Delta Airlines and Virgin Australia have gotten their approvals for an anti-trust immunity agreement to cooperate across the Pacific between the United States and Australia.  They did so, in part, by promising to keep up frequencies between the two countries.

This doesn’t mean that routes won’t be rationalized.  The frequencies will stay the same, the routes won’t.   These two airlines will deploy their 777 aircraft on routes that are complimentary rather than competitive.  Expect V Australia 777s to start arriving in San Francisco to replace QANTAS’ recently withdrawn flights.

Delta’s 777-200LR aircraft can potentially make the flight between Atlanta and Sydney (although with a touch of payload restriction) and provide competition to QANTAS’ new 747-400ER flights to Dallas/Fort Worth.

And for the first time, there is real competition for the QANTAS/British Airway/American Airlines Oneworld consortium.  Virgin Australia can provide domestic connections to Delta in Australia and Delta can provide domestic connections to Virgin Australia in the United States.

John Borghetti, CEO of Virgin Australia (and formerly an executive with QANTAS) has made it clear that he intends that Virgin Australia be a strong competitor with QANTAS rather than an constant underdog and he has experience with building networks as a result of working for QANTAS for many years.

Look for quite a bit of new competition on routes between the United States and Australia and I think United is going to be the airline to take the hit.  United has pretty old aircraft with a pretty old service product and no partners in Australia to assist with feed.  They also have no new large widebody aircraft to carry passengers with either although they will have the 787-8 with which they can start direct flights to New Zealand and Australia from cities in the United States that have never traditionally seen direct flights.

Filed under: Airline News by ajax