Delta Airlines power and influence has been a long, slow, soft expansion over several years.
This week it reached new levels, with the initial approval by the US DoT of the immunised joint venture – or, depending on your point of view, legalised cartel, across the Atlantic.
Delta, Virgin Atlantic, AirFrance and KLM will now be a fully formed operation, cross-selling tickets and destinations on each others websites seamlessly and each taking a slice of the profits. Its a guaranteed way of keeping prices up and competition down between that JV’s members.
British Airways and American Airlines do the same thing, United and Lufthansa Group too.
The difference however with Delta is that it owns 49% of Virgin Atlantic directly, and through a complex arrangement with AirFrance-KLM Group, bought a small shareholding in them for $350m. AF-KLM used the very same money to buy a 30% share of Virgin Atlantic, giving Delta effective control of the airline.
Delta is still an active participant in the Alitalia rescue bid, and has been quietly and calmly keeping its hopes of holding on to the Italian market share it brings to Skyteam.
Technically AirFrance-KLM still own a small slice of Alitalia – so if Delta does what Delta does, in co-ordination with Italian backed rescuers, it looks set to add Alitalia to its indirect control, further expanding its aviation empire.
And let’s not forget that Delta’s ownership of Virgin Atlantic, means it now has indirect control over Flybe through the Connect Air partnership. Flybe is soon to be rebranded under the Virgin Atlantic flag and will inevitably use Delta’s website infrastructure to operate seamlessly with Virgin Atlantic who use it too.
In the last few days, Delta had another win, this time in Japan. The airline has been flying to Singapore from Tokyo Narita and is about to end that because its about to get a decent set of routes at Haneda – which is effectively as central to Tokyo as you can get, where Narita is almost a 90 minute drive in zero traffic. Haneda is the crown jewels of airline routes into Tokyo, and Delta will moving almost its entire operation into the airport as soon as possible. Only its LAX flights will be left at Narita for now.
This takes us to the Delta-Korean Air joint venture, which is so close in business terms it makes them almost one company from a passengers perspective. Both airlines have the benefit of the US-Korean Open Skies arrangement, which allows each side to operate unhindered to and from the each others countries. This means that Delta can now stop wasting its time flying to destinations like Manilla and Singapore – which it has found difficult to keep profitable, and leave them to Korean Airlines operating on its behalf, with connections from Seoul-Incheon.
Its true that American Airlines and United will also be getting a few slots at Haneda in Tokyo, but they don’t have the same tight commercial and operational ties Delta does with Korean for onward flights.
Delta’s involvement in Alitalia also explains its dislike of start up AirItaly, 49% of which is owned by arch rival Qatar.
And don’t forget Delta also has a sizeable stake in China Eastern, which helps keep its operations into China functioning smoothly. Add to that a stake in Grupo AeroMexico and Gol, and its tentacles spread far and wide.
With Delta also the predominant airline in Skyteam – perhaps now a less important alliance structure than it once was, but still integrating a raft of airlines and route options across Delta’s sprawling airline empire, Delta’s dominance in the global aviation markets is largely unknown by the majority of the public. Few recognise it as one of the largest airline players in the world through its corporate holdings and extensions, and yet there its sits, quietly staying ahead of the game, operating its own plans in its own time.