BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Joint Application of 

Virgin Atlantic Airways, Ltd.

Delta Air Lines, Inc.

Société Air France 

Koninklijke Luchtvaart Maatschappij N.V.

Alitalia Compagnia Aerea Italiana S.p.A

Under 49 U.S.C. §§ 41308 and 41309

for Approval of and Antitrust Immunity 

for Alliance Agreements

)

)

)

)

)

)

)

)

)

)

)

)

)

Docket DOT-OST-2013-

JOINT APPLICATION FOR APPROVAL OF AND ANTITRUST IMMUNITY

FOR ALLIANCE AGREEMENTS

Communications with respect to this document should be sent to:

Jill Brady

General Counsel and Director of HR and 

External Affairs

VIRGIN ATLANTIC AIRWAYS LTD

The Base, Fleming Way

Crawley, United Kingdom

RH10 9LX, United Kingdom

Glen Hauenstein

Executive Vice President, Network 

Planning & Revenue Management

DELTA AIR LINES, INC.

1030 Delta Boulevard

Atlanta, Georgia 30320

Anita M. Mosner

Jennifer M. Nowak

HOLLAND & KNIGHT LLP

800 17th Street, NW, Suite 1100

Washington, D.C. 20006

Tel. 202-419-2604

Counsel for

VIRGIN ATLANTIC AIRWAYS

Ben Hirst

Senior Vice President and General 

Counsel

Andrea Fischer Newman

Senior Vice President, Government Affairs

Alexander Van der Bellen

Managing Director, Government Affairs 

and Associate General Counsel

DELTA AIR LINES, INC.

1212 New York Avenue, NW Suite 200

Washington, DC 20005 

Tel. 202-842-4184

April 8, 2013
Rita Ciccone

General Counsel & Vice President Legal 

and Corporate Affairs

ALITALIA-COMPAGNIA AEREA ITALIANA 

S.P.A.

Piazza Almerico da Schio. Pal RPU

00054 Fiumicino (Roma), Italy

Phone +39 06 65635136

ciccone.rita@alitalia.it

Richard D. Mathias

ZUCKERT, SCOUTT & RASENBERGER, 

L.L.P.

888 Seventeenth Street, NW, Suite 600

Washington, DC 20006-3309

Tel. 202-973-7917

Counsel for ALITALIA COMPAGNIA 

AEREA ITALIANA S.p.A.

Laurent Timsit, 

Vice President –

European and International Affairs

SOCIÉTÉ AIR FRANCE

45, rue de Paris

F-95747, Roissy CDG Cedex

Paris, France

Nienke Neij 

Corporate Legal Counsel

KLM ROYAL DUTCH AIRLINES

P.O. Box 7700, 1117 ZL Schiphol

The Netherlands

Robert E. Cohn

Patrick R. Rizzi

HOGAN LOVELLS US LLP

555 Thirteenth Street, NW

Washington, DC 20004

Tel. 202-637-4999/5659

robert.cohn@hoganlovells.com

patrick.rizzi@hoganlovells.com

Counsel for 

SOCIÉTÉ AIR FRANCE and 

KONINKLIJKE LUCHTVAART 

MAATSCHAPPIJ N.V.
Table of Contents

I. Introduction..........................................................................................................1

II. Executive Summary.............................................................................................3

III. Description of the Agreements...........................................................................11

A. Joint Venture Agreement........................................................................12

1. Network Working Group .............................................................15

2. Revenue Management and Pricing Working Group ....................16

3. Passenger Working Group..........................................................17

4. Operations Working Group .........................................................18

5. Finance Working Group..............................................................18

B. Coordination Agreement ........................................................................19

C. Implementing Agreements .....................................................................19

IV. The Application Is Consistent with the Department’s Legal Standards for 

Granting Immunity. ............................................................................................20

V. A Grant of Immunity Is Required to Produce Important Public Benefits..............21

A. The Delta/Virgin Atlantic Joint Venture Will Enable the Parties to 

Provide Substantial Consumer Benefits through New Services and 

Increased Competition. ..........................................................................23

1. An Optimized Joint Schedule Will Improve Competition and 

Consumer Choice on the Key New York- and BostonHeathrow Routes........................................................................23

2. The Joint Venture Will Provide Customers with the Benefit 

of the Expanded Scope of the Two Networks. ............................26

3. The JV Parties Plan to Launch New Nonstop Service at 

Seattle. .......................................................................................28

4. The Joint Venture Creates the Potential for Additional U.S.-

U.K. Flying from Delta Hub Cities. ..............................................29

5. The Joint Venture Will Improve Service Between the U.S. 

and U.K. Regional Cities.............................................................29

6. The Joint Venture Will Enable the JV Parties to Achieve a 

More Effective Sales Presence on Both Sides of the 

Atlantic .......................................................................................30

7. Airport Co-location and Streamlined Service Will Improve 

the Customer Experience ...........................................................31

B. Expansive Integration Across a Metal-Neutral North America-U.K. 

Network will Create Substantial Consumer Benefits that Cannot 

Be Achieved without Antitrust Immunity. ................................................32

C. The Improved Network Enabled by the Joint Venture Will Produce 

Substantial Quantifiable Consumer Benefits ..........................................33
VI. The Proposed Alliance Will Improve Competition and Consumer Choice 

on U.S.-U.K. Routes and Will Not Reduce Competition in Any Relevant 

Market. ..............................................................................................................34

A. The Current Competitive Landscape: AA/BA Dominates U.S.-U.K. 

Routes ...................................................................................................35

B. The Proposed Joint Venture Will Enhance Competition .........................38

1. United States-United Kingdom....................................................39

2. Complementary Routes ..............................................................40

3. Overlap City-Pairs ......................................................................41

VII. Granting ATI Would Be Consistent with the Letter and Spirit of the EUU.S. Open Skies Agreement and Settled DOT Precedent..................................48

VIII. The Joint Applicants Will Not Implement the Alliance Agreements without 

Antitrust Immunity..............................................................................................50

IX. The Joint Applicants Need Antitrust Immunity to Bridge the Two Joint 

Ventures. ...........................................................................................................50

X. Conclusion.........................................................................................................57
BEFORE THE

DEPARTMENT OF TRANSPORTATION

WASHINGTON, D.C.

Joint Application of 

Virgin Atlantic Airways, Ltd.

Delta Air Lines, Inc.

Société Air France 

Koninklijke Luchtvaart Maatschappij N.V.

Alitalia Compagnia Aerea Italiana S.p.A

Under 49 U.S.C. §§ 41308 and 41309

for Approval of and Antitrust Immunity 

for Alliance Agreements

)

)

)

)

)

)

)

)

)

)

)

)

)

Docket DOT-OST-2013-

JOINT APPLICATION FOR APPROVAL OF AND ANTITRUST IMMUNITY

FOR ALLIANCE AGREEMENTS

I. Introduction

Delta and Virgin Atlantic1 have entered into a comprehensive Joint Venture 

Agreement2 to combine their respective passenger services on routes between North 

America and the United Kingdom. The Joint Venture3 will be a more effective competitor 

on U.S.-U.K. routes, and in particular on U.S.-London routes. The Joint Venture sits 

alongside a recently announced transaction pursuant to which Delta will invest 

$360 million to acquire the 49% equity stake in Virgin Atlantic currently held by 

Singapore Airlines.4

 1 Common names are used throughout. Delta and Virgin Atlantic are sometimes 

referred to herein as the “JV Parties.” 

2 Hereinafter the “Joint Venture Agreement” or “JVA.”

3 Hereinafter the “Joint Venture” or “JV.”

4 The equity investment is subject to approval by the Department of Justice under 

the Hart-Scott-Rodino Antitrust Improvements Act, 15 U.S.C. § 18a (with respect to the 

equity investment) and by other competition authorities in relevant jurisdictions, including 

the European Union. 
Joint Application

Page 2

Delta and Virgin Atlantic, together with Air France, KLM and Alitalia5 hereby 

apply for antitrust immunity for the Alliance Agreements (described below) so that Delta 

and Virgin Atlantic can implement their Joint Venture and the Joint Applicants can 

implement the multilateral Coordination Agreement. Antitrust immunity for the Alliance 

Agreements is necessary for Delta and Virgin Atlantic to achieve the synergies and 

public benefits that will flow from the Joint Venture, and for the Joint Applicants to 

achieve the public benefits that will flow from the Coordination Agreement.

This Joint Application is made pursuant to 49 U.S.C. §§ 41308 and 41309. The 

Delta/Virgin Atlantic Joint Venture would create a coordinated business and “metal 

neutrality” between Delta and Virgin Atlantic on routes between North America (U.S., 

Canada, and Mexico) and the U.K. The Joint Venture will include all nonstop routes 

operated by Delta and Virgin Atlantic between North America and the U.K., as well as 

behind and beyond connecting flights operated by Delta within North America and by 

Virgin Atlantic within the U.K. The JVA is accompanied by a number of implementing 

agreements that provide for codesharing, lounge access, and reciprocal frequent flyer 

programs (“FFP”), among other things. The Joint Applicants have also executed a fiveway Coordination Agreement among Delta, Virgin Atlantic, Air France, KLM and Alitalia 

to facilitate coordination of the two joint ventures on North America-U.K. routes. 

Collectively, these are the Alliance Agreements for which antitrust immunity is sought.6 

 5 Hereinafter the “Joint Applicants.” The Joint Applicants request that the grant of 

antitrust immunity (“ATI”) extend to their majority-owned corporate affiliates. See 2009 

Star ATI, DOT Order 2009-7-10, at 27, Ordering Paragraph 1; 2011 Star ATI, DOT Order 

2011-11-16, at 7 & 11, Ordering Paragraph 1 (granting ATI to the “majority-owned 

affiliates” of the Joint Applicants).

6 Appendix A contains an abstract of the JVA and the Coordination Agreement. The 

remaining Alliance Agreements are being filed separately under Rule 12, and an index of 

those agreements is provided with the JV Parties’ Motion for Confidential Treatment. 

Appendices B and C contain additional information typically furnished to the Department 

in response to information requests in other antitrust immunity proceedings. 
Joint Application

Page 3

The alliance that would be formed by these agreements (the “Proposed Alliance”) 

meets the DOT’s standard for granting antitrust immunity because it will produce 

significant public benefits, and will not substantially reduce or eliminate competition in 

any relevant market. 

II. Executive Summary

Delta and Virgin Atlantic seek to form a highly coordinated joint venture for North 

America-U.K. service that will enable the JV Parties to compete more effectively on U.S.-

U.K. routes. Delta and Virgin Atlantic respectfully submit that the Proposed Alliance 

meets the Department’s public interest standard for approval and is consistent with 

previous grants of immunity for similar alliance arrangements. Delta’s minority 

investment in Virgin Atlantic and the accompanying Joint Venture between the JV 

Parties mark a milestone in aviation relations between the U.S. and Europe: this is the 

first time a U.S. carrier has taken an equity position of this size in a European airline. 

The Open Skies Agreement between the EU and U.S. laid the foundation for European 

and U.S. carriers to forge closer ties with each other. Delta’s investment in Virgin 

Atlantic is consistent with both the letter and spirit of the Open Skies Agreement, and the 

ability to enter into an immunized joint venture with Virgin Atlantic was critical to Delta’s 

investment decision. 

The Delta/Virgin Atlantic Joint Venture will deliver important public benefits, the 

most critical of which is the creation of a meaningful competitive alternative to the 

alliance between American Airlines and British Airways (“AA/BA Alliance”) that presently 

dominates the U.S.-U.K. market. By joining forces, Delta and Virgin Atlantic will 

strengthen each other and compete more effectively than either has been able to on its 

own, or would ever be able to in the absence of the Joint Venture. Specifically:

• Delta and Virgin Atlantic will optimize their joint schedules to improve service and 

connections. At New York, Delta and Virgin Atlantic will coordinate schedules, 
Joint Application

Page 4

eliminate “wingtip” flights and create a new high quality, high frequency product 

that can more effectively compete with the 15 daily New York-Heathrow flights 

operated by the AA/BA Alliance. Delta and Virgin Atlantic will also work to 

maximize connectivity at New York and other gateways onto Delta’s extensive 

North American network.

• The transaction enables the introduction of new nonstop service on the SeattleLondon Heathrow route. Delta (premerger Northwest) briefly operated Seattle 

service in the summer of 2008, but the flight was not viable in the face of an 

aggressive competitive response by British Airways. Virgin Atlantic will provide 

Delta with a London point of sale presence and improved connecting network out 

of London necessary to make the service a success. 

• The Joint Venture will establish each carrier as a nonstop competitor on 

important U.S.-London routes served by the other. By codesharing on Virgin

Atlantic’s flights, Delta will gain a nonstop LHR presence on five important routes 

including Los Angeles and Miami. Delta also will gain alternative access to 

important U.K. regional points that Virgin Atlantic serves beyond Heathrow. 

Virgin Atlantic will be able to offer services to Delta’s U.S. gateways such as 

Detroit, Atlanta and Minneapolis and beyond Virgin Atlantic’s U.S. gateways on 

Delta’s North American network.

• Delta and Virgin Atlantic will create a metal-neutral codeshare network covering 

all flights within and between North America and the U.K. The agreed revenue 

management techniques are designed to ensure full access of each party’s 

inventory to the other, and will eliminate “double marginalization” markups 

because both carriers share in the revenue of the entire journey.

• The Joint Venture will promote the development of potential future service on 

U.K. routes from Delta hubs, such as a second daily Detroit-LHR flight, additional 

frequencies on current Virgin Atlantic routes such as Newark-LHR, and other 

new services that would not be sustainable in the absence of the Joint Venture.

• The JVA provides for Delta and Virgin Atlantic to have a more effective and 

efficient joint sales force, increasing their ability to compete more effectively for 

corporate accounts and agency business. Virgin Atlantic’s strong position for 

London point of sale traffic will greatly enhance Delta’s penetration into the 

London business market, and Delta’s strong position in the United States for U.S. 

point of sale traffic will have the same effect on Virgin Atlantic. 

• The Joint Venture will create new efficiencies that improve the customer 

experience and lower costs, such as co-locating flights when and where possible. 

By co-locating flights at commonly served airports, Delta and Virgin Atlantic can 

reduce minimum connect times and save an estimated $15 million in annual 

operating expense.

• Delta and Virgin Atlantic will provide their passengers with enhanced access to 

airport lounges, and will permit reciprocal participation and recognition in each 

carrier’s frequent flyer program.
Joint Application

Page 5

The network improvements made possible by the Delta/Virgin Atlantic Joint 

Venture will deliver quantifiable benefits to consumers. Delta’s Quality of Service Index 

(“QSI”), coupled with additional modeling, predicts that consumers will enjoy at least 

$187 million in annual welfare benefits resulting from network-wide improvements in 

frequencies, scheduling, and route-planning.7 See discussion at section V(C).

The proposed Delta/Virgin Atlantic Joint Venture is different from proposed 

alliances and joint ventures previously submitted to the Department, which have focused 

on the combination of large networks. While this Joint Venture creates consumer 

benefits by linking the Delta and Virgin Atlantic networks, its larger purpose is to create 

consumer benefits by mounting a competitive response to a dominant firm. At the time 

of the AA/BA antitrust immunity application, the DOT foresaw that AA/BA’s large market 

share, high frequency of service, and other structural advantages would create serious 

challenges for competitors:

[T]he Department is also concerned that the proposed 

alliance will have diffuse negative effects in the remaining 

U.S.-U.K. overlap markets, as well as U.S.-U.K. markets 

generally. The proposed alliance combines the operations 

of British Airways and American, the two largest 

competitors in the market as measured by departures. 

They are each other’s primary competitors in the U.S.-U.K. 

market. Not surprisingly, the proposed alliance causes a 

share shift in many overlap markets involving London. For 

example, whereas British Airways is the leading competitor 

in New York-London pre-transaction, with 34 percent of 

bookings, post-transaction it would achieve almost 52 

percent of bookings by joining with American. Virgin 

Atlantic retains its second-place position in the market, but 

instead of an eight-point gap with the first-place competitor, 

it would then face a 26-point gap. In such circumstances, 

the Department recognizes that it could be difficult for 

 7 This figure does not include other consumer benefits not directly related to 

improvements in the JV Parties’ network offering. 
Joint Application

Page 6

competitors to match the frequency, scheduling, hubbing, 

and capacity-share advantages of the oneworld alliance.8

DOT’s concerns have proved to be well founded. Now, nearly three years after the DOT 

approved antitrust immunity for the joint venture between American Airlines and British 

Airways,9 the AA/BA Alliance dominates U.S.-London traffic. AA/BA now operates 59% 

of U.S.-LHR capacity;10 Virgin Atlantic is a distant second with a 16% share, and Delta is 

a marginal fourth place competitor with an 8% share.

The Delta/Virgin Atlantic Joint Venture will be a more effective competitor to the 

AA/BA Alliance than either airline would be separately because it will enable them to 

address the very hurdles the Department identified. For Delta and Virgin Atlantic, those 

hurdles are simple and clear: (1) access to LHR with sufficient slots to mount U.S.-LHR 

service of sufficient scope and frequency to be a meaningful competitive alternative to 

AA/BA, particularly for the time-sensitive business travelers who sustain the profitability 

of the services; (2) network feed and connectivity to support the economics of a high 

frequency service; and (3) brand and marketing presence in both the U.S. and U.K. to 

counter that of AA/BA. The formation of the Joint Venture will enable the carriers to 

overcome these barriers and improve their competitive position against AA/BA. 

Operating separately, Virgin Atlantic’s and Delta’s frequencies on the key routes 

of NYC-LHR and BOS-LHR lag far behind those of AA/BA. AA/BA dominates the routes 

with frequency and capacity offerings that exceed those of all other carriers combined. 

AA and BA together offer 15 daily NYC-LHR flights which they tout as “shuttle” service 

 8 American Airlines/British Airways, DOT Show Cause Order 2010-2-8, at 23.

9 American Airlines/British Airways, DOT Order 2010-7-8.

10 Based on June 2013 peak day schedule.
Joint Application

Page 7

with departures staggered every 30 minutes during the prime evening hours.11 Virgin 

Atlantic offers six daily NYC-LHR flights, and Delta offers just three daily flights.12

Similarly, at Boston, AA/BA currently offers four daily nonstop flights13 versus one flight 

each for Delta and Virgin Atlantic.14 These frequency disparities have a dramatic and 

disproportionate effect on each carrier’s ability to compete with AA/BA, particularly for 

time-sensitive travelers who value the flexibility of a high-frequency schedule.15 The 

Delta/Virgin Atlantic Joint Venture still will offer fewer flights than AA/BA, but together the 

carriers will operate an improved and well-timed schedule to more effectively compete 

with AA/BA.16 

Because of severe slot constraints at Heathrow, neither Delta nor Virgin Atlantic 

could mount a high-frequency service of its own. LHR remains one of the world’s most 

congested airports, with few slots available and even fewer that would be suitable for 

transatlantic service. As a Heathrow “non-incumbent,” Delta was not able to serve 

Heathrow at all until 2008, and until very recently did not hold a single LHR slot of its 

 11 Press Release, British Airways, Transatlantic Shuttle Service Created by the Joint 

Business, (Mar. 17, 2011), available at http://press.ba.com/?p=1688.

12 United offers five daily flights. Together, Delta, Virgin Atlantic and United offer 

14 daily LHR-NYC frequencies against AA/BA’s 15.

13 There have been six combined AA/BA services in previous summer seasons.

14 Exhibit JA-9.

15 The challenge that Delta and Virgin Atlantic face in their attempt to compete 

against AA/BA is underscored by the disproportionate share of premium traffic captured 

by AA/BA at New York and Boston. On the New York-LHR route, AA/BA have 62% of 

premium nonstop bookings, and 66% of total premium bookings (including behind and 

beyond passengers). Exhibit JA-6. On the Boston-LHR route, AA/BA have 73% of 

premium nonstop bookings, and 79% of total premium bookings including beyond and 

behind passengers. Exhibit JA-8. In each case, AA/BA’s share of premium bookings 

exceeds their seat share. Id.

16 The announced merger between American Airlines and US Airways will further 

strengthen AA/BA’s network of U.S. connections, add to the alliance’s Heathrow slot 

portfolio and routes, and place AA/BA in an even stronger competitive position against 

other transatlantic carriers. In particular, the merger will result in the addition of a new 

nonstop London-Charlotte service to the AA/BA offering.
Joint Application

Page 8

own.17 Delta’s current U.S.-LHR services are operated with leased slots from third 

parties and two “remedy” slots leased from AA/BA, which expire at the end of the 

commitments period. This is not a solid foundation upon which Delta can mount a 

serious competitive challenge to AA/BA. Virgin Atlantic’s slot holdings at LHR are 

miniscule compared to AA/BA’s.

18 Even if some slots become available over the next 

few years, growth through slot acquisitions is a slow and uncertain process. Only by 

joining forces can Delta and Virgin Atlantic offer a higher frequency service enabling the 

carriers to mount more effective competition against AA/BA. 

The Delta/Virgin Atlantic JVA will also improve each carrier’s network 

connectivity and ability to capture flow traffic, which will support the economics of their 

transatlantic flights. In the case of Virgin Atlantic, its transatlantic flights have little feed 

at either end. Although Virgin Atlantic is the U.K.’s second largest long-haul carrier, it 

operates as a point-to-point carrier serving international destinations from London. It 

has no European network to support its operation at LHR and no internal network in the 

U.K., apart from three recently-added points.19 On the U.S. side, Virgin Atlantic lacks a 

U.S. alliance partner and has limited access to cities beyond its U.S. gateways.20 The 

 17 Delta recently purchased a pair of slots from Alitalia. 

18 Virgin Atlantic holds around a 3% share of LHR slots, compared to AA/BA’s share 

of around 55%.

19 Virgin Atlantic attempted to bolster its European and intra-U.K. feed at Heathrow 

by purchasing bmi British Midland, which had a substantial LHR slot portfolio. However, 

IAG, the parent of British Airways and Iberia, was the successful bidder. IAG’s 

acquisition of bmi locks in British Airways’ already dominant position at Heathrow and 

forecloses any real prospect of Virgin Atlantic expanding its network at LHR. Although 

Virgin Atlantic is launching some short-haul services from Heathrow to Manchester, and 

using slots it has received as an EC-imposed remedy in the bmi deal from Heathrow to 

Edinburgh and Aberdeen, Virgin Atlantic continues to have a severely under-developed 

network for feed traffic behind London as compared to AA/BA.

20 Virgin Atlantic previously had a code share arrangement with Continental. This 

arrangement terminated when Continental merged with United. Virgin Atlantic also had 

a codeshare arrangement with US Airways, which is being terminated.
Joint Application

Page 9

JVA will enable Virgin Atlantic to access these U.S. markets more effectively. For Delta, 

the Joint Venture will allow Delta to broaden its network by placing its code on key Virgin 

Atlantic transatlantic flights, such as LAX-LHR, ORD-LHR and MIA-LHR, thus bringing 

additional nonstop LHR service to Delta customers. In addition, Delta will gain additional 

access to internal U.K. points that are now served by less convenient routings over Paris 

and Amsterdam. Although these network improvements will not put Delta and Virgin 

Atlantic on an equal scale with the powerful hub network that AA/BA operates at LHR, 

they do offer Delta and Virgin Atlantic the opportunity to compete in broader traffic flows 

than either carrier could serve without the alliance. 

The Delta/Virgin Atlantic Joint Venture also will enable each carrier to strengthen 

its marketing presence in the home country of the other carrier. Delta’s presence and 

brand recognition in the U.K. is low, which impedes its ability to compete effectively for 

U.K. point of sale customers, particularly for premium customers and corporate accounts 

for which a strong point of sales presence is especially important, and for sales through 

direct channels, which are dependent on brand recognition. Joining forces with Virgin 

Atlantic’s U.K. sales force and partnering with Virgin Atlantic’s iconic brand will 

immediately boost Delta’s U.K. market presence. Correspondingly, Virgin Atlantic will be 

able to join forces with Delta’s U.S. sales force, which will give it access to a large 

corporate customer base that it does not presently have and will improve its ability to 

capture U.S. point of sale customers, particularly in the time-sensitive business segment. 

In short, the Delta/Virgin Atlantic Joint Venture will create a strong new 

competitor that is better than the sum of its parts. Delta’s and Virgin Atlantic’s respective 

assets fill in each other's shortcomings: Delta brings a broad North American network 

and strong marketing presence throughout the U.S.; Virgin Atlantic brings an iconic U.K. 

brand, sales strength and established customer relationships in London. Delta and 
Joint Application

Page 10

Virgin Atlantic have a combined slot portfolio that enables a closer level of competition 

against AA/BA’s dominant U.S.-LHR service offerings. The Delta/Virgin Atlantic joint 

product offering will provide customers a new alternative that will be more attractive than 

Delta’s and Virgin Atlantic’s current standalone offerings. 

The benefits of the Delta/Virgin Atlantic Joint Venture are further complemented 

by Delta’s existing immunized joint venture with Air France/KLM and Alitalia. Through 

participation in the two transatlantic joint ventures Delta will be able to offer U.S. 

customers a complete package of service that includes all the benefits of the existing 

transatlantic joint venture, together with improved Heathrow service. In addition, 

because Virgin Atlantic has a very limited intra-U.K. network, coordination with Air 

France/KLM will enhance the ability of both joint ventures to compete for transatlantic 

passengers in U.K. regional markets served via Paris and Amsterdam. 

The Joint Venture is consistent with the E.U.-U.S. Open Skies Agreement and 

U.S. aviation policy, which has long recognized the formation of alliances as an 

important strategic tool. When paired with the formation of the Joint Venture, the 

Delta/Virgin Atlantic equity transaction will help to ensure that the JV Parties produce 

merger-like efficiencies from the Joint Venture, while ensuring that British nationals 

maintain control of Virgin Atlantic. The DOT has often granted antitrust immunity 

precisely in order to achieve such efficiencies. The Delta/Virgin Atlantic Joint Venture is 

a fully negotiated and detailed agreement that will lead to immediate efficiencies and 

public benefits. Approval of the proposed Delta/Virgin Atlantic Joint Venture and the 

Alliance Agreements is supported by and consistent with DOT’s decision to grant 

antitrust immunity to the AA/BA Alliance.

21 The Delta/Virgin Atlantic Joint Venture, as 

well as the other Alliance Agreements, will produce important public benefits in the North 

 21 American Airlines/British Airways, DOT Show Cause Order 2010-2-8, at 32.
Joint Application

Page 11

America-U.K. marketplace. The Delta/Virgin Atlantic Joint Venture is the competitive 

remedy to DOT’s well founded concerns of potential dominance by AA/BA as expressed 

when it approved that Alliance.

Delta and Virgin Atlantic require antitrust immunity to deliver the significant public 

benefits of their Joint Venture, and for Delta to realize the synergies and benefits of the 

equity stake it is taking in Virgin Atlantic. The JV Parties cannot share profits, pricing 

and scheduling plans or undertake many of the other joint activities contemplated by the 

JVA and the Alliance Agreements in the absence of antitrust immunity. No other Joint 

Venture has been willing to proceed with its agreements in the absence of immunity from 

the Department. In addition, as discussed below, the parties to the Delta/Virgin Atlantic 

Joint Venture, on the one hand, and the parties to the existing Delta/Air 

France/KLM/Alitalia Joint Venture, on the other hand, require antitrust immunity to 

coordinate activities in U.K. markets served by both joint ventures.

The Joint Applicants respectfully submit that the proposed Alliance Agreements 

meet the Department’s public interest standard for approval and are consistent with a

long line of decisions that conferred antitrust immunity upon similar alliance 

arrangements.

III. Description of the Agreements

The JV Parties intend to form a deeply integrated alliance. The Delta/Virgin 

Atlantic Joint Venture, coupled with the grant of antitrust immunity, will enable the JV 

Parties to produce new and more effective competition, new service and other consumer 

benefits, and significant efficiencies – all objectives for which the DOT has repeatedly 

granted antitrust immunity.

There can be no doubt that the JV Parties are fully committed to achieving these 

objectives. Delta has made a substantial investment to acquire a 49% equity stake in 
Joint Application

Page 12

Virgin Atlantic – the largest ownership permitted under current ownership and control

requirements of the EU and U.K. licensing regimes. Delta’s interests clearly lie in a longterm commitment to the success of Virgin Atlantic and the Joint Venture. Delta’s 

investment in Virgin Atlantic creates an alignment of financial incentives that will ensure 

that the benefits of the Joint Venture are realized. 

The JVA and other Alliance Agreements are consistent with the alliance 

agreements that the Department has approved and immunized in other recent ATI 

cases.22 The JVA is detailed and provides for a great degree of cooperation, which 

helps ensure that the immunized Joint Venture will produce substantial consumer 

benefits.

A. Joint Venture Agreement

The JVA between Delta and Virgin Atlantic covers all nonstop flights operated by 

Delta and Virgin Atlantic between North America (U.S., Canada, Mexico) and the U.K., 

as well as the JV Parties’ behind and beyond flights within North America and the U.K. 

that connect to the U.S.-U.K. services. The JVA creates metal neutrality between the 

two carriers and provides a detailed blueprint for how the JV Parties will implement and 

integrate their operations on Joint Venture routes. The Joint Venture is structured to 

ensure that each carrier is motivated to maximize the profitability of the Joint Venture as 

a whole. The integrated commercial activities contemplated by the JVA create mergerlike efficiencies that can be implemented only with antitrust immunity. Integrated 

commercial activities provided for in the JVA include:

• 50-50 sharing of incremental profits and losses generated by the Joint 

Venture above a certain baseline, subject to certain adjustments, which 

 22 See, e.g., American Airlines/British Airways, DOT Order 2010-7-8, at 22; 

SkyTeam II ATI, DOT Order 2008-5-32, at 4; U.S.-Japan Alliance Case, DOT Order 

2010-11-10, at 3.
Joint Application

Page 13

ensures that the JV Parties will be motivated to achieve shared goals and 

efficiencies.

• Network planning and schedule improvements. Network and capacity 

decisions relative to the JV Parties’ operations on Joint Venture routes 

will be planned for and made jointly to optimize the DL/VS competitive 

offering against rival alliances. This will allow the JV Parties to optimize 

frequency and capacity and to promote connectivity between the JV 

Parties’ operations.

• Metal neutrality, which ensures that the JV Parties will implement metal 

neutral sales and distribution policies and programs with respect to 

service on Joint Venture routes without preference to a JV Party’s own 

operated flights.

• Reciprocal code sharing on all Joint Venture and beyond routes within the 

U.K. and North America. Reciprocal codesharing will entail seamless 

interactive inventory availability and favorable special prorate terms, 

which will eliminate double-marginalization pricing mark-ups. 

• Joint sales and marketing coordination, which will maximize local point of 

sales expertise and allow the Parties to present a single sales face to 

customers. 

• Complementary product development and service enhancements.

• Airport co-location opportunities and joint purchasing strategies. 

The JV Parties are presenting a detailed and fully negotiated JVA for the 

Department’s consideration, with all financial settlement terms agreed in advance. 

Whereas most recent ATI applicants have presented “framework” agreements with 

details to be negotiated after the receipt of antitrust immunity, the JV Parties here have 

made definitive commitments to implement their Joint Venture on the terms and 

provisions set forth in the JVA once ATI is granted (subject to a limited number of other 

conditions being satisfied).23 Delta and Virgin Atlantic are contractually committed to 

implement the Joint Venture within six months after receipt of ATI approval.24 This 

provides the Department with certainty that the substantial consumer benefits and 

 23 This approach was necessary to support Delta’s commitment to acquire a 49% 

ownership interest in Virgin Atlantic.

24 JVA, Art. 2.2.1. 
Joint Application

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efficiencies of the Delta/Virgin Atlantic Joint Venture will be immediate and proximate to 

the grant of ATI approval.25

The JVA is consistent with other agreements that have been approved by DOT. 

As the Department stated when it approved the AA/BA/IB Joint Venture:

[T]he applicants present for our consideration a detailed 

and integrated joint venture agreement. Where applicants 

seek immunity to combine networks that overlap 

substantially, it is important for them to demonstrate that 

their proposed arrangement will lead to efficiencyenhancing integration. As we explained in the SkyTeam 

and Star cases, a “metal-neutral” joint venture allows the 

joint venture partners to share risks and rewards fairly and 

it incentivizes them to offer customers the best available 

products and services, without regard to which partner 

owns and operates the aircraft.26

The grounds for approval here are even more compelling. There is far less 

nonstop network overlap than in the AA/BA case, and the 49% equity investment 

component provides additional incentive for the JV Parties to achieve the envisaged 

efficiencies. 

The Joint Venture will be managed by a JV Steering Committee that will meet at 

least twice per year and consist of two representatives of each JV Party. The day-to-day 

 25 In recent years, the Department has required applicants for ATI to demonstrate 

that they have concrete plans to utilize this authority, and that this authority can yield 

immediate and substantial benefits. See, e.g., Delta/Virgin Blue, DOT Order 2011-6-9. 

Delta and Virgin Atlantic are well-prepared to make this showing. Although the carriers 

only recently agreed to form their Joint Venture, they have prior experience as partners, 

having maintained a U.S.-LHR codeshare arrangement from 1995 to 1997. Moreover, 

Delta and Virgin Atlantic have compatible processes and systems. Virgin Atlantic is 

hosted in a full service GDS and maintains a full suite of systems for handling 

codesharing and FFP reciprocity, because it cooperates with other major international 

carriers. The JV Parties will implement schedule improvements in the full IATA traffic 

season immediately following approval of this application and implementation of the 

JVA. The fact that Delta will hold 49% share interest in Virgin Atlantic is another 

compelling factor in favor of the carriers’ moving quickly to deliver the synergies of their 

integration activities. The JV Parties will be incentivized to move quickly to deliver new 

services and consumer benefits, and to build their competitive presence in the U.K.-

North America market.

26 American Airlines/British Airways, DOT Show Cause Order 2010-2-8, at 32.
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commercial and integration activities of the Joint Venture will be managed by five

working groups: (1) network, (2) revenue management and pricing, (3) passenger 

(sales, product, marketing, loyalty, brand/advertising), (4) finance, and (5) operations. 

Each of the working groups is discussed below.

1. Network Working Group

The Network Working Group will develop and implement the jointly agreed 

network optimization plan, including optimizing the JV Parties’ LHR and NYC slots and 

schedules, and assigning the most efficient aircraft from the JV Parties’ combined fleets 

to each route. Importantly, an initial agreed joint network plan that the JV Parties intend 

to implement following the grant of ATI has already been established, including specifics 

as to routes, schedule times, and fleet.27 The JVA provides that:

• The Network Working Group will develop and implement the jointly 

agreed network optimization plan, including optimizing the JV Parties time 

of day coverage on the NYC-LHR route to maximize competition against 

AA/BA’s 15 daily “shuttle” flights and United’s five well-timed flights, and 

improved passenger connections to Delta’s North America network.28

• The JV Parties intend to open direct Seattle-Heathrow service, bringing 

new service and competition to an AA/BA single carrier route.29

• The JV Parties intend to “[m]aintain or increase their current level of 

operations on the Joint Venture routes . . .” including the key New YorkLHR and Boston-LHR routes to better compete with AA/BA.30

Because these network plans have already been specified in the JVA, the JV 

Parties can move rapidly to realize the substantial public benefits of the joint network 

plan soon after ATI approval. The network changes will be implemented no later than 

 27 JVA, Art. 5.1.1 & Exhibit D.

28 JVA, Exhibit D. 

29 JVA, Exhibit D.

30 JVA, Art. 5.1.2.
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the first day of the second IATA season following Joint Venture implementation.31 (This 

period allows for advance publication and selling of the new schedule and the necessary 

lead-time for making operational changes).

2. Revenue Management and Pricing Working Group

The Revenue Management and Pricing Working Group will manage the 

coordinated pricing and revenue management functions of the Joint Venture and the 

delegation of responsibility for implementing the Joint Venture’s pricing strategies and 

activities, which is intended to maximize each carrier’s point of sale expertise. The JV 

Parties intend to achieve a high degree of integration and coordination of their respective 

inventory management systems and processes with respect to routings over Joint 

Venture routes and relevant beyond routes in order to maximize profits on a metalneutral basis. The JV Parties will manage their own flights with respect to revenue 

management activities; however, the JV Parties’ revenue management strategies and 

policies with respect to such routes will be aligned.32

Reciprocal codesharing is already supported by the JV Parties’ GDS platforms, 

and the JV Parties are putting additional systems and technology in place to support 

metal-neutral inventory management following implementation of the Joint Venture. 

Alignment and coordination of the JV Parties’ inventory management systems and 

processes will be accomplished through: (1) harmonization of booking classes, (2) 

seamless interactive inventory availability, (3) bid price exchange, (4) married segment 

logic and journey controls, (5) if technically and economically feasible, sourcing of each 

other’s forecasting data input for each JV Party’s unique origin/destination between 

North America and the U.K. to feed each other’s revenue management system, and (6) 

 31 JVA, Art. 2.2.1.

32 JVA, Art. 6.4.3.1.
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harmonization of passenger-related service methods and procedures to the extent 

practicable (such as passenger protection and waitlist priorities).33

3. Passenger Working Group

The Passenger Working Group will be responsible for creating a highly 

coordinated sales function for the Joint Venture, developing full reciprocity between the 

JV Parties’ loyalty programs, and facilitating reciprocal access to premium lounges, 

including Virgin Atlantic’s premier Heathrow Clubhouse and Delta’s new JFK SkyClub.

Under the Joint Venture Agreement, the JV Parties have committed to implement 

a “metal neutral” sales policy under which each JV Party will implement sales and 

distribution programs and policies with respect to Joint Venture routes without 

preference to its own flights on routes operated by the other JV Party.34 Upon 

implementation of the Joint Venture, the JV Parties will seek to present a common “face” 

to the customer using seamless tools, processes and support.35

The Joint Venture sales teams will coordinate with the Joint Venture pricing 

teams with respect to establishing discount policies for corporate and agency 

accounts.36 The JV Parties will implement common strategies and tactics for selling 

Joint Venture products and services and will maintain a coordinated approach to Joint 

Venture accounts and coordinated sales communications in order to minimize conflict 

and maximize coordination of sales activities.37

Although Delta and Virgin Atlantic will maintain separate frequent flyer programs, 

the JV Parties will implement and maintain full reciprocity between their respective 

 33 JVA, Art. 6.4.3.

34 JVA, Art. 6.5.2.

35 Id.

36 JVA, Art. 6.5.3.2.

37 JVA, Art. 6.5.3.3.
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loyalty programs.38 In addition, the JV Parties will provide reciprocal premium customer 

handling services, including priority airport check-in, baggage handling and excess 

baggage allowances to elite customers of each JV Party, as well as maintain reciprocal 

arrangements between their respective airport lounge programs for elite customers.39

4. Operations Working Group

The Operations Working Group will facilitate seamless passenger connections, 

baggage transfer, check-in and harmonization of customer service policies. The JV 

Parties agree to coordinate their schedules and operations with respect to Joint Venture 

routes and related beyond routes in order to maximize connections between the JV 

Parties’ flights and to reduce minimum connection times.40 The JV Parties will also 

pursue co-location opportunities at airports where flights on Joint Venture routes and 

beyond routes are operated by both JV Parties.41 The JV Parties will seek to address 

any customer service “seams” that may exist or arise in such processes and 

procedures.42

5. Finance Working Group

The Finance Working Group monitors and reports on Joint Venture financial 

performance and recommends actions as appropriate. Although the Finance Working 

 38 JVA, Art. 6.6.

39 Id.

40 JVA, Art. 6.8.

41 JVA, Art. 6.7.

42 JVA, Art. 6.8.
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Group is crucial to the management of the immunized Joint Venture, it does not have 

public-facing activities.43

B. Coordination Agreement

Antitrust immunity for the 5-way Coordination Agreement is needed to avoid 

potential immunity gaps between the two joint ventures arising from the coordination 

activities necessary for the efficient operation of the two joint ventures. Delta will be 

coordinating with Virgin Atlantic on North America-U.K. routes that involve a nonstop 

U.S.-U.K. segment. Delta will also be coordinating with AF/KL/AZ on North AmericaU.K. routes that involve connections via continental Europe, e.g. in Amsterdam or Paris. 

Overarching antitrust immunity is needed to avoid the “horseshoe” risk that coordination 

within one set of joint venture partners will be imputed to the other; immunity is also 

necessary to realize the benefits of coordination between the two joint ventures in U.K. 

regional markets, where transatlantic service is dominated by AA/BA. Accordingly, the 

Joint Applicants have entered into a Coordination Agreement (discussed in detail in 

section IX below) that defines the antitrust immunized cooperation necessary to facilitate 

the efficient operation of the two joint ventures. 

C. Implementing Agreements

The Joint Venture is accompanied by a number of alliance implementing 

agreements including a Codeshare Agreement,44 a Special Prorate Agreement, a 

Lounge Agreement, and an FFP Agreement. 

 43 In addition to the five working groups explicitly provided for in the JVA, the JV 

Parties have agreed to explore ways to cooperate and coordinate their respective cargo 

activities on Joint Venture routes, which may lead to the creation of a sixth working 

group covering cargo activities.

44 Although a limited codeshare is possible without immunity, the benefits of that 

codeshare would be substantially less without the coordinated network planning and 

metal neutrality that ATI will allow. 
Joint Application

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IV. The Application Is Consistent with the Department’s Legal Standards for 

Granting Immunity.

In considering applications for antitrust immunity, the Department engages in a 

two-part analysis: a “competitive analysis” and a “public benefits” analysis.45 Under 49 

U.S.C. § 41309(b) the Department will “approve an agreement . . . when the Secretary 

finds it is not adverse to the public interest and is not in violation of this Part.” If the 

Department approves an agreement under 49 U.S.C. § 41309, the Department has the 

discretion to grant the transaction antitrust immunity under 49 U.S.C. § 41308 “provided 

that [the Department determines] the exemption is required by the public interest.”46 

“While the public interest determination under both §§ 41309(b) and 41308(b) entails a 

comparison of anti-competitive effects and public benefits, the standard in section 

§ 41308(b) . . . is higher.”47

The Department’s established policy is to approve and grant immunity for intercarrier agreements if:

(1) the agreements do not eliminate or substantially reduce 

competition and are not adverse to the public interest; and

(2) a grant of immunity is required by the public interest and for the 

parties to proceed with the transaction.48

For the reasons discussed below, the Joint Applicants respectfully submit that 

the proposed Alliance Agreements meet these criteria. 

 45 See 2011 Star ATI, DOT Order 2011-11-16, at 5; American Airlines/British 

Airways, DOT Order 2010-7-8, at 7-8.

46 2011 Star ATI, DOT Order 2011-11-16, at 5; see also 49 U.S.C. § 41308.

47 2011 Star ATI, DOT Order 2011-11-16, at 5; American Airlines/British Airways, 

DOT Order 2010-7-8, at 8.

48 American Airlines/British Airways, DOT Order 2010-7-8, at 8.
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V. A Grant of Immunity Is Required to Produce Important Public Benefits.

The Joint Venture will produce substantial public benefits by providing enhanced 

competition for the AA/BA Alliance in the U.S.-U.K. market, which it today dominates as 

a result of its control of slots at LHR and its greater network reach. Delta and Virgin 

Atlantic will compete more effectively by providing new and enhanced services, as 

described below, each of which in itself provides a substantial public benefit. Taken 

together, these new services and the competition they bring to the market will produce 

consumer welfare benefits in excess of $187 million per year.49

Antitrust immunity for the Alliance Agreements is necessary to achieve these 

benefits. Only by joining forces can Delta and Virgin Atlantic mount a viable competitive 

alternative to AA/BA. Joining forces will allow Delta and Virgin Atlantic to optimize flight 

schedules, share profits and losses, engage in joint pricing and revenue management in 

Joint Venture markets, and launch joint sales and marketing initiatives. Further, only by 

coordinating its activities with the two joint ventures will Delta be able to ensure the 

efficient operation of each joint venture and therefore the full realization of the 

competitive benefits to which they give rise. These and other joint activities will allow the 

JV Parties to achieve merger-like synergies; but in the absence of immunity these 

activities would also expose the Joint Applicants to unacceptable antitrust risk. 

 49 See discussion in Part V (C) and Exhibit JA-11. 
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The Department on numerous occasions50 has found that integrated airline 

alliances, such as the Joint Venture proposed here, produce extensive consumer 

benefits: “Antitrust immunity is well suited to enable carriers to achieve merger-like 

efficiencies and deliver benefits that would not otherwise be possible.”51 For example, 

the Department has noted the beneficial impact of immunized alliances on service 

levels, fares, and costs:

“[W]e tentatively find that the following public benefits are 

likely [from an immunized oneworld alliance]: (1) more 

options for travelers in numerous transatlantic city pairs, 

based on the applicants’ ability . . . to achieve fare 

combinability; (2) lower fares resulting from the reduction in 

double marginalization on multi-segment itineraries; (3) 

volume discounting . . .; (4) expanded access to 

discounted fares resulting from coordinated inventory; (5) 

reduced costs through shared sales, marketing, 

distribution, procurement, . . .”52

The cooperation between Delta and Virgin Atlantic will generate important efficiencies 

and public benefits, discussed below.

 50 See International Aviation Developments: Transatlantic Deregulation, The Alliance 

Network Effect, U.S. Department of Transportation, Office of the Secretary (Oct. 2000), 

at 5 (“DOT Second Report”), at 2-3, 5-6, 10; see also, e.g., SkyTeam II ATI, DOT Order 

2008-5-32; ANA/CO/UA AA/JAL, DOT Order 2010-10-4; Continental/Star Alliance, DOT 

Order 2009-4-5; American Airlines/British Airways, DOT Order 2010-2-8; Delta/Virgin 

Australia/Pacific Blue, DOT Order 2011-6-9; 9-way Star Alliance ATI, DOT Order 2006-

12-17; American/Lan Airlines/Lan Peru, DOT Order 2005-10-8; America West/Royal 

Jordanian, DOT Order 2005-1-23; American/SN Brussels, DOT Order 2004-4-10; 

United/Asiana, DOT Order 2003-5-18; American/Swiss, DOT Order 2002-11-12; 

American Finnair, DOT Order 2002-7-39; Delta/Korean, DOT Order 2002-6-18; 

United/Bmi, DOT Order 2002-4-4; Delta/Air France/Alitalia/Czech, DOT Order 2002-1-6; 

Continental/COPA, DOT Order 2001-5-1; United/Austrian, DOT Order 2001-1-19; 

American/Lan Chile, DOT Order 1999-9-9.

51 SkyTeam II ATI, DOT Order 2008-4-17, at 15. 

52 American Airlines/British Airways, DOT Order 2010-2-8, at 30.
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A. The Delta/Virgin Atlantic Joint Venture Will Enable the Parties to 

Provide Substantial Consumer Benefits through New Services and 

Increased Competition.

1. An Optimized Joint Schedule Will Improve Competition and 

Consumer Choice on the Key New York- and BostonHeathrow Routes. 

On the most important U.S.-U.K. route, New York-LHR, Delta and Virgin Atlantic 

are currently unable to offer sufficient frequencies and convenient departure times to 

effectively compete against AA/BA’s 15 flights per day. Delta only operates three flights 

a day, and Virgin Atlantic operates six flights a day: four at JFK and two at EWR. A 

similar disparity exists at Boston-LHR, where AA/BA operates four flights a day 

compared to one each by Delta and Virgin Atlantic.

This disparity in frequencies is particularly significant in the all-important market 

for business travelers. Time-sensitive business travelers value the flexibility afforded by 

high frequencies and favorable time-of-day coverage. In order to offer sustainable 

service on these routes, a carrier must capture its fair share of high value customers (as 

measured by the carrier’s total share of seat capacity on the route). But corporate 

accounts have repeatedly told Delta its service frequencies and time-of-day coverage on 

NYC-LHR are inadequate and have refused to commit business to Delta proportionate to 

its seat-share on the route.53 Market share data confirms this point, showing that Delta 

captures only 7% of premium traffic on the route, well below its 10% capacity share.54

The best way Delta can reverse its chronic underperformance against AA/BA at New 

York and at Boston is to offer more frequencies and better time-of-day coverage. Given 

 53 See Declaration of Chuck Imhoff, Delta Managing Director for New York Sales for 

Delta Air Lines, at DL00000268–275; Letters of Support from Delta Customers to the 

Department of Justice at DL00000276-364; and Letters of Support from Delta 

Customers to DOT filed contemporaneously in this docket. 

54 Exhibit JA-6.
Joint Application

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the slot constraints at LHR and the other challenges of the market, the only way to 

accomplish that is for Delta and Virgin Atlantic to join forces.

Even after Delta and Virgin Atlantic join forces, the frequencies offered by AA/BA 

on these routes would still greatly outstrip those offered by Delta and Virgin Atlantic. But 

by combining forces and spreading their flights out over the course of the day, the two 

carriers can come closer to effectively competing against AA/BA. For example, Delta 

and Virgin Atlantic’s London to New York services overlap and conflict with each other. 

As illustrated in the table below, by taking advantage of the larger portfolio of slots they 

would hold together, Delta and Virgin Atlantic can move overlapping flights to achieve 

better time-of-day coverage and offer a more flexible schedule that has greater utility for 

customers, particularly for time sensitive passengers. This will allow Delta and Virgin 

Atlantic to be much more effective in competing with AA/BA for that segment of the 

market.

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2. The Joint Venture Will Provide Customers with the 

Benefit of the Expanded Scope of the Two Networks.

In addition to combining and optimizing their service in the key business routes of 

NYC-LHR and BOS-LHR, the Joint Venture will enable Delta and Virgin Atlantic to join 

their networks to provide customers with more service options and to compete more 

effectively with AA/BA across the U.S.-U.K. market as a whole.

Delta and Virgin Atlantic will be able to adjust their schedules to enhance 

connections to Delta’s North American services beyond Virgin Atlantic’s U.S. gateways, 

which will improve the distribution and penetration of Virgin Atlantic’s product in the U.S. 

and North American marketplace. In particular, this will enable Virgin Atlantic to reach 

points behind the NYC gateway by connecting to Delta’s hub at JFK. It will also allow 

Virgin Atlantic to reach points served by Delta behind Virgin Atlantic’s other U.S. 

gateways. Similarly, Delta will be able to reach points in the U.K. that will shortly be 

served by Virgin Atlantic over LHR, which will afford customers more alternatives to the 

routings Delta presently offers over Paris or Amsterdam in conjunction with Air France 

and KLM. 

The Department previously has acknowledged the benefits that may be realized 

when carriers enter an immunized relationship that permits joint realignment of 

schedules.55 Here, antitrust immunity would allow the JV Parties to realign schedules in 

order to mount a more effective competitive response to AA/BA, which would otherwise 

retain its dominant position on the Boston-and New York-Heathrow routes. 

Second, the Joint Venture will enable Virgin Atlantic and Delta to place their 

codes on each other’s transatlantic flights and offer online service to their customers in 

markets they cannot serve today.

 55 2009 Star ATI, DOT Order 2009-7-10, at 15; American Airlines/British Airways, 

DOT Order 2010-2-8, at 2. 
Joint Application

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By codesharing on Virgin Atlantic flights, Delta will gain a nonstop presence on 

large and important U.S.-LHR routes including LAX-LHR, MIA-LHR, ORD-LHR, IADLHR and SFO-LHR. In addition, Delta will be able to codeshare on Virgin Atlantic’s 

services from Las Vegas and Orlando to London Gatwick. 

Acting alone, Delta lacks the necessary LHR slots to enter the routes above on a 

nonstop basis and so is not a close competitor against the established incumbent 

services, particularly in AA/BA hub markets such as MIA, ORD and LAX. Delta’s past 

experience on the MIA-LHR route makes the point: Delta entered the MIA-LHR route 

using AA/BA remedy slots, but quickly withdrew following substantial losses in the face

of competition against AA/BA supported by its powerful hubs on each end of the route. 

By codesharing with Virgin Atlantic, Delta’s customers will have access to Virgin 

Atlantic’s MIA-LHR offering, which will greatly improve Delta’s competitive position in 

Miami. Delta is the second-largest U.S. carrier behind American, which has a hub at 

MIA. Delta has a large base of customers in South Florida, and Miami is at the 

intersection of many international routes flown by other Delta partners including Paris 

(Air France), Amsterdam (KLM), Mexico City (Aeromexico), and Brazil (Gol).

Los Angeles is another example. Although Delta and its partners fly nonstop 

from LAX to Tokyo, Sydney, Paris, Amsterdam, and select cities in Latin America, they 

do not currently offer service to the U.K. The addition of two nonstop LHR codeshare 

flights in conjunction with Virgin Atlantic would enhance the appeal of Delta’s commercial 

offering out of LAX, especially to corporate and agency customers who value a 

multiplicity of connections to cities that are centers of business activity.

ORD, IAD and SFO are hub cities for Delta competitors, where Delta is not viable 

as a standalone carrier; however, together with Virgin Atlantic, Delta can inject new 

competition where it is particularly beneficial.
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For its part, by codesharing on Delta’s LHR-ATL, LHR-MSP and LHR-DTW 

services, Virgin Atlantic will gain online access to important nonstop markets that Virgin 

Atlantic does not currently serve. In addition, Virgin Atlantic will gain one-stop access to 

the vast array of points that Delta serves behind its largest hubs.56

3. The JV Parties Plan to Launch New Nonstop Service at 

Seattle.

If the Joint Venture is approved, Delta and Virgin Atlantic intend to launch a new 

nonstop flight from Seattle to London. This move would create the only nonstop 

competition against British Airways on this route. Delta recently acquired LHR slots from 

Alitalia to facilitate this entry.

Delta’s predecessor Northwest introduced a SEA-LHR flight in June 2008, but 

the route performed poorly – not least because AA/BA doubled its frequencies on this 

route in response to Northwest’s entry on this route. Northwest ceased service after 

only six months. At the time, Northwest had no meaningful London point of sale 

presence. 

Today, Delta operates a significant array of international flights from SEA, 

including flights to Paris and Amsterdam in conjunction with its alliance partners, but 

Delta still would not undertake a new service to LHR because of its weak presence in 

London. By joining forces with Virgin Atlantic and capitalizing on its marketing strength 

in London and the U.K., Delta and Virgin Atlantic believe this new service would be 

viable and would enable the JV Parties to mount competition to AA/BA on what is now a 

monopoly nonstop route.

 56 Virgin Atlantic had limited access to U.S. beyond-gateway points pursuant to its 

codeshare agreement with US Airways. In anticipation of the Delta/Virgin Atlantic Joint 

Venture, Virgin Atlantic has terminated its codeshare relationship with US Airways. 

However, Virgin Atlantic’s relationship with US Airways was in jeopardy in light of US 

Airways’ plans to merge with American. 
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4. The Joint Venture Creates the Potential for Additional 

U.S.-U.K. Flying from Delta Hub Cities. 

With an expanded competitive presence and improved London point of sale 

marketing, Delta would consider additional flying from its hubs to London, subject to the 

availability of slots. For example, a second daily flight from Delta’s Detroit hub to 

Heathrow would be a high priority, given the fact that Delta already offers double daily 

service out of Atlanta (and will soon offer triple daily service on that route). Adding a 

second daily flight at Detroit would improve the competitiveness of the Detroit gateway 

against Chicago. And, potential future service between Salt Lake City and Heathrow 

would offer numerous connections to points in the Western United States served by 

Delta. The inauguration of new services would create significant public benefits. Each 

new route added by the Joint Venture will create in excess of $150 million in value to the 

U.S. economy and U.S. aviation interests.57 

5. The Joint Venture Will Improve Service Between the U.S. 

and U.K. Regional Cities.

Virgin Atlantic has a strong presence in U.K. regional markets (although not as 

strong as that commanded by British Airways). Virgin Atlantic this spring will offer

connecting flights from regional U.K. cities to London. Virgin Atlantic currently offers 

several direct flights from regional U.K. cities to the U.S., such as daily service between 

Manchester and Orlando, and twice a week service between Manchester and Las 

Vegas, as well as seasonal service between Glasgow and Orlando. (Virgin Atlantic also 

 57 See, e.g., Remarks of DOT Under Secretary for Policy, Phoenix Sky Harbor 

Aviation Symposium 2005 (single new long haul flight produces $158 million in economic 

activity); Los Angeles Economic Development Corporation Study, 2007 (daily 

transoceanic wide-body flight generates $623 million in economic output annually, 

sustains 3,120 direct and indirect jobs with annual wages of $156 million). See

http://globenewswire.com/news-release/2010/10/06/431064/203195/en/Iberia-toResume-Air-Service-Between-Los-Angeles-and-Madrid-New-Flights-Expected-toGenerate-Hundreds-of-Millions-of-Dollars-in-Annual-Regional-Economic-Activity.html.
Joint Application

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serves Orlando and Las Vegas from London Gatwick.) These services, which largely 

cater to U.K.-originating tourists, are of great importance to the tourism-dependent

economies of Florida and Nevada.

As noted above, Virgin Atlantic is introducing additional feeder service from 

regional U.K. airports in response to the threat posed by British Airways’ acquisition of 

bmi. Virgin Atlantic commenced service from Heathrow to Manchester at the end of 

March, and, using BA/bmi remedy slots, will offer service from Heathrow to Aberdeen 

and Edinburgh in April. These services will expand the options for passengers traveling 

between the U.S. and U.K. regions, and will provide important feed for U.S.-LHR 

services operated by both Virgin Atlantic and Delta. Delta flights will also connect to 

these cities on a codeshare basis. A marketing presence on both sides of the Atlantic 

will enhance the likelihood of success for these flights.

6. The Joint Venture Will Enable the JV Parties to Achieve 

a More Effective Sales Presence on Both Sides of the 

Atlantic.

The Joint Venture will allow Delta and Virgin Atlantic to benefit from each other’s 

strong brand recognition, customer awareness, and overall sales presence on their 

respective sides of the Atlantic. Currently, Delta suffers from a weak sales presence and 

brand recognition in the United Kingdom, and Virgin Atlantic’s marketing presence in the 

U.S. lacks the scale and scope of its far larger competitors.58 As a result of the Joint 

Venture, Delta will gain access to Virgin Atlantic’s strong presence in the U.K., and 

Virgin Atlantic will represent Delta for its U.K. sales; conversely, Virgin Atlantic will gain 

access to Delta’s U.S.-based sales presence and resources, and Delta will represent 

 58 This is another area in which the JV Parties are at a competitive disadvantage 

compared to AA/BA; as a result of their immunized alliance, American Airlines and 

British Airways each benefit from the strong sales presence of the other in its country of 

origin. 
Joint Application

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Virgin Atlantic for its North America sales. This will strengthen the ability of the JV 

Parties to market their products – and thereby attract more customers who will enjoy the 

benefits of the Joint Venture’s improved network offering – in both North America and 

the U.K. 

The JV Parties plan to create joint promotional materials and activities to 

generate customer awareness of the new schedule benefits created by the Joint 

Venture; the JV Parties will direct these sales materials and activities with particular 

focus towards corporate and agency customers, with whom the JV Parties currently 

suffer a disadvantage against AA/BA. Other joint marketing activities will include 

advertising, co-branded promotional materials, marketing of joint bonus programs, 

promotion of credit cards, programs with non-airline partners such as hotels, and 

marketing of shared frequent flyer benefits. Joint sales activities will be governed by a 

shared Code of Conduct that will ensure the JV Parties’ sales strategies are coordinated 

and optimized to attract Joint Venture customers.59

The JV Parties will be able to compete more effectively with rival alliances, many 

of which already have aligned their sales forces and harmonized their practices and 

policies. In particular, coordination of sales forces and activities will help Delta and 

Virgin Atlantic gain ground in the market for premium transatlantic travel against AA/BA. 

7. Airport Co-location and Streamlined Service Will 

Improve the Customer Experience.

Delta and Virgin Atlantic will strive to co-locate facilities at commonly served 

stations wherever possible. For example, both carriers serve New York JFK from 

Terminal 4, which will enable the carriers to streamline check-in and transfer operations. 

Delta has also indicated to the operators of Heathrow Airport its desire to co-locate with 

 59 The JV Parties will also engage in coordination- and efficiency-enhancing 

measures such as co-location of sales offices where practical.
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Virgin Atlantic at the same terminal. Co-location will improve the customer experience 

and reduce minimum connecting times. The carriers will work together to eliminate 

duplicative and overlapping facilities wherever possible. Delta has conducted a 

preliminary analysis and estimates these efficiencies will result in approximately $15 

million in annual cost savings at stations across the joint network.

B. Expansive Integration Across a Metal-Neutral North America-U.K. 

Network Will Create Substantial Consumer Benefits that Cannot Be 

Achieved without Antitrust Immunity. 

Although the JV Parties can begin limited codesharing prior to receiving ATI, 

antitrust immunity is necessary to realize the overwhelming majority of consumer 

benefits that an immunized metal-neutral codeshare creates. In a non-immunized 

relationship between competing carriers, each carrier is incentivized to take a restrictive 

approach in sharing its network with its partners. A carrier in such a relationship will 

frequently restrict inventory classes, impose unfavorable prorate terms, and price tickets 

to maximize profit for itself rather than across all carriers in the relationship – all of which 

results in less traffic flowing across the shared networks and less effective competition 

with rival alliances. By contrast, in an immunized Joint Venture the carriers have a 

common incentive to maximize profit for the Joint Venture as a whole because they are 

indifferent as to which carrier operates a given flight. 

A grant of antitrust immunity would allow Delta and Virgin Atlantic to codeshare 

on a metal-neutral basis. This harmonization of incentives would eliminate double 

marginalization pricing and other inefficiencies that result from non-metal neutral 

codeshares. In addition, antitrust immunity would allow the JV Parties to coordinate 

flight times in order to maximize connectivity across both carriers. As the Department 

recognized in DOT Order 2009-7-10:

By implementing an economic benefit-sharing agreement, 

carriers within the alliance are motivated to perform 
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alliance-focused network planning, sales, and 

management, thereby benefiting a broad range of 

consumers seeking a better, seamless transportation 

product. . . . By pooling resources to improve the overall 

service offering, and by sharing financial gains and losses, 

we find that the partners are able to harmonize the global 

network and become indifferent as to which of them 

collects the revenue or operates the aircraft over a given 

itinerary. They are thus able to focus their efforts on 

gaining the customer’s business by providing the best 

available fare, schedule, and routing between two cities.60

This principle is demonstrated by Virgin Atlantic’s own experience. Although 

Virgin Atlantic does have certain arm’s length codesharing arrangements in place, its 

ability to penetrate markets beyond its U.S. gateways is somewhat limited. Less than 

3% of traffic on Virgin Atlantic’s U.S.-U.K. flights travels beyond its U.S. gateways.61 By 

contrast, 10% of the traffic carried by British Airways travels beyond the U.S. 

gateways.62 Although there are a number of factors at play, British Airways’ ability to 

codeshare on a metal-neutral basis with American Airlines surely contributes to this 

disparity.

C. The Improved Network Enabled by the Joint Venture Will Produce 

Substantial Quantifiable Consumer Benefits.

As described above, the Joint Venture will enable improvements in frequencies, 

schedules, capacity, available nonstop routes, and behind-and-beyond connections. 

Taken together, these enhancements mean that the JV Parties will be able to offer an 

overall network of flights that is much more attractive and useful to consumers, 

particularly time-sensitive business travelers. 

 60 Continental/Star Alliance, DOT Order 2009-7-10, at 15.

61 MIDT YE Aug 31, 2012. 

62 Id.
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Delta’s internal Quality of Service Index (“QSI”) model forecasts the shifts in 

traffic that are likely to occur once these network changes are in place.63 The QSI model 

indicates that, as a result of the improvements in quality created by the JVA, Delta and 

Virgin Atlantic will be able to attract additional passengers. These predicted increases in 

passengers reflect the benefits to consumers arising from the JVA. Additional models 

used to calculate the consumer value reflected in those traffic shifts indicate that the 

Joint Venture network would generate over $187 million in annual consumer benefits.64

The network improvements will bring benefits to both premium and non-premium 

passengers – time sensitive passengers are expected to enjoy over $176 million in 

annual consumer benefits, and non-time sensitive passengers will see over $11 million 

in annual benefits.65

VI. The Proposed Alliance Will Improve Competition and Consumer Choice on 

U.S.-U.K. Routes and Will Not Reduce Competition in Any Relevant Market.

The purpose of the proposed Joint Venture is to allow Delta and Virgin Atlantic to 

join forces so that they can compete more effectively with the AA/BA Alliance, which 

today dominates the U.S.-U.K. market in general and the NYC-LHR market in particular. 

 63 The QSI models take into account various metrics of quality, including time of day, 

equipment type, and airport presence. Based on the characteristics of all flights on a 

given route, QSI predicts the number of local passengers who will fly on each flight. To 

assess the Joint Venture, Delta compared announced schedules and routes (in January 

2013 to represent the winter schedule and April 2013 to reflect the summer schedule) 

against expected schedules and routes once the Joint Venture is in place.

64 This figure is a quantification of the benefits to consumers from increased quality 

compared to Delta’s and Virgin Atlantic’s existing offerings, and does not translate 

directly into increased revenue for Delta and Virgin Atlantic.

65 Exhibit JA-11. Delta’s QSI modeling does not take into account certain other 

consumer benefits that do not arise directly from the increased attractiveness to 

consumers of the combined Delta/Virgin Atlantic network offering. For instance, these 

figures do not account for the reduction in prices arising from the elimination of doublemarginalization that the Joint Venture will bring for itineraries that include both Virgin 

Atlantic- and Delta-operated legs. These and other benefits will bring value to 

consumers over and above the quality-related consumer benefits quantified here.
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The existing networks of Delta and Virgin Atlantic are highly complementary; the two 

carriers compete on only two nonstop routes, NYC-LHR and BOS-LHR. The Joint 

Venture will increase competition on those two routes by replacing two existing, smaller 

players with a more effective competitor. And, unlike transactions that strengthen the 

leading incumbent, in this case, even with the Delta/Virgin Atlantic Joint Venture, AA/BA 

will continue to have a leading market presence on both routes.

A. The Current Competitive Landscape: AA/BA Dominates U.S.-U.K. 

Routes.

When the Department granted antitrust immunity to American and British Airways 

in 2010, the Department recognized the risk that AA/BA might dominate its competitors 

in U.S.-U.K. markets given the large market share, high frequency of service, and other 

structural advantages the AA/BA Alliance would have over its competitors.66 The 

Department’s concerns have been realized. AA/BA holds the overwhelming majority of 

slots and related assets at London’s Heathrow Airport. Most recently, AA/BA expanded 

its grip over Heathrow through the acquisition by British Airways/IAG of bmi British 

Midland, including bmi’s Heathrow slots and other assets.67 No single carrier can provide 

a sustainable and meaningful competitive alternative to AA/BA, which jointly commands 

a 59% share of the seats on U.S.-LHR flights and 57% of Heathrow slots. Virgin Atlantic 

is a distant number two competitor in capacity terms, with 16% of the U.S.-LHR seat 

share, and is even weaker with respect to slot holdings, with only 3.3% of Heathrow 

slots. United has 14% of the U.S.-LHR seat share, and Delta is a marginal fourth place 

 66 American Airlines/British Airways, DOT Show Cause Order 2010-2-8, at 23.

67 London is the top U.S. international destination with approximately $6 billion in 

annual revenue (twice as large as the next-largest destination, Paris). Heathrow is 

included in eight of the 10 largest U.S.-to-Europe routes, and Heathrow passengers 

account for 55% of all travelers on the top 25 U.S.-to-Europe routes. (Figures derived 

from Aviation Daily, PlaneStats.com, and industry data.) London also is the top 

destination for international corporate travel from the U.S. by nearly a factor of three, and 

the U.S.-Heathrow corporate sales segment is estimated at nearly $1.5 billion annually. 
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competitor on U.S.-LHR routes, with only 8% of seats and a miniscule 0.3% of Heathrow 

slots. Given the slot constraints at LHR, there is little ability for other carriers to grow on 

their own.

Stepping back from Heathrow, AA/BA also dominates nonstop U.S.-U.K. 

frequencies as a whole. AA/BA has well over twice as many frequencies as the nextclosest carrier, United, and over twice as many frequencies as Delta and Virgin Atlantic 

combined.

68

AA/BA’s dominance in daily nonstop frequencies between the U.S. and U.K. 

translates into an even greater share of premium traffic than its seat capacity relative to 

other carriers alone would suggest.69 Because premium (i.e., business) travelers are 

time-sensitive and prefer airlines that offer a large number of conveniently-spaced 

departure times, the premium segment gravitates towards AA/BA on transatlantic flights. 

Unless and until Virgin Atlantic and Delta can offer frequencies and flight timing that 

 68 Based on June 2013 peak day schedule.

69 For example, and as discussed in more detail below, AA/BA dominates the 

premium segment on the NYC-LHR route with 63% of such bookings. Exhibit JA-6.
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rivals AA/BA’s offerings on key transatlantic routes, they will always fail to capture their 

fair market share (as determined by capacity) of premium traffic. This in turn hobbles 

Delta’s and Virgin Atlantic’s overall performance on transatlantic routes, as premium 

travel drives profitability on these routes. 

Absent the immunized Joint Venture, AA/BA’s dominance will continue, because 

strong organic growth at Heathrow by Delta and Virgin Atlantic (or others) is not possible 

due to the scarcity and high cost of slots.70 AA/BA’s schedule strength on key routes 

makes it impossible to gain significant customer preference through incremental network 

additions – particularly so given that the limited slots that are available are often neither 

suitable for transatlantic service nor attractive for travel at peak times of the day. With 

IAG’s purchase of bmi, Virgin Atlantic’s access to feed traffic is under threat. Without an 

alliance partner, Virgin Atlantic faces serious challenges to its ability to grow and 

compete. For its part, the lack of credible scale and service on key business routes 

undermines Delta’s global product offering and has led to disappointing results on key 

transatlantic routes that compete with AA/BA.

Virgin Atlantic also lacks scale at Heathrow, and lacks the ability to expand either 

its Heathrow transatlantic routes or its U.S. and North American networks.

 70 There are virtually no available Heathrow slots for competitive service on U.S.-

U.K. routes. British Airways historically has not transferred any slot pairs (other than as 

a result of recent forced divestitures), keeping 55% of Heathrow slots completely out of 

reach. Even on the rare occasions when slots are available for purchase, they come at 

high cost.
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The proposed Joint Venture is a market-based solution to AA/BA’s dominance. 

The proposed Joint Venture—bolstered by the first major equity investment of its size by 

a U.S. carrier in a European airline—will combine Delta’s and Virgin Atlantic’s current 

Heathrow slot holdings used on transatlantic routes into a single slot pool, allowing Delta 

and Virgin Atlantic to use the number and timing of their slots more effectively and more 

efficiently than either carrier could on its own. In the absence of the immunized Joint 

Venture, however, and given existing slot constraints, there is no other way for Delta or 

Virgin Atlantic to build a meaningfully stronger position at Heathrow, or offer a 

meaningful competitive alternative to AA/BA in the U.S.-U.K. market.

B. The Proposed Joint Venture Will Enhance Competition.

Far from reducing or eliminating competition in any relevant markets, the 

proposed Joint Venture will enhance competition on the U.S.-U.K. routes covered by the 

Joint Venture Agreement. The extensive benefits will include new routings, service that 

is optimized across time channels, more schedule flexibility for travelers and greater 

connecting options—in short, a better product for consumers. The proposed Joint 

Venture will combine the two carriers’ North America-U.K. operations and resources. 
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This will benefit consumers by creating a strong, viable competitor to AA/BA, particularly 

for time-sensitive business travelers and corporate customers. United will also remain 

as a viable competitor on U.S.-U.K. routes with 14% of the U.S.-LHR seat share.

1. United States-United Kingdom

The United States-United Kingdom air transport market is among the largest and 

most important in the world. 17 million passengers traveled nonstop between the two 

countries last year.71 As shown in the table above, AA/BA operates the largest share of 

U.S.-U.K. services. Delta and Virgin Atlantic combined would be in second place, and 

United would remain a strong number three competitor, with more than twice the U.S.-

U.K. frequencies operated by Delta today. The proposed Joint Venture will not reduce 

or eliminate competition; rather, it will create more meaningful competition with AA/BA 

and more options for travelers on U.S.-U.K. routes.

A total of seven carriers currently operate nonstop service between the U.S. and 

the U.K.:72

• British Airways, with 304 weekly flights between London (LHR, LCY and 

LGW) and 18 U.S. gateways (Seattle, San Francisco, Los Angeles, San 

Diego, Las Vegas, Phoenix, Denver, Dallas/Ft. Worth, Houston, Chicago, 

Atlanta, Tampa, Orlando, Miami, New York (EWR and JFK), Philadelphia, 

Baltimore and Washington).

• Virgin Atlantic, with 122 weekly flights between London (LHR and 

LGW)/Glasgow/Manchester and 10 U.S. gateways (San Francisco, Los 

Angeles, Las Vegas, Chicago, Boston, New York (JFK and EWR), 

Washington, Orlando and Miami). 

• American, with 119 weekly flights between London (LHR)/Manchester 

and seven U.S. gateways (Boston, Chicago, Dallas/Fort Worth, Los 

Angeles, Miami, New York (JFK) and Raleigh/Durham). 

• United, with 175 weekly flights between London (LHR) and six U.S. 

gateways (San Francisco, Los Angeles, Houston, Chicago, Dulles and 

 71 DOT T100 data YE July, 2012.

72 OAG schedules, June, 2013.
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New York (EWR)), as well as MAN-EWR, EDI-EWR, GLA-EWR and BFSEWR.

• Delta, with 118 weekly flights between London (LHR)/Manchester and 

five U.S. gateways (Minneapolis/St. Paul, Detroit, Atlanta, Boston and 

New York (JFK)).

• US Airways, with 28 weekly flights between London (LHR and LGW) and 

two U.S. gateways (Charlotte and Philadelphia). Following the recent 

announcement of the merger between AA and US Airways, the US 

Airways transatlantic frequencies will further enhance AA/BA’s dominance 

on U.S.-U.K. routes. In particular, the merger will add a new nonstop 

London-Charlotte service to AA/BA’s already dominant offering.73

• Kuwait Airways, with three weekly flights between London (LHR) and 

New York (JFK).

Several other carriers offer connecting service options for travel between the U.S. and 

the U.K., including Aer Lingus, via Dublin, Icelandair, via Reykjavik, and Air Canada, via 

Toronto.

2. Complementary Routes

As discussed above, the Virgin Atlantic and Delta networks are largely 

complementary. The proposed Joint Venture will ensure that customers of each carrier 

have access to the flights of the other on a metal-neutral basis. For both sets of 

customers, this means access to both new nonstop transatlantic flights and the beyond 

networks of both carriers.

Virgin Atlantic offers many routes that will complement Delta’s offerings, including 

leisure service from Gatwick, nonstop services from Manchester, and U.K. regional 

points where Virgin Atlantic has been awarded remedy slots to compete with a merged 

BA/bmi. Virgin Atlantic has developed scheduled long-haul services from London 

Gatwick and two U.K. regional airports (Glasgow and Manchester) to points in the U.S. 

that provide valuable links for consumers. Under the proposed alliance, these routes will 

 73 US Airways has moved its Charlotte-London service from Gatwick to Heathrow as 

of March 31. 
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provide new connecting opportunities for consumers between Delta’s U.S. network and 

Manchester and Glasgow. Virgin Atlantic’s Manchester-Las Vegas service operates 

only twice a week, so the combination of these nonstop flights and indirect flights via 

Delta’s Manchester-Atlanta route will provide greater routing and schedule flexibility for 

consumers. Additionally, Virgin Atlantic’s brand recognition and market presence in the 

U.K. will enhance Delta’s U.K.-originating sales for the Manchester-Atlanta route. 

Finally, Virgin Atlantic is commencing new routes from Heathrow to Aberdeen, 

Edinburgh and Manchester this spring on which Delta plans to codeshare, enabling new 

competitive routings between the U.S. and these cities and multiple points across the 

combined Virgin Atlantic and Delta network. These new routings will compete strongly 

against AA/BA, which remains the largest carrier between these three points and the 

U.S.

Likewise, Delta offers many flight options that Virgin Atlantic cannot offer on its 

own. Most importantly, Virgin Atlantic customers will be able to make use of Delta’s 

network within the United States. This means that travelers from and to the U.K. will be 

able to travel to numerous points within the U.S. solely on Virgin Atlantic-coded flights, 

will not pay for double-marginalization, and will enjoy the benefit of flight schedules that 

have been optimized for connecting passengers.

3. Overlap City-Pairs

There are only two transatlantic city-pairs on which Delta and Virgin Atlantic offer 

overlapping nonstop service: New York-London and Boston-London. On both of these 

key transatlantic routes, the proposed alliance will not reduce competition, but rather will 

create a viable competitive alternative to AA/BA. On both routes, AA/BA dominates, 

both in terms of seat share and in capturing the highest proportion of high value 

passengers (i.e., premium, time-sensitive business passengers and corporate contract 
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passengers) relative to seat share. These high value passengers are critical to market 

performance and profitable operations; however, Delta and Virgin Atlantic each carry a 

higher proportion of low value customers (i.e., coach, leisure and non-time-sensitive 

passengers) than AA/BA.74 

Because premium traffic drives profitability on these routes, carriers typically 

schedule frequencies with an eye toward capturing the largest possible share of 

premium time-sensitive passengers; because aircraft have a fixed number of premium 

and economy seats, this approach usually results in excess capacity for non-premium 

passengers. The need to compete on frequency ensures a ready supply of nonpremium seats, which in turn generates strong competition for non-time-sensitive 

passengers. In particular, AA/BA leverages its advantage in connecting non-premium 

passengers (in particular over Heathrow) to supplement local traffic and fill capacity.75

This dynamic ensures that, because the proposed alliance will create competition for 

time-sensitive business travelers on New York-London and Boston-London, there will be 

continued competition for non-time-sensitive travelers as well.76 Increased competition 

for premium passengers will also likely in turn decrease the opportunity cost to AA/BA of 

selling premium seats to price-sensitive non-premium travelers who would otherwise 

travel in economy seating. AA/BA will then likely compete more intensely in selling the 

vacated premium economy seats to non-premium economy passengers, thereby 

creating increased capacity and downward pricing pressure for non-premium sales.

 74 Exhibits JA-5 - JA-8. 

75 AA/BA has 68% of behind-and-beyond bookings using New York-London as a 

trunk route, and 85% of behind-and-beyond bookings using Boston-London as a trunk 

route, with the vast majority of this comprised of U.K.-behind traffic connecting over 

Heathrow.

76 In addition, as discussed further below, United’s nonstop service on New YorkLondon will continue to discipline fares in that market.
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a. New York-London

New York-London is the largest transatlantic route. There are four daily nonstop 

competitors.77 AA/BA dominates the route with 53% of total capacity, Virgin Atlantic is a 

distant second with 23% of capacity, United/Star has 12% and Delta is fourth with only 

10% of capacity78 – one-fifth the size of AA/BA.79 AA/BA is also the leader in 

frequencies. AA/BA flies 15 daily flights—54% of the nonstop frequencies—and 

departures are staggered every 30 minutes during the prime evening hours. By 

contrast, Virgin Atlantic has six daily nonstop frequencies, United has five and Delta has 

just three. Neither Delta nor Virgin Atlantic can offer competing scale, frequencies or 

networks on its own. Although AA/BA would remain by far the largest carrier on the 

route and continue to hold a large frequency advantage even if the requested immunity 

were granted, the Proposed Alliance would better position Delta and Virgin Atlantic to 

mount a more robust competitive challenge to AA/BA on this critical route.

If premium bookings are isolated, AA/BA’s dominance is even starker. AA/BA’s 

shuttle-like service captures the majority of the high-value business segment – 62% of 

all premium nonstop bookings on the route go to AA/BA, well above AA/BA’s share of 

capacity. Virgin Atlantic again is a distant second, accounting for 23% of premium 

nonstop bookings. Delta currently is not an effective competitor for premium nonstop 

passengers. Delta has only 7% of premium bookings, 30% less than its share of overall 

 77 Kuwait Airways also serves the JFK-LHR route on a less-than-daily basis. 

78 Although United/Star has only a 2% advantage over Delta in capacity terms, 

United/Star offers superior frequencies and time of day coverage. United/Star offers five 

daily well-spaced flights out of EWR to LHR (departing at 9:00, 17:50, 19:05, 20:55, and 

21:40), as opposed to Delta’s three closely “bunched” departures out of JFK (departing 

at 18:30, 19:30, and 21:00). See Summer 2013 OAG schedules.

79 Based on Summer 2012 data.
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capacity on the route. The following chart illustrates the extent to which Delta is 

underperforming on premium traffic relative to its overall share of capacity on NYC-LHR:

Delta’s relative disadvantage in premium bookings on NYC-LHR is explained by 

insufficient frequency. Delta’s three daily JFK-LHR flights are not sufficient to appeal to 

time-sensitive business passengers, who demand schedule flexibility. Because of this, 

Delta is unable to enter into preferred contracts for New York-London flights,80 and its 

ability to compete effectively against the AA/BA oneworld Alliance and the United/Star 

Alliance (which offers five NYC-LON flights to Delta’s three) is diminished, especially 

with respect to London-centric business.81 Notably, based on MIDT data, although Delta 

has 10% of time-sensitive bookings on New York-London for North America point-of-sale 

traffic, it has only 5% for international point-of-sale traffic. This position is exacerbated 

 80 See Declaration of Chuck Imhoff, Delta Managing Director for New York Sales for 

Delta Air Lines, at DL00000268-275; Letters of Support from Delta Customers to the 

Department of Justice at DL00000276-364; and Letters of Support from Delta 

Customers to DOT filed contemporaneously in this docket.

81 United’s Newark hub is the largest in the New York region, and its relative 

competitive position in the NYC-LON market is stronger than its 12% share of capacity 

would suggest. See n. 78 supra.
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when direct sales are factored in: 46% of Delta’s North American sales on this route are 

direct, whereas only 8% of international sales are made through direct channels. 

Together, Delta and Virgin Atlantic can offer an attractive schedule to business 

customers. The proposed Joint Venture gives the two carriers otherwise unattainable 

scale and a schedule that makes both carriers more attractive to customers, particularly 

to time-sensitive business customers. The Joint Venture will combine the JV Parties’ 

current frequencies for a total of nine daily frequencies on the NYC-LHR route. The JV 

Parties will optimize frequencies across time channels to provide nearly hourly service at 

peak times. The Delta/Virgin Atlantic Joint Venture will provide the necessary service 

into Heathrow, enabling the Joint Venture to better compete for corporate contracts that 

historically have been closed due to a lack of frequencies, and integrated sales forces 

will provide point-of-sale expertise. The Joint Venture will increase the number of viable 

competitors for the crucial time-sensitive business segment, introducing price 

competition on routes dominated by AA/BA and ensuring that AA/BA will have to 

compete harder for this high-value traffic.

The proposed Joint Venture will not allow Delta and Virgin Atlantic to “impose 

and sustain supra competitive prices or reduce service levels below competitive 

levels.”82 AA/BA will remain the largest carriers on the market, clearly preventing the JV 

Parties from being able to raise prices. United and the Star Alliance, supported by a 

large hub at Newark, will remain a significant competitor in the market able to impose 

discipline to prevent price increases above competitive levels. The immunized Joint 

Venture is not likely to result in price increases. Rather, given the increased competition 

for premium passengers, the high demand for time-sensitive business frequencies, and 

 82 SkyTeam II ATI, DOT Order 2008-4-17, at 12.
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the resulting excess capacity for economy passengers, competition for all passengers 

will remain strong as carriers fight to maintain load factors. 

b. Boston-London

The situation for the Boston-London route parallels that for New York-London: 

AA/BA is the dominant player, and pooling and optimizing frequencies will allow Delta 

and Virgin Atlantic to mount a more effective competitive response to the market 

leader.83

Delta and Virgin Atlantic did not overlap on this route until March 2011, when 

Delta entered using two AA/BA remedy slot pairs. Delta started with two daily 

frequencies but was forced to reduce its service to one daily frequency to mitigate 

losses, and returned the second slot pair to British Airways. Currently, AA/BA controls 

71% of capacity on the route and 73% of premium nonstop bookings.84 By contrast, 

Delta and Virgin Atlantic have only 12% and 15% of capacity, and only 8% and 19% of 

premium bookings, respectively. Similar to New York-London, whereas Delta has 14% of 

time-sensitive bookings on Boston-London for North America point-of-sale traffic, it has 

only 5% for international point-of-sale traffic. Indeed, Delta has further downgauged its 

capacity on this route by more than 30 daily seats (by changing from B-767-400 to B767-300 aircraft) in response to weak market conditions.

AA/BA will operate four daily frequencies this summer.85 Currently, the JV Parties 

each have one daily frequency, both of which occupy the same time channel in the 

 83 See Exhibits JA-7 – JA-9.

84 Based on Summer 2012 data.

85 AA/BA recently published schedule changes for Boston, replacing three daily AA 

757 narrowbody flights with a single new British Airways 747 flight. AA/BA maintains 

excellent schedule coverage in all time channels with a modest overall capacity 

reduction of 210 daily seats, but (due to the enhanced configuration of BA’s 747) an 

increase in premium capacity of 30 daily seats despite the reduction in frequencies.
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eastbound direction. The proposed Joint Venture will maintain the JV Parties’ two 

frequencies but align them across time channels to better compete with AA/BA’s four 

frequencies, improving competition and providing a better product for travelers. 

Combining operations with Virgin Atlantic will allow Delta to maintain a presence on the 

route, will create a more viable competitor to AA/BA for Boston-based business travelers 

and corporate contracts, and will improve timing for leisure travelers.

As on the New York-London route, the Proposed Alliance will not allow Delta and 

Virgin Atlantic to “impose and sustain supra competitive prices or reduce service levels 

below competitive levels”86 because AA/BA will remain the dominant carrier on the route. 

In addition, as in New York-London, the proposed Joint Venture is incentivized to 

maintain frequencies to compete for more profitable business passengers, which will in 

turn ensure there is continued capacity for economy passengers. Additionally, the 

Department previously has recognized the competitive discipline resulting from 

connecting services operated by other alliances and carriers. In approving the 

expanded nine-way immunity for the Star Alliance, the Department stated that “[f]or the 

large majority of travelers, the carriers offering U.S.-Switzerland connecting services, 

such as the European members of SkyTeam and oneworld, should discipline the fares 

and service offered by the nonstop carriers.”87 There is a wide variety of one-stop 

options for leisure travelers at Boston, including New York, Toronto, Montreal, Reykjavik 

and Dublin, among others. One-stop services account for 8% of bookings on this route, 

with United (and its Star partners) holding a 6% share. Finally, there is one Heathrow 

slot pair, designated for LHR-BOS service, available from the AA/BA remedy slots to 

support potential new entry by a third competitor.

 86 SkyTeam II ATI, DOT Order 2008-4-17, at 12. 

87 9-way Star Alliance ATI, DOT Order 2006-12-17, at 12.
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VII. Granting ATI Would Be Consistent with the Letter and Spirit of the EU-U.S. 

Open Skies Agreement and Settled DOT Precedent.

The Federal Transportation Code requires the Department to “strengthen[] the 

competitive position of air carriers to ensure at least equality with foreign air carriers, 

including the attainment of the opportunity for air carriers to maintain and increase their 

profitability in foreign air transportation.”88 Permitting Delta and Virgin Atlantic to 

coordinate and cooperate under a grant of antitrust immunity from the Department will 

create a balanced competitive landscape by making the Proposed Alliance wellpositioned to better compete against oneworld on key U.S.-U.K. routes.

The existence of an open skies agreement between the United States and the 

homeland of each applicant has long been a public interest factor that is a prerequisite to 

approval of an ATI application.89 The successful conclusion of the EU-U.S. Open Skies 

Agreement satisfies this requirement with respect to each of the Joint Applicants. DOT 

has conferred ATI upon the Alliance between American, British Airways, Iberia et. al. on 

the basis of this Agreement. The same considerations that weighed in favor of immunity 

for AA/BA apply here.90

DOT has long supported the formation of international airline alliances as an 

important step towards the further liberalization and integration of the international air 

transport market. In a 1999 study of airline alliances, DOT expressly recognized and 

endorsed the emergence of alliances and joint ventures as a valuable surrogate for 

airline mergers and other forms of consolidation:91

 88 49 U.S.C. § 40101(e)(1).

89 American Airlines/SN Brussels, DOT Order 2004-4-10, at 1; American 

Airlines/British Airways, DOT Order 2010-7-8, at 15.

90 American Airlines/British Airways, DOT Order 2010-7-8.

91 Office of the Secretary, U.S. Department of Transportation, International 

Developments: Global Deregulation Takes Off (December 1999), at 4.
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The airline industry, in response to consumer demand, 

sees the enormous growth potential for the over-regulated 

and under-served international market, and individual 

airlines are trying to position themselves to participate in 

that growth. The resulting development of large strategic 

alliances, together with code sharing and other marketing 

arrangements is changing the structure of the airline 

industry and is generating new pressures to overcome the 

limitations of restrictive bilateral agreements. They have 

provided a way for carriers to mitigate the limitations of 

bilateral agreements, ownership restrictions, and licensing 

and control regulation.

Delta’s decision to take a 49% equity stake in Virgin Atlantic supports prompt 

approval of antitrust immunity. Delta’s equity investment, existing as it would alongside 

the Joint Venture for the operation of the North America-U.K. business, would incentivize 

the JV Parties to realize the benefits of the Joint Venture. In prior ATI decisions, the 

DOT has found that a grant of antitrust immunity would permit the JV Parties to produce 

merger-like efficiencies. “Generally speaking, a grant of antitrust immunity may enable 

airlines to achieve merger-like synergies, boost capacity, and deliver lower prices for 

some itineraries.”92

The emphasis and support U.S. and European officials have attached to the 

formation of airline alliances support approval of antitrust immunity for the Delta/Virgin 

Atlantic Joint Venture. Immunity would also be consistent with prior DOT decisions.93

 92 Delta/Virgin Australia/Pacific Blue, DOT Order 2011-5-8, at 13.

93 Indeed, a decision to deny ATI on the facts here, and in the wake of longstanding 

precedent would be at odds with the course of dealing between the EU and U.S. As 

DOT observed in its Order to Show Cause in the KLM/Northwest antitrust immunity 

case:

We believe that the Netherlands would consider it to be 

inconsistent with the Open Skies spirit if we denied the 

applicants’ request, unless we had substantial grounds for taking 

such action (e.g., because the proposal would substantially 

reduce competition in several markets without any offsetting 

benefits). DOT Show Cause Order 92-11-27, at 17 

(November 20, 1992).
Joint Application

Page 50

VIII. The Joint Applicants Will Not Implement the Alliance Agreements without 

Antitrust Immunity.

The Joint Venture Agreement expressly provides for coordinated scheduling, 

yield management, inventory allocation, and pricing, joint purchasing, joint decisionmaking on new routes, and revenue sharing – and these are precisely the aspects of the 

Joint Venture arrangement that will produce the largest consumer benefits. To proceed 

with joint activities absent antitrust immunity would involve obvious antitrust risk and 

regulatory and legal uncertainty.94 In other cases, the Department itself has 

acknowledged that the cooperation and coordination benefits from such agreements 

cannot be attained without immunity.95

The Joint Applicants also consider it necessary that the requested antitrust 

immunity encompass the five-way Coordination Agreement between Delta, Virgin 

Atlantic, Air France, KLM, and Alitalia. As DOT has observed, when a proposed alliance 

involves multiple parties, this may raise the level of antitrust risk.96 The Joint Applicants 

are unwilling to assume this risk.

IX. The Joint Applicants Need Antitrust Immunity to Bridge the Two Joint 

Ventures.

Antitrust immunity for the 5-way Coordination Agreement is needed to avoid 

potential immunity gaps between the two joint ventures and to allow for coordination 

 94 Airlines have had to defend themselves in multiple lawsuits driven by plaintiffs’ 

counsel involving antitrust claims, regardless of the lack of merit. See, e.g., In re 

Northwest Airlines Corp. Antitrust Litig., 208 F.R.D. 174 (E.D. Mich. 2002), review 

denied, 310 F.3d 953 (6th Cir. 2002), cert. denied, 539 U.S. 904 (2003); In re Airline 

Ticket Commission Antitrust Litig., 268 F.3d 619 (8th Cir. 2001). The risk of antitrust 

litigation remains a significant concern.

95 See, e.g., American Airlines/British Airways, DOT Show Cause Order 2010-2-3, at 

30 (listing expected public benefits and stating that “A grant of antitrust immunity is, we 

tentatively find, necessary to achieve most of these benefits”). 

96 “The specific terms of the 4-way JV, with its emphasis on a common bottom line, 

create a greater risk of antitrust litigation.” SkyTeam II ATI, DOT Order 2008-4-17, at 14.
Joint Application

Page 51

activities necessary for the efficient operation of the two joint ventures. Delta will be 

coordinating with Virgin Atlantic on North America-U.K. routes that involve a nonstop 

U.S.-U.K. segment. Delta will also be coordinating with AF/KL/AZ on North AmericaU.K. routes that involve connections at Amsterdam and Paris. Coordination between the 

two joint ventures will support the realization of additional consumer benefits, particularly 

for transatlantic passengers to and from U.K. regional cities where service is dominated 

by AA/BA. Accordingly, the Joint Applicants have entered into a Coordination 

Agreement whereby the Joint Applicants envision potential 5-way coordination of the 

following activities: 

(a) coordination of pricing with respect to city pair routings between points 

in the U.K. and points in North America;

(b) coordination of inventory management systems and processes with 

respect to city pair routings between points in the U.K. and points in 

North America; 

(c) coordination of exit-North America and exit-U.K. surcharges and fees, 

and coordination of pricing with respect to ancillary products and 

services;

(d) coordination of network and capacity decisions with respect to 

operations of the Parties on city pair routings between points in the 

U.K. and points in North America;

(e) joint or coordinated sales and marketing initiatives and activities, 

including joint contracting with corporate and agency accounts, 

coordination with respect to corporate discounts and agency 

commissions and incentives, and establishment of delegated sales 

responsibility based on home market representation; 

(f) joint purchasing opportunities, including with respect to ground 

handling services, distribution arrangements and other third party 

arrangements; and

(g) joint or coordinated advertising and promotion programs. 

As specified above, the core coordination between the two JV’s will be in city pair 

routings between points in the U.K. and points in North America. However, there are 

certain coordination activities (such as the setting of ancillary fees, and corporate and 

agency sales programs) that are by their nature broader in geographic scope. The Joint 
Joint Application

Page 52

Applicants believe antitrust immunity that covers the identified coordination activities is 

necessary to permit the two joint ventures to function side-by-side without creating 

antitrust risk for the existing Delta/Air France/KLM/Alitalia (“DL/AF/KL/AZ”) joint 

venture.97

The Delta/Virgin Atlantic Joint Venture is complementary to the existing 

transatlantic joint venture. Because AF/KL/AZ have a limited presence in the U.K. 

generally, and at London in particular, Virgin Atlantic is better able to support Delta’s 

U.S.-U.K. services against the larger and stronger AA/BA Alliance. Among the members 

of the DL/AF/KL/AZ joint venture, only Delta serves the U.S.-U.K. nonstop market.98 As 

shown by the following table, 94% of U.S.-U.K. traffic flies nonstop or via a U.K. 

gateway; only 3.4% of U.S.-U.K. traffic travels via an AF/KL/AZ hub:

U.S.-U.K. Traffic Mix

Nonstop 89.2%

Connecting in LHR 4.9%

Connecting in AMS 2.5%

Connecting in CDG 0.9%

Connecting in FCO 0.0%

Other EU Connections 2.5%

Total 100.0%

(MIDT YE December, 2012)

By forming a Joint Venture with Virgin Atlantic, Delta will enjoy a stronger U.K. 

presence, increased frequency on key U.S.-U.K. business routes, and a reinforced local 

sales force with deep established relationships for London point of sale corporate and 

 97 Virgin Atlantic is evaluating the possibility of entering into the SkyTeam Alliance. 

However, the Joint Venture at issue is a bilateral arrangement between Delta and Virgin 

Atlantic; Virgin Atlantic’s ultimate SkyTeam decision will have no bearing on the ability of 

Delta and Virgin Atlantic to deliver the substantial public benefits identified in the 

application. 

98 Air France operated a LAX-LHR services for a period of six months, but withdrew 

the service in the face of heavy losses. Financial Times, Air France to drop Heathrow-LA 

service (Oct. 9, 2008). 
Joint Application

Page 53

agency business. The Delta/Virgin Atlantic Joint Venture provides Delta the platform it 

needs to develop a more competitive U.S.-U.K. network.

Coordination between the two joint ventures would support the realization of 

additional consumer benefits on North America-U.K. routes. Transatlantic service to and 

from U.K. regional cities is dominated by AA/BA, which is the only true hub operator at 

LHR. While Virgin Atlantic is receiving a handful of slots to start service on three intraU.K. routes, Virgin Atlantic does not have and cannot develop LHR as a hub to offer 

comprehensive coverage of U.K. regional cities. Coordination with Air France and KLM 

would help to alleviate this problem. Air France and KLM serve 13 U.K. regional cities

with 70 daily flights from AMS and CDG.99 While the number of transatlantic passengers 

originating in these cities is small relative to U.S.-LHR, they are nonetheless important to 

offering a comprehensive North America-U.K. product to compete with AA/BA. For 

example, companies with London headquarters often have branch offices in regional 

cities, which can be better served through coordination of the Delta/Virgin Atlantic and 

DL/AF/KL/AZ joint ventures.

The Delta/Virgin Atlantic Joint Venture and the DL/AF/KL/AZ joint venture will 

exist in parallel. Delta will maintain separate settlement and governance relationships 

with each joint venture. The overlap between the joint ventures is limited because of the 

nature of U.S.-U.K. traffic flows discussed above, and the fact that Virgin Atlantic does 

not serve any point in continental Europe. The scope of the Delta/Virgin Atlantic Joint 

Venture includes all of North America (United States/Canada/Mexico) to the U.K. Delta 

will codeshare on Virgin Atlantic’s North America services to and from the U.K., as well 

as Virgin Atlantic’s regional services within the U.K.; however, there are no plans for

 99 Exhibit JA-10.
Joint Application

Page 54

Delta to codeshare on Virgin Atlantic’s long haul services to points east and south of 

London.

Delta and Virgin Atlantic have decided to focus their Joint Venture on North 

America-U.K. traffic flows, which serves the carriers’ commercial objective in forming an 

alliance centered on Heathrow as well as the public interest. First, the public interest is 

best served by using limited Heathrow capacity to accommodate the demand of North 

America-U.K. O&D passengers, rather than to accommodate the needs of connecting 

passengers who may well be indifferent to their transfer point. Second, the potential 

Delta connections to Virgin Atlantic long-haul points beyond the U.K. are limited and of 

poor quality relative to existing Delta connecting options via Amsterdam, Paris or Rome. 

Virgin Atlantic serves only 10 points beyond the U.K.,

100 including Delhi, Mumbai, Tokyo, 

Shanghai, Hong Kong, and select points in Africa. However, Delta already serves 

Tokyo, Shanghai, Hong Kong and Africa on a direct or nonstop basis with its own aircraft 

– making a lengthy and circuitous connection via London relatively unattractive. Virgin 

Atlantic’s long-haul services east and south of London are timed primarily to meet the 

needs of the large and important London local market.101 For example, a Washington to 

Delhi customer traveling on Virgin Atlantic would arrive at LHR at 6:55 a.m., and would 

depart for Delhi at 9:50 p.m. nearly 14 hours later. There is no same-day connection at 

all in the westbound direction.102 By contrast, the DL/KLM/AF/AZ joint venture service via 

Amsterdam arrives at 7:45 a.m., and makes an onward connection to Delhi at noon. 

 100 OAG Schedules, June, 2013.

101 Neither Virgin Atlantic nor AF/KL/AZ are significant competitors for North 

American flow traffic to Virgin Atlantic’s beyond-London destinations. The current 

combined AF/KL/AZ market share for North American traffic to the East of London points 

served by Virgin Atlantic is 2.7%. Virgin Atlantic’s share of North America traffic to these 

points is 0.8%. MIDT YE 2012.

102 Feb. 2013 Delta Online Flight Schedules, available at http://www.delta.com/

schedules/travel/reservations/flight sched/index.jsp. 
Joint Application

Page 55

Same-day service in the westbound direction is available with a 6:15 layover in 

Amsterdam.103 

For these reasons, Delta can maximize the service and public benefits of the two 

Joint Ventures by relying primarily on the Delta/Virgin Atlantic Joint Venture to serve 

North America-U.K. traffic, and continuing to rely on the DL/AF/KL/AZ joint venture to 

serve continental Europe and flow markets beyond the European hub gateways. The 

new Delta/Virgin Atlantic Joint Venture, in combination with the DL/AF/KL/AZ joint 

venture, will enable the Joint Applicants to offer U.S. customers a more complete 

package of service that includes all the benefits of the existing alliance, together with 

enhanced service offerings to London and the U.K.

In order to maximize the public benefits generated by the two joint ventures, and 

to avoid harmful and unnecessary antitrust risk, it is critical for the Joint Applicants to 

have over-arching immunity to bridge the coordination activities described above.104 ATI 

is needed to avoid the “horseshoe” immunity gap for cross-alliance coordination through 

Delta, particularly given that Virgin Atlantic and AF/KL overlap on certain U.K. regional 

markets. An illustration of this antitrust risk is provided by the following diagram:

 103 Id.

104 DOT precedent allows separate and distinct commercial relationships within a 

broad immunized alliance group. An important example is DOT’s decision to approve 

Continental’s addition to the nine-member Star immunized alliance group, when 

Continental had established a joint venture relationship with only four Star members, and 

had little or no bilateral cooperation with the other carriers. By Order 2009-7-10, DOT 

granted “approval of alliance agreements that add Continental to the existing alliance 

involving Air Canada, Austrian, bmi, LOT, Lufthansa, SAS, Swiss, TAP, and United . . . 

and, within that broader alliance, approval of an integrated joint venture agreement 

called Atlantic Plus-Plus (“A++”) involving Air Canada, Continental, Lufthansa, and 

United.” Order, at 1 (emphasis added).
Joint Application

Page 56

Delta currently leads pricing of U.S. point of sale itineraries for connections to 

Aberdeen via Amsterdam on KLM on behalf of the DL/AF/KL/AZ joint venture; going 

forward Delta also plans to lead pricing of U.S. point of sale itineraries to Aberdeen via 

LHR on Virgin Atlantic on behalf of the Delta/Virgin Atlantic Joint Venture. Without 

antitrust immunity to bridge the gap between the two joint ventures, all parties would be 

exposed to the risk of possible liability under Section 1 of the Sherman Act under the 

theory that there was a non-immunized agreement between the members of the two joint 

ventures on Detroit-Aberdeen pricing. Moreover, realistically it cannot be mitigated by 

use of firewalls or other restraints on information flows because, in this example, the 

pricing for both joint ventures is being set within the same company.

The loss of competition that would result from a grant of immunity to cover these 

limited overlap markets in the U.K. is not material. First, and most importantly, AA/BA 

has substantially more one-stop service in these markets than Delta/Virgin Atlantic will 

have and will serve as the main competitive constraint on pricing. Second, Lufthansa 

and other European carriers can and do serve the market.

In addition to antitrust immunity to cover coordination between the two joint 

ventures within the U.S.-U.K. markets themselves, the Joint Applicants also need 

immunity to support the development of corporate discount programs and agency deals 
Joint Application

Page 57

that involve the transatlantic services of both joint ventures. Corporate discounts and 

agency commissions105 are typically offered on a global basis, and in order to compete 

most effectively against AA/BA for corporate and agency customers the Joint Applicants 

need to be able to offer a single, comprehensive package of services to their customers 

including both transatlantic joint ventures. 

X. Conclusion

Approval of and antitrust immunity for the Alliance Agreements is in the public 

interest and will create important consumer benefits estimated to exceed $187 million 

per year. The Delta/Virgin Atlantic Joint Venture enables both carriers to overcome their 

respective weaknesses: Delta will gain access to Virgin Atlantic’s LHR slot portfolio and 

London sales presence; Virgin Atlantic will gain access to Delta’s large network and 

distribution strength in North America. On the important NYC-LHR and BOS-LHR 

routes, the transaction benefits consumers by enabling the JV Parties to combine 

frequencies and retime flights, creating a new and more effective competitor to the 

dominant AA/BA Alliance. The Joint Venture would also enable new direct service from 

Seattle to LHR. In the U.K., Delta will have the opportunity to connect passengers to 

Virgin Atlantic’s budding U.K. network, and additional benefits would be enabled by 

coordination with the other Joint Applicants, particularly on North America-U.K. regional 

routes that are served via Amsterdam and Paris. Antitrust immunity is essential to the 

full realization of the consumer benefits and procompetitive effects of the Joint Venture. 

 105 The Joint Applicants note that agency commissions have been the subject of 

numerous antitrust lawsuits against air carriers. See, In re Travel Agency Commission 

Antitrust Litigation, 898 F. Supp. 685 (D. Minn 1995); Hall v. United Air Lines, Inc., 298 

F. Supp. 2d 652 (E.D. N.C. 2003), aff’d, 2004-2 Trade Cases P 74,637 (4th Cir. 2004); In 

Re Travel Agent Commission Antitrust Litigation, 583 F.3d 896 (6th Cir. 2009).
Joint Application

Page 58

WHEREFORE, the Joint Applicants respectfully request that the Department approve, 

and grant antitrust immunity for, the Alliance Agreements pursuant to 49 U.S.C. §§ 

41308 and 41309. 

Respectfully submitted,

______________________________

Anita M. Mosner

Jennifer M. Nowak

Holland & Knight LLP

Counsel for

VIRGIN ATLANTIC AIRWAYS

Rita Ciccone

 General Counsel & Vice President 

Legal and Corporate Affairs

ALITALIA-COMPAGNIA AEREA ITALIANA

________________________________

Ben Hirst

General Counsel

Andrea Fischer Newman, Senior Vice

President, Government Affairs 

Alexander Van der Bellen, 

Managing Director,

Government Affairs and Associate

General Counsel

DELTA AIR LINES, INC.

______________________________

Robert E. Cohn

Patrick R. Rizzi

Hogan Lovells US LLP

Counsel for 

SOCIÉTÉ AIR FRANCE and KLM ROYAL 

DUTCH AIRLINES


JA -

The Partnership with Delta Provides Virgin Atlantic with a US Domestic Network, 

Improving Competition and Consumer Choice

4/8/2013

PRIVILEGED AND CONFIDENTIAL

GLA

MAN

MIA

MCO

BOS

EWR/JFK

IAD

LAX

LAS

SFO

ORD

LHR/LGW

3


JA -

New York-London

Capacity and Premium Passenger Shares

4/8/2013

PRIVILEGED AND CONFIDENTIAL

Source: OAG and MIDT YE Oct 2012

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AA+BA (oneworld) DL VS Other

Share of Capacity/Bookings (%)

Capacity Nonstop Premium Passengers Total Premium Passengers Including Behind - Beyond Passengers.

6

JA -

Boston-London

Capacity and Premium Passenger Shares

4/8/2013

PRIVILEGED AND CONFIDENTIAL

Source: OAG and MIDT YE Oct 2012

8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AA+BA (oneworld) DL VS Other

Share of Capacity/Bookings (%)

Capacity Nonstop Premium Passengers Total Premium Passengers Including Behind - Beyond Passengers.
JA -

The JV Creates a New and Competitive Alternative 

to AA/BA’s High Frequency Offering at NYC and BOS

4/8/2013

PRIVILEGED AND CONFIDENTIAL

NYC-LHR Daily Flights by 

Carrier

JFK and EWR to LHR Daily 

Flights – June 2013

BOS - LHR Daily Flights – June 

2013

1

1

4

BOS-LHR Daily Flights by 

Carrier

9

3

5

6

15
JA -

Air France/KLM Regional U.K. Flying

4/8/2013

PRIVILEGED AND CONFIDENTIAL 10

Air France/KLM serve 13 U.K. Regional Cities with 70 Daily Flights from their AMS and CDG Hubs

Mktg Al Orig Dest City Name Avg Daily Departures Seats/Week Avg Seats/Dep

AF CDG ABZ Aberdeen 3 1,540 77

AF CDG BHX Birmingham 3 2,583 123

AF CDG BRS Bristol 1 576 96

AF CDG EDI Edinburgh 4 2,660 95

AF CDG MAN Manchester 3 3,570 170

AF CDG NCL Newcastle 3 1,805 95

KL AMS ABZ Aberdeen 5 4,118 118

KL AMS BHX Birmingham 5 4,657 133

KL AMS BRS Bristol 4 2,400 89

KL AMS CWL Cardiff 3 1,600 80

KL AMS EDI Edinburgh 6 5,482 137

KL AMS GLA Glasgow 5 4,158 119

KL AMS HUY Humberside 3 1,600 80

KL AMS LBA Leeds/Bradford 4 2,080 80

KL AMS MAN Manchester 6 6,460 154

KL AMS MME Durham 3 1,600 80

KL AMS MSE Manston 2 1,120 80

KL AMS NCL Newcastle 5 3,802 109

KL AMS NWI Norwich 4 2,080 80

TOTAL 70 53,891 110

Source: June OAG Data
JA -

The JV Provides Significant Consumer Benefit 

4/8/2013

PRIVILEGED AND CONFIDENTIAL 11

O&D Survey Data Omitted. Will be made available 

by Delta to U.S. carriers upon request.
Appendix A

Page 1

Appendix A

ALLIANCE AGREEMENTS

Joint Venture Abstract

Joint Venture 

Scope

• Scheduled service on non-stop routes between the U.K., on the one 

hand, and the United States, Canada or Mexico (“North America”), on the 

other hand (the “JV Routes”), and related beyond routes to the extent 

provided in the JV Agreement

Joint Venture 

Management

• JV Steering Committee consisting of two representatives of each party 

meeting at least twice per year 

• Working groups that meet at least two times per year to oversee 1) 

network, 2) revenue management and pricing, 3) passenger (sales, 

product, marketing, loyalty, brand/advertising), 4) finance and 5) 

operations

• Codes of conduct for each working group to be developed and approved 

by the Steering Committee

• Consensus decision-making for network and capacity decisions relative 

to the JV Routes with certain limited exceptions

• Equitable allocation of future Joint Venture capacity growth taking into 

account aircraft availability and the optimal economic outcome for the 

Joint Venture

Financial 

Settlement

• 50/50 sharing of incremental Joint Venture profits/losses (trunk routes 

and beyond) subject to adjustments for incremental profits over certain 

amounts

Exclusivity

• Delta to be VAA’s exclusive North American airline partner except for 

certain grandfathered carriers and any SkyTeam member airline

• VAA to be Delta’s exclusive U.K. airline partner except for any SkyTeam 

member airline

Note: An index of the JVA implementing agreements is provided in the 

Delta/Virgin Atlantic Motion for Confidential Treatment.
Execution Copy

 

COORDINATION AGREEMENT

This COORDINATION AGREEMENT (the “Agreement”) is entered into as of this 8th

day of April, 2013 by and among:

ALITALIA – COMPAGNIA AEREA ITALIANA S.P.A., a corporation formed under 

the laws of Italy, capital stock Euro 668,355,344.00 fully paid up, with its principal place 

of business at Piazza Almerico da Schio Pal RPU 00054 Fiumicino (RM) Italy, Tax 

Code, V.A.T. Code and Rome Company Register number 02500880121 – REA of Rome 

1225709, (hereinafter “Alitalia”);

DELTA AIR LINES, INC., a corporation formed under the laws of Delaware with its 

principal place of business at 1030 Delta Boulevard, Atlanta, Georgia 30354, U.S.A. 

(hereinafter “Delta”);

KONINKLIJKE LUCHTVAART MAATSCHAPPIJ N.V., a corporation formed under 

the laws of The Netherlands with its principal place of business at Amsterdamseweg 55, 

1182 GP Amstelveen, The Netherlands (hereinafter “KLM”); 

SOCIETE AIR FRANCE, a corporation formed under the laws of France with its 

principal place of business at 45 rue de Paris, 95747 Roissy CDG Cedex, France 

(hereinafter “Air France”); and

VIRGIN ATLANTIC AIRWAYS LIMITED, a company registered in England with 

registered number 1600117, whose registered office is at The Office Manor Royal, 

Crawley, West Sussex, RH10 9NU, England, (hereinafter “Virgin”).

In this Agreement, Delta, Air France, KLM, Alitalia, and Virgin may each be individually 

referred to as a “Party” and may collectively be referred to as the “Parties”.

Recitals

The Governments of the United States and the European Union have entered into a 

comprehensive “Open Skies” Air Transport Agreement to facilitate the expansion of 

international air transportation opportunities;

The Parties wish to take advantage of the commercial opportunities presented by the 

Open Skies agreements by filing this Agreement for approval and grant of antitrust immunity by 

the U.S. Department of Transportation (the “DOT”) pursuant to 49 U.S.C. §§ 41308 and 41309 

(“US Antitrust Immunity”); 

Delta, on the one hand, and Air France, KLM and Alitalia (collectively, the “European 

Party”), on the other hand, are parties to a transatlantic joint venture agreement (as amended or 

modified from time to time, the “TATL JV Agreement”), pursuant to which Delta and the 
- 2 -

 

European Party operate a highly integrated, metal-neutral joint venture on the terms and 

conditions set forth therein (the “TATL Joint Venture”) with respect to the parties’ scheduled 

passenger and combination passenger/cargo operations on certain routes, including all routes 

between Europe and North America and related beyond routes to the extent set forth in the 

TATL JV Agreement (the “TATL Joint Venture Routes”), and certain other alliance 

agreements (collectively, the “TATL Alliance Agreements”);

The DOT has approved and granted US Antitrust Immunity, subject to certain conditions,

with respect to the TATL Alliance Agreements and the activities contemplated under such 

agreements;

Delta has entered into a Transaction Agreement dated as of December 11, 2012 (the 

“Transaction Agreement”) among Delta, Virgin Atlantic Limited, the indirect parent company 

of Virgin (“VAL”), Singapore Airlines Limited (“Singapore”) and Bluebottle Investments (UK) 

Limited (the “Virgin Group Shareholder,” and, together with Singapore, the “VAL 

Shareholders”), pursuant to which, among other things, Singapore agreed to sell and transfer to 

Delta, and Delta agreed to purchase from Singapore, shares of capital stock of VAL held by 

Singapore, which comprise 49% of the outstanding capital stock of VAL;

In connection with the execution and delivery of the Transaction Agreement, Delta and 

Virgin entered into (i) a Joint Venture Agreement dated as of December 11, 2012 (as amended or 

modified from time to time, the “DL-VS JV Agreement”) establishing a highly integrated, 

metal-neutral joint venture (the “DL-VS Joint Venture”) with respect to the parties’ scheduled 

passenger and combination passenger/cargo operations on nonstop routes between the UK and 

North America and, to the extent set forth in the DL-VS JV Agreement, related beyond routes to 

points within the UK and North America on the terms and conditions set forth therein

(collectively, the “DL-VS Joint Venture Routes”), subject to receipt of all required 

governmental and competition authority approvals including US Antitrust Immunity, and (ii) the 

Implementing Agreements (as defined in the DL-VS JV Agreement, and together with the DLVS JV Agreement, collectively, the “DL-VS Alliance Agreements”); 

While there is minimal overlap between the UK-North America city pair routings 

operated by Delta and Virgin pursuant to the DL-VS Joint Venture and the UK-North America 

city pair routings operated by Delta and the European Party pursuant to the TATL Joint Venture, 

Delta will be a member of both Joint Ventures and will be involved in coordinating commercial 

activities such as pricing, revenue management and joint sales activities on behalf of both Joint 

Ventures. Accordingly, the Parties will seek US Antitrust Immunity with respect to the activities 

contemplated under this Agreement in order to permit the efficient operation of the two Joint 

Ventures; and 

The Parties therefore desire to enter into this Agreement to establish the framework for 

coordination of the commercial activities that may be implemented between the DL-VS Joint 

Venture and the TATL Joint Venture and between and among the Parties, as set forth herein.
- 3 -

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants and 

agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, the 

Parties hereby agree as follows:

ARTICLE 1. EFFECTIVENESS

1.1 This Agreement shall become effective as of the date of this Agreement, provided

that, notwithstanding anything set forth herein, the cooperation and other activities contemplated 

by Articles 3 and 4 hereof are subject to and conditioned upon receipt of all required

governmental or competition authority approvals including US Antitrust Immunity and each 

Party’s satisfactory assessment of any proposed coordination under Article 101 of the Treaty of 

the Functioning of the European Union. In addition, all aspects of the coordination and 

commercial cooperation activities contemplated hereunder, including those areas outlined in 

Articles 3 and 4, shall be subject to the prior review and written approval of the Parties engaged 

in such activities.

ARTICLE 2. SCOPE OF THIS AGREEMENT; CONFLICT

2.1 The DL-VS Alliance Agreements set forth the commercial cooperation activities

that will be implemented by Delta and Virgin in connection with implementation of the DL-VS 

Joint Venture.

2.2 The TATL Alliance Agreements set forth the commercial cooperation activities 

currently engaged in between and among Delta, Air France, KLM and Alitalia on behalf of the 

TATL Joint Venture. 

2.3 Notwithstanding anything set forth in this Agreement, the Parties agree that the 

DL-VS Alliance Agreements shall govern the obligations of Delta and Virgin with respect to the 

DL-VS JV and the TATL Alliance Agreements shall govern the obligations of Delta, Air France, 

Alitalia and KLM with respect to the TATL JV. Nothing in this Agreement shall terminate, 

supersede or in any way amend, modify or replace any provision contained in the DL-VS 

Alliance Agreements or the TATL Alliance Agreements. Solely as between Delta and Virgin, in 

the event of any conflict between the provisions of this Agreement and the provisions of the DLVS Alliance Agreements, the DL-VS Alliance Agreements shall prevail. Solely as between 

Delta, Air France, KLM and Alitalia, in the event of any conflict between the provisions of this 

Agreement and the provisions of the TATL Alliance Agreements, the TATL Alliance 

Agreements shall prevail. 

ARTICLE 3. COOPERATION IN PASSENGER PROGRAMS

3.1 Subject to Article 1.1, the Parties may coordinate the following activities

(collectively, the “Passenger Programs”), the terms of such coordination to be developed and 

implemented as mutually agreed by the Parties:
- 4 -

 

(a) coordination of pricing with respect to city pair routings between points in the 

UK and points in North America;

(b) coordination of inventory management systems and processes with respect to 

city pair routings between points in the UK and points in North America; 

(c) coordination of exit-North America and exit-UK surcharges and fees, and 

coordination of pricing with respect to ancillary products and services;

(d) coordination of network and capacity decisions with respect to operations of 

the Parties on city pair routings between points in the UK and points in North 

America;

(e) joint or coordinated sales and marketing initiatives and activities, including 

joint contracting with corporate and agency accounts, coordination with 

respect to corporate discounts and agency commissions and incentives, and 

establishment of delegated sales responsibility based on home market 

representation; 

(f) joint purchasing opportunities, including with respect to ground handling 

services, distribution arrangements and other third party arrangements; and

(g) joint or coordinated advertising and promotion programs. 

ARTICLE 4. COOPERATION IN CARGO PROGRAMS

4.1 Subject to Article 1.1, the Parties may engage in cooperative programs and 

coordinated activities related to their cargo air transportation products and services with respect 

to routes between the UK and North America, including joint cargo sales, blocked space 

arrangements, cooperation in cargo marketing programs and cargo joint venture arrangements

(collectively, the “Cargo Programs”), the terms of such coordination to be developed and 

implemented as mutually agreed by the Parties. 

ARTICLE 5. SERVICE MARKS

5.1 For purposes of this Agreement, “Service Marks” shall mean the name, logos, 

promotions, designs, artworks or other symbols or devices describing or identifying a Party whether or not 

previously registered as trademarks or service marks in any jurisdiction. 

5.2 The Service Marks of each Party are and shall remain the property of such Party. Each 

Party shall each retain the right to change its Service Marks at any time during the term of this Agreement 

in its sole discretion. During the term of this Agreement or any Party’s participation in this Agreement, a 

Party may authorize another Party to use its Service Marks in advertising and in promoting sales and joint 

marketing programs under this Agreement; provided, however, that all such uses shall be subject to the 

prior written approval by the owner of the Service Mark. For the avoidance of doubt, any right of one 

Party to use another Party’s Service Marks pursuant to any such authorization shall be non-exclusive, 

non-assignable, and non-transferable. Upon the termination of this Agreement or withdrawal by a Party 

from this Agreement, for any reason, each Party shall immediately cease using the other Parties’ or the 
- 5 -

 

withdrawing Party’s Service Marks in any manner whatsoever, except to the extent explicitly permitted 

under this Agreement or any other relevant agreement between the Parties. For the avoidance of doubt, 

nothing in this Agreement shall be deemed to be a grant by any Party of any license or other interest in 

any of its Service Marks. 

5.3 No Party shall sell or license the Service Marks of any other Party without the 

prior written consent of such other Party.

5.4 Each Party represents and warrants to the other Parties that its Service Marks do 

not infringe upon the trademarks, trade names, service marks, similar rights or rights therein of 

any third party.

ARTICLE 6. GOVERNMENTAL AND REGULATORY APPROVALS

6.1 In carrying out this Agreement, the Parties will comply with all necessary 

governmental laws, regulations, and requirements, including, but not limited to, applicable 

competition laws.

6.2 Subject to Article 2.3, the Parties shall take all necessary steps, in cooperation 

with each other, to obtain all required governmental and competition authority approvals, 

including without limitation US Antitrust Immunity, in order to carry out the terms of this 

Agreement.

6.3 In the event that any governmental agency or regulatory body having jurisdiction 

over the subject matter hereof shall require any material condition or limitation to this 

Agreement, the Parties shall negotiate in good faith to make such amendments to this Agreement 

as shall be necessary to achieve the purposes and objectives of this Agreement. If (i) any such 

condition or limitation, in the reasonable judgment of a Party, is fundamental to the intent of that 

Party and the operation of this Agreement (which shall include any such condition or limitation 

that a Party is not obligated to accept or agree to under the provisions of the DL-VS JV 

Agreement or the TATL JV Agreement, as the case may be), and (ii) the Parties, acting in 

accordance with this Article 6.3, are unable to agree upon a suitable replacement provision 

within thirty (30) days of receiving notice thereof from such Party, then such Party shall have the 

right to withdraw from this Agreement upon a further thirty (30) days’ advance written notice to 

the other Parties, which action shall not effect a termination of this Agreement so long as two or 

more Parties remain as parties to this Agreement.

6.4 In the event that any necessary governmental or competition authority approval is 

withdrawn, any governmental order is issued, or there is any change in applicable orders, 

statutes, laws or regulations governing the activities contemplated by this Agreement, in each 

case which would materially affect the rights, benefits, and/or obligations of the Parties hereto, 

the Parties shall comply therewith, and shall not be liable to each other for failure to fulfill any 

obligations under this Agreement that may be inconsistent with such changes, orders, statutes, 

laws or regulations. In such circumstance, the Parties shall negotiate in good faith to make such 
- 6 -

 

amendments to this Agreement as may be necessary and sufficient to achieve the purposes and 

objectives of this Agreement. If (i) any such change in governmental or competition authority 

approvals, orders, statutes, laws or regulations, in the reasonable judgment of a Party, would 

have a material adverse effect on the operation of this Agreement, and (ii) the Parties, acting in 

accordance with this Article 6.4, are unable to agree upon a suitable replacement provision 

within thirty (30) days of receiving notice thereof from such Party, then such Party shall have the 

right to withdraw from this Agreement upon a further thirty (30) days’ advance written notice to 

the other Parties, which action shall not effect a termination of this Agreement so long as two or 

more Parties remain as parties to this Agreement.

ARTICLE 7. SEVERABILITY

7.1 If any non-material provision contained in this Agreement shall be held to be 

invalid or unenforceable in any respect in any jurisdiction, such invalidity or unenforceability 

shall not affect the other provisions hereof which can be given effect without the invalid 

provision, and, to this end, the provisions of this Agreement are intended to be and shall be 

deemed severable.

7.2 The Parties shall negotiate in good faith to reach agreement for the replacement of

such invalid or unenforceable provision with a valid and enforceable provision having, to the 

maximum extent possible, the same economic or practical effect. 

7.3 If (i) in the reasonable judgment of a Party any provision or provisions held to be 

invalid and unenforceable is or are fundamental to the intent of such Party and the operation of 

this Agreement, and (ii) the Parties, acting in accordance with Article 7.2, are unable to agree 

upon a suitable replacement provision within thirty (30) days of receiving notice thereof from 

such Party, then such Party shall have the right to withdraw from this Agreement upon a further 

thirty (30) days’ advance written notice to the other Parties, which action shall not effect a 

termination of this Agreement so long as two or more Parties remain as parties to this 

Agreement.

ARTICLE 8. APPLICABLE LAW

8.1 This Agreement shall in all respects be governed by and interpreted in accordance 

with the laws of the State of New York (without regard to principles of conflicts of law), 

including all matters of construction, validity, and performance applicable to contracts made and 

to be performed therein.

ARTICLE 9. TERMINATION

9.1 Subject to Article 1.1, this Agreement shall remain in effect with respect to each 

Party until such Party withdraws from the Agreement or unless this Agreement is earlier 

terminated in accordance with the provisions hereof. The withdrawal of a Party from this 

Agreement shall not effect a termination of this Agreement so long as Virgin and at least one of 

Air France, KLM or Alitalia remain as parties to this Agreement. Notwithstanding the 
- 7 -

 

foregoing, unless the Parties agree otherwise, this Agreement shall terminate immediately upon 

the termination of the DL-VS Joint Venture or the TATL Joint Venture.

9.2 In the event of a withdrawal of a Party from this Agreement or a termination of 

this Agreement, each Party agrees to fulfill all obligations which accrued hereunder prior to the 

termination becoming effective.

9.3 NO PARTY WILL BE LIABLE TO ANY OTHER PARTY FOR ANY 

CONSEQUENTIAL, PUNITIVE, SPECIAL OR EXEMPLARY DAMAGES, INCLUDING 

LOST PROSPECTIVE ECONOMIC ADVANTAGE, LOST REVENUE, LOST PROFITS, 

ANTICIPATED SAVINGS OR GOODWILL ARISING FROM ANY PERFORMANCE OR 

FAILURE TO PERFORM UNDER THIS AGREEMENT, OR ANY TERMINATION OF THIS 

AGREEMENT EVEN IF SUCH PARTY KNEW OR SHOULD HAVE KNOWN OF THE 

EXISTENCE OF SUCH DAMAGES AND WHETHER BASED ON CONTRACT, TORT, 

WARRANTY CLAIMS OR OTHERWISE IN CONNECTION WITH THIS AGREEMENT, 

AND EACH PARTY HEREBY RELEASES AND WAIVES ANY CLAIMS AGAINST EACH 

OTHER PARTY REGARDING SUCH DAMAGES. ACCORDINGLY, A PARTY MAY 

RECOVER ONLY ACTUAL, DIRECT AND IDENTIFIABLE DAMAGES WITH RESPECT 

TO SUCH MATTERS.

ARTICLE 10. FORCE MAJEURE

10.1 No Party shall be liable with respect to any failure to perform its obligations under 

this Agreement to the extent such failure is due to reasons beyond its reasonable control, 

including, but not limited to, governmental interference, direction or restriction, war or civil 

commotion, terrorist attacks, strikes, lock-out, labor disputes, public enemy, blockade, 

insurrections, riots, acts of nature, accidents to the aircraft in the course of operating, involuntary 

aircraft grounding or mandatory downtime imposed by a governmental authority, epidemics or 

quarantine restrictions (collectively, “Force Majeure”).

10.2 In any such case, the obligation of the affected Party to perform such obligations 

will be suspended or limited to the extent circumstances permit performance (except for the 

obligation to pay any amounts due and payable to the other Party or Parties that became due and 

payable prior to the date of the Force Majeure) until such circumstances shall have ceased, and 

no Party shall be held to pay any damage or cost of whatever kind (except for any accrued rights 

and liabilities) in respect of such affected obligations.

10.3 If a Party is affected by Force Majeure, it shall immediately notify, in writing, the 

other Parties of the nature and extent of the circumstances in question, and in such case the 

Parties shall discuss and agree on the action to be taken.

ARTICLE 11. CERTIFICATION, REGISTRATION FEES

11.1 All certification, filing, and registration fees or duties which may be assessed in 

connection with this Agreement under the national law of a Party to this Agreement are payable 

by that Party.
- 8 -

 

ARTICLE 12. NOTICES

12.1 Unless otherwise expressly set forth in this Agreement, all notices, reports, and 

other communications required or permitted hereunder or thereunder to be given to or made upon 

a Party hereto shall be in writing, and shall be considered as properly given if addressed as 

provided below and either (a) delivered in person; (b) sent by an express courier delivery service 

which provides signed acknowledgment of receipt; or (c) transmitted by facsimile (upon receipt 

by sender thereof of evidence that a complete transmission of such copy was made to the 

recipient thereof) and, if sent by facsimile, confirmed by (i) telephone call contemporaneously 

made to the individual designated as the one to receive such notice, or (ii) dispatching a hard 

copy of such notice by mail (postage prepaid), or (iii) either of the methods set forth in (a) or (b) 

effective upon receipt. For the purposes of notice, the addresses of the Parties shall be as set 

forth below; provided, however, a Party shall have the right to change its address for notice to 

any other location or person by giving at least five (5) days prior written notice to the other 

Parties in the manner set forth in this Article 12.1.

For Delta:

Delta Air Lines, Inc. 

1030 Delta Boulevard

Department 945

Atlanta, GA 30320, USA

Attention: Executive Vice President – Marketing, Network Planning and Revenue 

Management

Phone: 404-715-1601 

Fax: 404-77315-2087

With a copy to:

Delta Air Lines, Inc. 

1030 Delta Boulevard

Department 981

Atlanta, GA 30320, USA 

Attention: Senior Vice President & General Counsel

Phone: 404-715-2387 

Fax: 404-715-2233

For Virgin:

Virgin Atlantic Airways Limited

The Base, Fleming Way, Crawley, RH10 9LX, UK

Attention: Chief Commercial Officer

Phone: +441293747031

Fax: +441293747094
- 9 -

 

With a copy to:

Virgin Atlantic Airways Limited

The Base, Fleming Way, Crawley, RH10 9LX, UK

Attention: General Counsel

Phone: +44 (0)1293 747185 

Fax: +44 (0)1293 444126

For Alitalia:

Alitalia- Compagnia Aerea Italiana S.p.A

Piazza Almerico da Schio

RPU Building – 00054 Fiumicino (Rome), Italy

Attention: Paolo Amato

Deputy General Manager Corporate

Fax: +39.06.65635146

With a copy to:

Alitalia Compagnia Aerea Italiana S.P.A

Piazza Almerico da Schio.

RPU Building- 00054 Fiumicino (Rome), Italy

Attention to: Rita Ciccone

General Counsel & Vice President Legal and Corporate Affairs

Fax +39 06 65635139

For KLM:

KLM Royal Dutch Airlines

Attention: Mr. Pieter Elbers

Managing Director & Chief Operating Officer

Fax: +31206488082

With a copy to:

KLM Royal Dutch Airlines

Legal Services – AMS/DJ

Attention: Mrs. Barbara van Koppen 

Company Secretary & General Counsel

Fax: +31206488096
- 10 -

 

For Air France:

International Affairs & Alliances (DD.SI)

45, rue de Paris

F-95747 Roissy CDG Cedex

France

Attention: Mr. Dominique Patry

VP International Affairs & Alliances

Fax: +331 4156 5969

With a copy to:

Société Air France

Legal Department (DB.AJ)

45, rue de Paris

F-95747 Roissy CDG Cedex

France

Attention: Mr. Jean-Marc Bardy – General Counsel

Fax: +331 4156 6719

ARTICLE 13. MISCELLANEOUS

13.1 Waiver

No failure to exercise and no delay in exercising, on the part of a Party, any right, 

remedy, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or 

partial exercise of any right, remedy, power or privilege hereunder preclude any other or further 

exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, 

remedies, powers, and privileges herein provided are cumulative and not exclusive of any rights, 

remedies, powers, and privileges provided by law. The failure of a Party to insist upon a strict 

performance of any of the terms or provisions of this Agreement, or to exercise any option, right 

or remedy herein contained, shall not be construed as a waiver or as a relinquishment for the 

future of such term, provision, option, right or remedy, but the same shall continue and remain in 

full force and effect. No waiver by a Party of any term or provision of this Agreement shall be 

deemed to have been made unless expressed in writing and signed by such Party.

13.2 Assignment

No Party hereto shall assign, transfer or permit the assignment or transfer of this 

Agreement without the prior written consent of the other Parties. Any purported assignment or 

transfer without such consent shall be null and void and of no force or effect.
- 11 -

 

13.3 Public Announcements

The Parties intend to coordinate all permitted public announcements, press releases, and 

other information provided to the media regarding this Agreement, and each Party agrees to use 

reasonable efforts to review any such materials with the other Parties before distributing those 

materials to media representatives or any other person.

13.4 Expenses

Each of the Parties hereto shall bear its own lawyers’, accountants’ and other fees, costs, 

and expenses incurred in connection with the negotiation, execution, and performance of this 

Agreement and any of the transactions contemplated hereby or thereby.

13.5 Independent Contractor

Each of the Parties hereto is an independent contractor. Nothing in this Agreement is 

intended or shall be construed to create or establish any agency relationship (except to the extent 

a Party is expressly in writing designated to serve as agent for another Party), partnership, joint 

venture or fiduciary relationship between or among the Parties. No Party hereto or any of its 

affiliates has any authority to act for or to incur any obligations on behalf of or in the name of 

any other Party hereto or any of its affiliates. Each of the Parties will remain an entirely separate 

corporate entity and, unless otherwise expressly provided herein or in another agreement, will 

retain independent decision-making and managerial authority regarding all matters.

13.6 Indemnification

Subject to Article 9.3, each Party agrees to indemnify each of the other Parties, its 

directors, officers, agents, and employees (collectively, the “Indemnified Parties”) against, and 

agrees to protect, save, and keep harmless each thereof from, any and all liabilities, obligations, 

losses, damages, penalties, fines, claims, actions, suits, out-of-pocket costs, expenses, and 

disbursements (including reasonable legal fees and expenses) of whatsoever kind and nature 

(collectively the “Claims”), imposed on, incurred by or asserted against the Indemnified Parties 

relating to or arising out of any breach by such Party of this Agreement, provided that, in no 

event shall the indemnifying Party be required to indemnify another Party against any liabilities, 

obligations, losses, damages, penalties, fines, claims, actions, suits, out-of-pocket costs, expenses 

or disbursements to the extent that such liabilities, obligations, losses, damages, penalties, fines, 

claims, actions, suits, out-of-pocket costs, expenses or disbursements arise out of or are 

attributable to the gross negligence or willful misconduct of such Party (or a director, officer, 

agent or employee thereof).

13.8 Successors and Assigns

This Agreement shall be binding upon and shall inure to the benefit of the Parties and 

their successors and permitted assigns.
- 12 -

 

13.9 Sovereign Immunity

All Parties acknowledge that the transactions contemplated by this Agreement may 

involve commercial activity carried on throughout the world. To the extent that a Party hereto or 

any of its property is or becomes entitled at any time to any immunity, on the grounds of 

sovereignty or otherwise, from any legal action, suit, arbitration proceeding or other proceeding, 

from set-off or counterclaim, from the jurisdiction of any court of competent jurisdiction, from 

service of process, from attachment prior to judgment or after judgment, from attachment in aid 

of execution or levy or execution resulting from a decree or judgment, from judgment or from 

jurisdiction, that Party for itself and its property does hereby irrevocably and unconditionally 

waive all rights to, and agrees not to plead or claim, any such immunity with respect to its 

obligations, liabilities or any other matter arising out of or in connection with this Agreement or 

the subject matter hereof. Such agreement shall be irrevocable and not subject to withdrawal in 

any and all jurisdictions, including under the Foreign Sovereign Immunities Act of 1976 of the 

United States of America.

13.10 No Third-Party Beneficiary

All rights, remedies, and obligations of the Parties hereunder shall accrue and apply 

solely to such Parties and their successors and assigns, and there is no intent to benefit any third 

parties.

13.11 Further Assurances

Each Party will cooperate fully with the other Parties, and shall do and perform such 

further acts and execute and deliver such further instruments and documents at such Party’s 

expense, as may be required by applicable law or regulations, or as may be reasonably requested 

by any other Party to carry out and effectuate the purposes of this Agreement

13.12 Other

(a) Unless otherwise specified in this Agreement, all references in this 

Agreement to “herein”, “hereof”, “hereto”, “hereby”, and “hereunder” shall be deemed 

references to this Agreement as a whole and not to any particular article, section, subsection, 

paragraph, sentence or clause of this Agreement. Unless otherwise specified in this Agreement, 

references herein to “including” or “include” shall mean “including without limitation” or 

“include without limitation”, respectively. References herein to the termination of this 

Agreement (or words of similar import) shall mean the termination of this Agreement by 

exercise of termination rights.

(b) The captions appearing in this Agreement have been inserted as a matter 

of convenience and in no way define, limit or enlarge the scope of this Agreement or any of the 

provisions hereof.

(c) This Agreement is the product of negotiations between the Parties and 

shall be construed as if jointly prepared and drafted by them, and no provision hereof shall be 
- 13 -

 

construed for or against any Party by reason of ambiguity in language, rules of construction 

against the drafting Party or similar doctrine.

(d) This Agreement may be executed by any of the Parties hereto on any 

number of separate counterparts, and all such counterparts taken together shall be deemed to 

constitute one and the same instrument. Execution may be effected by delivery of facsimiles of 

signature pages (and the Parties shall follow such delivery by prompt delivery of originals of 

such pages).

(e) This Agreement, together with the DL-VS Alliance Agreements, the 

TATL Alliance Agreements, and any commercial cooperation agreements entered into between 

or among the Parties after the date hereof with respect to the commercial cooperation activities 

contemplated under Articles 3 or 4, constitute the entire agreement by or among the Parties 

hereto with respect to antitrust immunized activities between the DL-VS Joint Venture and the 

TATL Joint Venture and between and among the Parties. For the avoidance of doubt, this 

Agreement does not terminate, supersede or in any way amend, modify or replace (i) the 

agreements previously entered between Delta and Virgin with respect to the DL-VS Joint 

Venture and (ii) the agreements previously entered into by and among Air France, Delta, KLM 

and Alitalia with respect to the TATL Joint Venture, which govern their previously approved 

antitrust immunized alliance.

13.13 Survival

The provisions of Articles 8, 11, 12 and 13 shall survive the termination of this 

Agreement as necessary in order to permit the Parties to satisfy any obligations hereunder 

following such termination.

(The remainder of this page is intentionally left blank.)
- 14 -

 

IN WITNESS WHEREOF, the Parties have caused this Coordination Agreement among 

Air France, Delta, KLM, Alitalia, and Virgin to be duly executed and delivered by their proper 

and duly authorized officers as of the day and year first set forth above: 

ALITALIA COMPAGNIA AEREA DELTA AIR LINES, INC.

ITALIANA S.P.A.

By: /s/ Giancarlo Schisano By: /s/ Wayne Aaron 

Name: Giancarlo Schisano Name: Wayne Aaron

Title: Deputy General Manager Business Title: SVP, Alliances & Partner Development

Date: April 8, 2013 Date: April 8, 2013

KONINKLIJKE LUCHTVAART SOCIÉTÉ AIR FRANCE 

MAATSCHAPPIJ N.V.

By: /s/ E. Varwijk By: /s/ A. Nouschi 

Name: E. Varwijk Name: A. Nouschi

Title: Managing Director Title: VP Alliances

Date: April 8, 2013 Date: April 8, 2013

VIRGIN ATLANTIC AIRWAYS LIMITED

By: /s/ Tim Livett 

Name: Tim Livett

Title: Chief Financial Officer

Date: April 8, 2013
Appendix B

Page 1

Appendix B

ADDITIONAL DOCUMENTS AND INFORMATION

To expedite the Department’s consideration of this Joint Application, the Joint 

Applicants are providing the Department with additional information and documents 

typically requested by the Department for purposes of evaluating applications for 

antitrust immunity.

A. Document Production

Delta and Virgin Atlantic are concurrently submitting internal corporate 

documents relating to the investment transaction and Joint Venture Agreement. Delta 

and Virgin Atlantic conducted a thorough search of their corporate records in connection 

with the Hart-Scott Rodino (HSR) Notification of Delta’s equity investment in Virgin 

Atlantic to the U.S. Department of Justice. 

The HSR 4(c) and 4(d) documents include all studies, surveys, analyses and 

reports which were prepared by or for any officer(s) or director(s) for the purpose of 

evaluating or analyzing the Delta/Virgin Atlantic investment transaction and Joint 

Venture Agreement with respect to market shares, competition, competitors, markets, 

potential for sales growth or expansion into product or geographic markets. Delta and 

Virgin Atlantic are producing the HSR 4(c) and 4(d) documents in their entirety to assist 

the Department in its review and approval of the antitrust immunity application. 

These documents contain confidential proprietary information, and are being 

furnished pursuant to the Department’s Rule 12 procedures. Exhibits A, B, and C to the 

Joint Motion for Confidential Treatment contain complete indexes of the confidential 

document production.
Appendix B

Page 2

B. Transatlantic Routes and Services

The proposed North America-U.K. services of Delta and Virgin Atlantic that would 

be operated under the Joint Venture are provided at Exhibit D of the Joint Venture 

Agreement. Although Delta and Virgin Atlantic are actively considering the launch of 

SEA-LHR service if this Application is approved, the JV Parties have no other immediate 

plans to make service or equipment changes as a result of receiving immunity for the 

Delta/Virgin Atlantic Joint Venture and other Alliance Agreements.

C. Codeshare Partners

Delta’s codeshare partners are provided at:

www.delta.com/content/www/en_US/traveling-with-us/where-we-fly/flight-partners.html

Virgin Atlantic codeshare routes and partners are provided at:

www.virgin-atlantic.com/us/en/travel-information/our-partner-airlines.html

E. Alliances

Virgin Atlantic is not a member of a major global alliance. Virgin Atlantic is 

evaluating the possibility of entering into the SkyTeam Alliance. However, the Joint 

Venture at issue is a bilateral arrangement between Delta and Virgin Atlantic; Virgin 

Atlantic’s ultimate SkyTeam decision will have no bearing on the ability of Delta and 

Virgin Atlantic to deliver the substantial public benefits identified in the application. 

Delta is a founding member of SkyTeam. SkyTeam currently has 19 member 

airlines.106 Delta, together with SkyTeam members Air France, KLM, and Alitalia, operate 

an immunized transatlantic joint venture, and also have immunity with Czech Airlines 

(“CSA”).107 Except as described in this application, there will be no changes in the 

relations between Delta and Virgin Atlantic and other SkyTeam members as a result of a 

grant of antitrust immunity in this proceeding.

 106 www.skyteam.com/en/About-us/Our-members/

107 See DOT Order 2008-5-32, amended by DOT Order 2009-6-26.
Appendix B

Page 3

F. Other Antitrust-Immunized Relationships

Virgin Atlantic is not a party to any antitrust-immunized relationship.

Delta, Air France, KLM, Alitalia, CSA, and Korean Air have antitrust immunity 

which they have held since 2002.108 Korean Air and CSA are not part of this application. 

Delta also has antitrust immunity with Virgin Australia, Virgin Australia International 

Airlines Pty. Ltd., Virgin Australia Airlines (SE Asia) Pty. Ltd., and Virgin Australia 

Airlines (NZ) Pty. Ltd..

109 None of the Virgin Australia carriers are part of this Joint 

Application.

G. Exchange of Equity or Ownership Interests

In addition to the Joint Venture, as explained above, Delta will purchase a 49% 

equity stake in Virgin Atlantic. 

H. Hub Airports for Delta

Numerous U.S. and foreign passenger airlines operate scheduled service at the 

U.S. airports where Delta has a hub (i.e., Atlanta, Cincinnati, Detroit, Memphis, 

Minneapolis/St. Paul, New York-JFK, New York-LGA, and Salt Lake City). The Joint 

Applicants request that the Department take official notice of published schedules for 

these hubs, pursuant to Rule 24 of the Department’s rules of practice.

I. Competitive Access to London-LHR and Related Facilities.

Information about such access is discussed in Appendix C, Response to 

Interrogatory No. 6.

J. Labor Issues

The transaction and resulting immunized Delta/Virgin Atlantic Joint Venture and 

cooperation/coordination with the other Joint Applicants raises no significant labor 

issues. Indeed, the Joint Applicants believe that the long-term impact of the transaction 

 108 See DOT Order 2002-6-18.

109 See DOT Order 2011-6-9.
Appendix B

Page 4

will be positive for all existing employees, and no significant impact on unionized 

employees is anticipated under the Delta/Virgin Atlantic Joint Venture Agreement or 

other Alliance Agreements.

K. Civil Reserve Air Fleet Commitments

Granting this Joint Application for antitrust immunity will have no impact on 

Delta’s CRAF commitments.

L. Global Distribution Systems

The grant of antitrust immunity here should also cover the coordination of (1) the 

presentation and sale of the Joint Applicants’ airline services in GDSs and (2) the 

operations of their respective international reservations systems. In this regard, the 

Department has previously determined to extend antitrust immunity to GDS activities.110

Given the lack of bargaining power that carriers have with GDSs, the extension of 

antitrust immunity to cover GDS dealing would be beneficial. The Joint Applicants

recognize, however, that the immunity will not extend to the Joint Applicants’ 

management of any interest they may now, or in the future, have in individual GDSs.111

M. Duration of Approval and Immunity

The Joint Applicants request that the Department approve, and grant antitrust 

immunity for, the Alliance Agreements for a period of at least five years, subject to 

review of the Alliance Agreements in five years. 

N. Conditions

In addition to the CRS-related condition above, the Joint Applicants will accept 

the standard conditions that the Department has attached to previous grants of antitrust 

immunity relating to: (a) non-participation in certain IATA-related tariff coordination 

activities; (b) O&D survey data reporting requirements; (c) operation under a common 

 110 See DOT Order 1993-1-11, at 15-16.

111 See DOT Order 1998-10-20, at 18.
Appendix B

Page 5

brand or common name; and (d) the submission for prior review of subsequent 

subsidiary agreements implementing the Alliance Agreements.112

 112 See, e.g., DOT Orders 2002-1-6, 2011-6-9.
Appendix C

Page 1

Appendix C

RESPONSES TO DOT’S PRIOR ATI INTERROGATORIES

1. Please provide your analysis of the traffic and revenue effects of the 

Joint Venture/Alliance on the Joint Applicants and other airlines. 

Identify the extent to which the traffic and revenue for the Joint 

Venture/Alliance will be stimulated versus diverted from other 

carriers/alliances. Describe the methodology and disclose all 

assumptions (including assumptions about competitive responses) 

and data sources used to produce estimates. 

As addressed more completely in Part V (C) above, internal Delta projections 

show that the Joint Venture will enable the JV Parties to implement network 

enhancements that will produce over $187 million in consumer benefits and attract 

approximately twenty-five thousand additional passengers per year to the Joint Venture 

carriers.113

Delta estimates that the Joint Venture will produce substantial “Network 

Synergies” and “Sales Synergies”.114 “Network Synergies” account for revenue captured 

from the enhanced value to consumers of the routes, frequencies and capacity that will 

be offered by the Delta/Virgin Atlantic Joint Venture, as compared to the carriers’ current 

offerings. Delta’s network planning team calculated these approximate synergies using 

methods that Delta employs in the ordinary course for network optimization. “Sales 

Synergies” account for closure in existing market share and fare gaps (through attracting 

more high-value time sensitive passengers) for both carriers. Delta estimated these 

synergies using two databases: PRISM (a database that covers corporate sales) and 

MIDT. Both types of synergy are likely to translate into increased revenue for Delta and 

Virgin Atlantic.

 113 See Part V(C) supra; Exhibit JA-11.

114 Attachment 4(c)-6 to Delta’s Hart-Scott Rodino Notification Form, pgs. 2-5. 
Appendix C

Page 2

2. Explain what changes You would make to Your transatlantic 

capacity after the DOT decision on the Joint Application is made.

By partnering with Virgin Atlantic, Delta will be able to expand its participation in 

the U.S.-LHR and U.S.-U.K. marketplace. Both JV Parties have committed under the 

agreed Joint Venture network plan to maintain all of their existing U.S.-U.K. flights. No 

changes are contemplated to Delta’s existing transatlantic capacity outside the U.K. as a 

result of approval of this alliance.

Potential Joint Venture-enabled services that may be approved (subject to slot 

availability) include new nonstop service between Seattle and London Heathrow. If the 

alliance is not approved, Delta will not launch Seattle service. Additional potential Joint 

Venture-enabled services (subject to the availability of slots) include additional flights 

from Delta hubs to LHR and select U.K. cities, and new routes between LHR and select 

U.S. non-hub cities and additional frequencies on existing routes. Delta is also likely to 

re-introduce the capacity (over 30 daily seats) withdrawn from its LHR-NYC and LHRBOS services in the Winter 2012 schedule with approval of its Joint Venture plans.

3. Describe the sources of, and estimate the value of, any cost savings 

that You will be able to achieve only if You were granted ATI (i.e., 

that could not be achieved without ATI).

With antitrust immunity, Delta and Virgin Atlantic will enjoy substantial efficiencies 

and cost savings from expanded and deeper integration which, in turn, can be passed 

on to consumers. For example, joint procurement activities would enable the carriers to 

negotiate for better, lower-priced contracts with suppliers.115 Similarly, greater 

harmonization of in-flight and airport products, joint marketing, production and 

 115 These activities may include (i) volume/bulk purchasing, common specifications 

for goods/services, joint bidding, joint negotiations with suppliers, the use of 

standardized contracts for goods/services, and the establishment of a joint procurement 

group, and (ii) diverse areas of supply-and-demand such as general goods/services, 

maintenance services, field station support, catering services, ground equipment 

acquisition and sales, fuel, information technology, and cargo services.
Appendix C

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distribution efforts, and frequent flyer programs will drive costs lower as well. Increased 

connecting traffic flows, joint pricing, inventory/revenue management, IT systems 

harmonization, joint and shared facilities and operations, and integrated administrative 

functions will yield additional substantial cost reductions and savings. 

Cooperation between Delta and Virgin Atlantic will facilitate efficiencies through 

reductions in station costs at commonly served airports. The carriers will be able to work 

together to eliminate staff and facilities redundancies. Delta has conducted a preliminary 

analysis and estimates these efficiencies will result in approximately $15 million in 

annual cost savings at stations across the joint network.

Based on other experiences and reports regarding other alliances, Delta and 

Virgin Atlantic roughly estimate that the following cost savings might be anticipated. 

These benefits will be realized incrementally, over time, as the carriers integrate their 

networks, operations, revenue management systems, and distribution channels. 

Source of Cost Efficiencies Estimate of Cost Efficiencies

Sales, marketing and distribution 25-50%

Pricing and Fare Filing 25-50%

Revenue Management 25-50%

IT Systems Harmonization/Integration 10-30%

Joint/Shared Airport Operations and 

Facilities

20-40%

Inter-Carrier Communication and Decision 

Making

10-30% 

4. Explain specifically what consumer benefits that will result from the 

Alliance/Joint Venture cannot be achieved without antitrust 

immunity. For each type of consumer benefit noted, please describe 

how the Joint Applicants are currently cooperating in that, and how 

that cooperation would change if You were granted ATI.

See Discussion in Joint Application, Part V.
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5. Please discuss the anticipated effects of the Alliance/Joint Venture 

on your interline agreements and level of interline traffic with 

carriers that are not part of the Alliance/Joint Venture.

Approval of immunity for the Delta/Virgin Atlantic Joint Venture is not expected to 

have a material effect on the terms of interline agreements or level of interline traffic 

carried by Delta or Virgin Atlantic, as each carrier maintains interline agreements with a 

host of non-SkyTeam and non-Alliance carriers. Other than Virgin Atlantic’s recent 

termination of its codeshare arrangement with US Airways (discussed above), neither 

Delta nor Virgin Atlantic has any plans to change those agreements on the basis of the 

grant of antitrust immunity in this proceeding.

6. Describe the extent to which airport facilities, including gates and 

slots, are available to U.S.-flag carriers that want to begin or 

increase service to the countries affected by the Joint 

Venture/Alliance.

LHR is constrained both in terms of slots and facilities, making it difficult for U.S. 

carriers to expand. Delta, a Heathrow non-incumbent prior to U.S.-EU Open Skies, has 

faced great challenges in developing a meaningful presence in the U.S.-LHR 

marketplace. All of Delta’s LHR flights are currently operated with slots leased from other 

carriers, and Delta only recently acquired two slot pairs, which it will use in 2014, either 

for growth, or lease slot replacement, depending on the outcome of this application. 

AA/BA currently operates 59% of U.S.-LHR capacity, Virgin Atlantic has a 16% share, 

and Delta has an 8% share. This Joint Venture advances the public interest and enables 

Virgin Atlantic and Delta to overcome limitations on their organic growth at LHR and 

become a more viable competitor to the AA/BA Alliance. Apart from LHR (and to a more 

limited extent, LGW), slots and facilities are generally available at other U.K. airports for 

carriers wanting to begin or increase service.
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7. Describe (i) the current state of cooperation between and among the 

JV Parties for passenger and cargo traffic, and (ii) how and to what 

extent cargo will be included in the Joint Venture/Alliance.

Delta and Virgin Atlantic have concluded a number of alliance implementing 

agreements including a reciprocal codeshare agreement, a reciprocal lounge access 

agreement, and a reciprocal frequent flyer agreement. In anticipation of immunity, Delta 

and Virgin Atlantic are moving forward with these arm’s-length agreements, which do not 

require ATI to implement. However, the most important benefits and efficiencies of the 

integrated Joint Venture, discussed above, can only be implemented after ATI approval. 

Delta and Virgin Atlantic have agreed to explore, through the Cargo Working Group, 

ways in which they can grow their joint business in cargo programs.

8. Explain what relation the Joint Applicants will have with any other 

partner carrier that offers Atlantic services (e.g., Delta’s ATI with Air 

France and the European members of SkyTeam).

See Discussion in Joint Application, Part IX.

9. DOT Data Request

Information responsive to the following DOT data requests is being furnished to 

the Office of Aviation Analysis pursuant to Rule 12:

A. MIDT Traffic Data116

Using MIDT data for the most recent 12-month period available provide 

directional net passenger bookings for all itineraries that touch the U.S. 

and have a gateway that touches Europe, Africa, the Middle East, or

India. Additionally include bookings for any itinerary that touches the 

United Kingdom to anywhere in the world. Include the following data 

elements:

Field 1: Trip Originating Airport

Field 2: Booked Point of Sale Country Code

Field 3: Airport Path and Marketing Carrier Designator String by Leg

 116 The Joint Applicants have no objection to the Department’s public use of MIDT 

data in summary form in its decision, but the Joint Applicants are constrained from 

publishing the full content of the MIDT database purchased from a commercial vendor.
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Example: An Atlanta – London – Johannesburg directional trip with 

segments marketed by DL, VS respectively would be reported as “ATL 

DL LHR VS JNB”. Use a “//” to represent the marketing carrier on any 

ARNK (Arrival Not Known) segments.

Field 4: Volume of Net Bookings

Include an explanation of the trip break methodology used to create 

directional trips from itinerary data.

B. Origin Destination Fare Data

For all itineraries that Delta and Virgin Atlantic participate in, provide all 

itineraries that touch the U.S. and have a gateway that touches Europe, 

Africa, the Middle East, or India. Additionally include any itinerary that 

touches the United Kingdom to anywhere in the world. The Department 

prefers the O&D data represent an internal 100% census of itineraries 

meeting the above criteria, however suitable alternatives will be 

considered if proposed. Data should be submitted on a quarterly basis for 

the most recent year ended period for which data is available. Provide all 

information for any itinerary that was begun during the periods described 

above irrespective of when the full itinerary was completed.

Provide the itinerary in an origin-destination (by direction of travel) format, 

referred to as “market directional.” Provide the number of (1) passengers, 

(2) market fare, (3) purchase class, (4) period, (5) airport sequence, (6) 

operating carrier code sequence, (7) change in operating carrier flag, (8) 

ticketing/marketing carrier code sequence, (9) change in 

ticketing/marketing carrier flag, (10) origin, (11) destination, (12) number 

of market coupons, (13) sequence number of each market directional that 

makes a full itinerary, (14) total distance flown (all kilometers converted to 

miles), (15) distance between the origin and destination (all kilometers 

converted to miles), (16) unique itinerary identifier, (17) one-way/roundtrip itinerary identifier, (18) reporting carrier, and a (19) full itinerary online 

identifier. Fares must include all taxes, fees, and applicable surcharges 

(particularly any fuel surcharges paid). Provide the passenger counts 

summarized by the unique combination of period, flight sequence, 

ticketing/marketing carrier sequence, operating carrier sequence, 

reporting carrier, directional market fare, one-way/round-trip itinerary 

identifier, full itinerary online identifier, and purchase class value.

For itineraries that include a segment provided by ground transportation, 

note the ground segment as ‘—’ in the tkcarriergroup and 

opcarriergroup variables.

Provide a description of the methodologies used to determine market 

directional trip breaks within itineraries and the prorate for assigning the 

market directional fare from the full itinerary fare. DOT proposes using the 

industry standard “four hour rule” for intra-North American travel and the 

“24-hour rule” for all other travel to determine market directional trip 

breaks. DOT prefers the use of the square root of the miles methodology 
Appendix C

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for market directional fare proration. Square root of the miles 

methodology distributes the itinerary revenue by dividing the itinerary fare 

by the square root of the number of miles distance between airports in the 

itinerary. To the extent the applicants prefer to use alternative 

methodologies for determining market directional trip breaks or prorates, 

they are required to provide appropriate methodological descriptions and 

validation.

The purchase class values should provide detail that allows for the 

evaluation of a given itinerary’s level of service purchased. The classes 

should be broken down by both Restricted and Unrestricted fares sold in 

First Class, Business Class, Premium Economy, and Economy cabins. 

DOT is open to alternative mappings and levels of detail that the 

applicants may suggest. If multiple purchase classes are assigned to 

different segments in a market directional provide the most premium class 

assigned from any of the segments in the market directional.

Figure 1 provides a detailed listing of the variables required (meta data)

and Figure 2 provides a sample of the final format. The minimum 

combination of variables that make each row unique (composite primary 

key for the dataset) is highlighted in yellow.

Provide the data electronically as a comma separated value (CSV) or 

other delimited text file format. If a format other then CSV is selected 

provide the meta-data detail necessary to allow for the loading of the data 

into a relational database environment.
CERTIFICATE OF SERVICE

A copy of the foregoing Joint Application has been served this 8th day of April, 2013, 

upon the following:

francis.heil@aa.com

robert.wirick@aa.com 

howard.kass@usairways.com

benjamin.slocum@usairways.com

thomas.bolling@united.com

dan.weiss@united.com

todd.homan@dot.gov

peter.irvine@dot.gov

reese.davidson@dot.gov

bob.goldner@dot.gov

paul.gretch@dot.gov

esta.rosenberg@dot.gov

urskr@state.gov

Ishiwata.K@portseattle.org

joe.cambron@wcaa.us

brubinst@panynj.gov

louis.miller@atlanta-airport.com

steve.luben@atlanta-airport.com

info@airlineinfo.com