The Air France KLM Group and Delta Air Lines
have entered into a new long-term joint venture whereby the
partners will jointly operate their trans-Atlantic business by
coordinating operations and sharing revenues and costs of their
trans-Atlantic route network.
The airlines will cooperate on routes
between North America and Africa, the Middle East and India, as
well as on flights between Europe and several countries in Latin
The joint venture represents
approximately 25% of total trans-Atlantic capacity with
annual revenues estimated at more than US$12 billion
(approximately 9.3 billion euros, reference year 2008/09).
The vast network, offering over 200 flights and approximately 50,000
seats daily, is structured around six main hubs:
Amsterdam, Atlanta, Detroit, Minneapolis, New York-JFK and
Paris-CDG, together with Cincinnati, Lyon, Memphis and Salt
Going forward, this structure will
represent a major strength for the SkyTeam alliance, of which
all three airlines are members.
“The structure of this joint
venture, in which we operate as a single business where we
consensually develop our strategies and share revenues and costs,
provides the incentives for us to collaborate in a way that
generates benefits for customers, shareholders and employees of
our three airlines,” said Richard Anderson, CEO of Delta Air
Lines. “Customers will benefit from the unique scope and choices
we will offer, while shareholders and employees will benefit
from the stronger competitive and financial position of our
Air France and KLM have been working with their respective American partners for many years. KLM signed a joint
venture agreement with Northwest in 1997, while Air France and
Delta signed a joint venture agreement in 2007. Following the
merger of Delta and Northwest, the next logical business strategy
was to establish a single trans-Atlantic joint venture. The
agreement signed on Wednesday is the result of that collaboration.
Included in the JV figures are results
services under the flight codes of all three airlines (AF, KL
and DL codes), as well as the contribution from connecting
flights beyond the hubs.
The joint venture’s geographic scope
includes all flights between North America and Europe, between
Amsterdam and India, and between North America and Tahiti. On
these routes, the business will be jointly operated with the
strategy and economics equally shared among the Air France KLM
Group and Delta.
Wherever traffic rights permit, and notably
between the United States and the European Union, flights will be mutually code-hared.
The joint venture will also step up
the visibility of all three airlines in more than 400 airports:
the Air France, KLM and Delta brands will be combined at all North
American and European airports wherever any of the three carriers
operates. Moreover, each partner will also support the three
brands in advertising and marketing.
Governance of the joint
venture will be equally shared between the Air France KLM Group
and Delta. An executive committee comprising the three CEOs and a
management committee comprising representatives from Marketing,
Network, Sales, Alliances, Finance and Operations will define
Ten working groups will be responsible for
implementing and managing the agreement in the sectors of network,
revenue management, sales, product, frequent flyer,
advertising/brand, cargo, operations, IT and finance. The joint
venture will not however lead to the creation of a subsidiary.
venture is a long-term, evergreen arrangement that can only be
cancelled with a three year notice, after an initial term of 10
other recent news regarding: