Air France-KLM and Delta Air Lines signed the finalized deal that will control 25 percent of passenger flight capacity between the United States and Europe. The two airlines have been operating as code-share partners since 1997 – both airlines are a member of the SkyTeam alliance. However, it was not until the Open Skies agreement, which became affective March 30th of last year, that US-EU routes have really opened up. Moves like this parallel agreements like the British Airways and American Airlines pact.
“This strategic partnership puts us in a good position compared with other major alliances, which are extremely active on the world’s leading long-haul market. By integrating our trans-Atlantic operations, we will give our passengers what they desire: more choice, more frequencies, more convenient flight schedules and superior customer service,” said Pierre-Henri Gourgeon, president and CEO of Air France KLM. “By optimizing the use of our pooled resources, this joint venture will help us weather the current economic situation and protect our product offering.”
Many travelers are curious as to how this will impact travel prices. The two carriers have denied it, but said each carrier would save approximately $150 million each as the pact will help cut over-served routes. The two carriers forecast annual revenue to be $12 billion. They plan to offer 200 trans-Atlantic flights and approximately 50,000 seats daily.
“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 respective airlines.”
It will be interesting to watch how US-EU routes shake up in the coming months / years. American and British Airways await anti-trust immunity. Rival carriers, like Virgin Atlantic, have opposed the deal, but I do not think Virgin will have any affect on changing the allied partners’ plans. Despite the two airlines assuring the public that ticket prices will not change, it sounds unlikely.
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