Air France-KLM and Delta launch major joint venture

The Air France KLM Group and Delta Air Lines announced a long-term plan to operate their transatlantic operations as one entity, “coordinating operations and sharing revenues and costs” of the network. In addition, “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 America,” the announcement said. KLM and Delta subsidiary Northwest Airlines have had a joint venture agreement since 1997, while Air France and Delta inked a similar pact in 2007. Last year, the U.S. Transportation Department awarded antitrust immunity in transatlantic markets for the SkyTeam carriers Air France, Alitalia, CSA Czech Airlines, Delta, KLM and Northwest after finding that the combination would not have an adverse effect on competition.

“Following the merger of Delta and Northwest, the next logical business strategy was to establish a single transatlantic joint venture,” the companies said. Operating as a single unit, the new joint venture will control about 25% of all transatlantic capacity, they said, and will bring in revenues estimated at more than $12 billion a year. “The airline partners will provide their corporate clients with a broad, global offering that best meets their expectations for the most convenient airline system,” they noted. The routes initially covered in the joint venture include all those 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,” they said. “Whenever traffic rights permit, and notably between the United States and the European Union, flights will be mutually code-shared.”

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