIA Travel Tips .com Latest Travel News Thursday, 18 October 2007

Air France and Delta Air Lines have signed a joint venture agreement to share revenues and costs on their trans-Atlantic routes. The deal will encompass combined revenues of approximately US$1.5 billion annually during the first phase of the operation and more than US$8 billion annually for the second phase.

The first phase will begin April 2008 and will include all non-stop flights operated by Air France and Delta between Air France's Paris-CDG, Orly, and Lyon hubs, and Delta's Atlanta, New York JFK, Cincinnati and Salt Lake City hubs. It will also include flights operated by both carriers between London-Heathrow and the US. A combined 19 daily flights and more than 4,500 seats per day - a 45% increase - are expected to be part of the first phase of implementation.

By 2010, the agreement will be extended to all trans-Atlantic flights operated by Air France and Delta between Europe and the Mediterranean on one side and North America on the other side, as well as all flights between Los Angeles and Tahiti.

"The launch of this joint venture marks a turning point in our partnership with Delta," said Jean-Cyril Spinetta, Chairman and CEO of Air France KLM Group. "Our long-standing cooperation paves the way for some particularly interesting opportunities. Since signing the EU-US Open Skies agreement in April of this year, we now benefit from even greater access to worldwide markets offering some of the highest growth potential."

Once the 2008 summer schedule comes into effect, many transatlantic flights operated by Air France and Delta between Europe and the US will be sold on a code-share basis.

First phase benefits of the joint venture partnership will include:

- Delta serving London Heathrow using three of Air France's slots at that airport with:

- a London-Heathrow/Los Angeles flight operated by Air France
- two London-Heathrow/New York JFK flights operated by Delta
- a London-Heathrow/Atlanta flight operated by Delta

- The addition of three new trans-Atlantic routes not currently served on a non-stop basis by either airline: 

- a Paris-Orly/New York JFK flight operated by Delta
- a Lyon/New York JFK flight operated by Delta, and
- a Paris-CDG/Salt Lake City flight operated by Delta

"This is a win for Delta, Air France, and for the loyal base of customers who fly our airlines across the Atlantic each year," said Richard Anderson, Chief Executive Officer of Delta Air Lines. "As part of this new joint venture and the antitrust immunity we have enjoyed since 2002, we will have plenty of scope to coordinate our sales policies on our respective transatlantic networks, thanks to more comprehensive and integrated services and procedures. Together, we will be able to offer passengers more flight options and frequencies, better schedules, new opportunities to earn more miles to take advantage of an enlarged network with seamless booking."

The joint venture will not lead to the creation of a subsidiary. It will be managed by a steering committee formed by Air France and Delta. The committee will oversee nine working groups responsible for coordinating day-to-day implementation of the joint venture agreement in the areas of network, revenue management, sales and distribution, products and services, frequent flyer program, operations, IT, finance and cargo.

The joint venture has an initial term through March 31, 2016 and will renew for subsequent periods of three years with effect from this date.

On June 28, Air France, KLM, Delta, Northwest, Alitalia and CSA Czech Airlines filed for expanded antitrust immunity with the U.S. Department of Transportation. If granted, such immunity would enable Air France, KLM, Delta and Northwest to set up a joint venture agreement among the four of them and ultimately integrate their trans-Atlantic operations.

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