Airlines to operate together globally
Air France KLM and Delta Air Lines today (May 20) signed a long term joint venture deal in Paris to operate flights around the world.
On transatlantic routes the airlines will co-ordinate all operations and share revenue and costs.
The carriers will also co-operate on routes between North America and Africa, the Middle East and India and between Europe and countries in Latin America.
The deal consolidates the previous co-operation between AF and Delta and Northwest Airlines, now taken over by Delta, and KLM
The three carriers said the joint venture would provide more than 200 transatlantic flights daily and represented about 25% of all transatlantic capacity.
At a press conferecec, they said they expected the joint venture to create a total of $300m in syngergies by the seocnd year.
The airlines claimed the deal would give passengers more choice, increased frequencies, convenient flight schedules, competitive fares and harmonised services.
The joint venture is the culmination of many years of co-operation between the airlines.
KLM first signed a transatlantic deal with Northwest Airlines in 1997.
AF and Delta signed their own joint venture agreement in 2007.
A statement by AF KLM and Delta said today's agreement setting up a single transatlantic joint venture was the “next logical business strategy.”
The airlines will share the running of the joint venture with an executive committee of the three ceos and a management committee with members from various departments including marketing, finance, sales, network, alliances and operations.
There will also be ten working groups to put the deal into force.
The carriers, all members of the SkyTeam alliance, said the deal was long term and could only be cancelled with a three year notice period after an initial ten years.
Pierre-Henri Gourgeon, president and ceo of AF KLM, said: “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 transatlantic operations, we will give our passengers what they desire: more choice,more frequencies, more convenient flight schedules and superior customer services.”
Richard Anderson, Delta's ceo, said the joint venture allowed the airlines to operate as a single business.
He added: “Customers will benefit from the unique scope and choices we offer.”
Peter Hartman, president and ceo of KLM, said:
“We know from experience that the success of a joint venture calls for shared vision and long term commitment, the simplest of operating rules and fair sharing of revenues and costs.
“At KLM, we are proud to be starting to write a new page in our history.”
Mr Gourgeon said at the press conferecne that alitalia would join the joint venture as soon as it had received anti-trust immunity (ATI).
He said that while the old company which ran the Italian carrier had had ATI, the new one did not.
Mr Gourgeon said he had "no worries" that the EC would object to the expanded joint venture.
Mr Anderson said the joint venture would operate out of six major hubs: Paris, Amsterdam, New York JFK, Detroit, Minneapolis and Atlanta.
The deal would not, however, cover from from North America to Asia, from Europe to Asia or point to point traffic in Europe.
He added that it was a 50-50 deaol between AF KLM and Delta although neither side has any equity holding in the other carrier.
Mr Gourgeon said it was not a merger but an "economic arrangement which delivers similar benefits."
www.airfrance.com [1] www.klm.com [2] www.delta.com [3]