Delta Air Lines, Air France and KLM signed a deal Wednesday to combine two separate joint venture agreements into one to create a trans-Atlantic powerhouse that's expected to generate $12 billion in annual revenue, provide better travel options for customers and more closely align the carriers' operations without a formal merger.
Passengers get more nonstop flights between major U.S. and European cities while competition and the weak global economy will likely mean fares won't be affected too much.
The airlines aren't merging, and no subsidiary will be created, but airline consultant Darryl Jenkins said the equal sharing of revenue and costs regardless of who is flying the plane means the carriers will essentially act as one airline on certain routes.
"This is a very big deal," Jenkins said.
The joint venture represents about 25 percent of total trans-Atlantic capacity. The deal covers all the airlines' flights between North America and Europe, between Amsterdam and India, and between North America and Tahiti, the companies said.
The agreement means the airlines will equally share cost and revenues on certain flights regardless of what airline owns or flies the aircraft.
Also, under the joint venture, sales teams don't have a preference of which airline's flight they book a customer on.
What it means for customers is seamless booking and more access to frequent flier upgrades and other redemption opportunities, Delta chief executive Richard Anderson said.
The airlines said they will coordinate branding at airports and global advertising.
An executive committee consisting of the carriers' CEOs and a management committee made up of representatives from the carriers will work together on strategy.
Southwest's next destination
Southwest Airlines is headed for a battle in Brew Town. On Wednesday, the big discounter identified Milwaukee as its fourth new destination for 2009. Hometown carrier Midwest Airlines, backed by minority owner Northwest, is already tangling with AirTran for market share there. Southwest will arrive in the fourth quarter but hasn't identified any routes yet.