Virgin-Delta Realign Heathrow Schedule to Battle British Airways

Delta Air Lines Inc. (DAL) and Virgin Atlantic Airways Ltd. will streamline timetables between New York’s John F. Kennedy airport and London Heathrow as their first priority after winning antitrust immunity for an alliance.

The pair will operate nine daily New York-London flights each way from March 30, seven focused on Kennedy and two at Newark. Jets will leave Heathrow for JFK every 30 minutes in an evening peak currently dominated by British Airways and American Airlines, Virgin Chief Executive Officer Craig Kreeger said.

“The first thing that we’ve done in terms of changing our schedule is take flights that were on top of each other and create a better schedule for customers in the New York market,” Kreeger said in a phone interview. “It’s the logical place to start -- it’s where we have the biggest amount of service and it’s where we think our competition can be a huge value.”

Yesterday’s approval of the pact by the U.S. Department of Transportation lets the airlines combine networks on key trans-Atlantic routes in an alliance driven by Delta’s June purchase of a 49 percent stake in Richard Branson’s flagship company. Antitrust clearance means the airlines can also coordinate pricing, share costs and consult on fleet needs, Kreeger said.

Terminal Switch

In London, Virgin is working with Heathrow Airport Ltd. on moving Delta services to Terminal 3, where its own flights are based, from Terminal 4. Shifting feeder traffic from northern Britain there from Terminal 1 is also desirable, the CEO said.

Delta and Virgin will together control about 35 percent of available seats between New York JFK and Heathrow, versus a 63 percent joint share at International Consolidated Airlines Group SA (IAG)’s BA and AMR Corp. (AAMRQ)’s American, which have coordinated JFK-Heathrow flights since April 2011, according to Kreeger.

Between Europe’s busiest airport and the entire U.S. the Delta-Virgin share will be about 25 percent, versus 55 percent for BA-AA, and to North America as a whole the figure will be 21 percent, compared with 51 percent for the two Oneworld carriers.

“While we together won’t have the single largest network between the U.S. and the U.K., we’ll now have an extremely competitive one,” said Kreeger, a 53-year-old American who took over as CEO of Crawley, England-based Virgin Atlantic on Feb. 1.

Restrictions in place prior to the antitrust signoff mean Virgin and Delta haven’t yet shared information on supply and demand or compared their strengths on various services, though the only other overlap route is London-Boston, Kreeger said.

Blend Sought

In total, the pact between the carriers will entail joint operation of 31 daily round-trip flights between the U.S. and the U.K., versus 58 offered by British Airways and American.

The carriers plan to see how customers respond to their accord before making major service changes, Kreeger said. While dedicated to retaining a Virgin ethos known for perks spanning resort-like lounges to motorcycle pickups, the CEO reckons there may be opportunities for aligning the two identities.

“I like to think it will be a blend of some things that makes sense for us to do similarly and other things that are characters of each airline’s brand and service that customers associate with that airline,” he said.

Delta, which bought its stake in Virgin Atlantic from Singapore Airlines Ltd. (SIA) for $360 million earlier this year, has itself been wooing premium passengers at its hometown hub in Atlanta with surprise Porsche sports-car rides between terminals when they have a connecting flight to catch.

Kreeger, has set a target of returning a company in which billionaire Branson retains a 51 percent stake to profit in the year through February 2015, after it recorded a loss of 69.9 million pounds ($112 million) in fiscal 2013.

A more fuel-efficient fleet and the Delta pact alone will ensure profitability, Kreeger said earlier this month, with Virgin also targeting cost savings of 45 million pounds this year, mainly from enhanced computer and e-commerce functions.

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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