Delta Air Lines and Virgin Australia have confirmed to the United States Department of Transportation (DOT) that their joint venture is over. The move comes as Virgin Australia looks to partner with United Airlines as it charts its course forward.

Delta Air Lines and Virgin Australia end their joint venture

Delta Air Lines and Virgin Australia have ended their joint venture. In a letter to the DOT, the two airlines have indicated that they are no longer cooperating and thus have suspended their transpacific joint venture. Joint venture approval first came in 2011.

In the letter, the airlines have highlighted the circumstances that led to this. Before March 2020, Virgin Australia indicated it flew around 3,250 weekly services covering 72 routes from 41 points around Australia, many under the Delta and Virgin Australia joint venture. However, Virgin Australia had to cut down its operations with the onset of the global health crisis. As part of that reduction, it ceased all international flying. This included operations between the United States and Australia, effective March 30th, 2020. Domestic capacity cuts soon followed, and eventually, Virgin was down to 10% of its pre-crisis operations in Australia.

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Photo: Delta Air Lines

On April 20, 2020, Virgin Australia entered Voluntary Administration in Australia. The airline entered the process intending to shed debt and restructure the company. It concluded in late 2020 with the sale of the Virgin Australia group to Bain Capital. Coming out of this process, Virgin Australia has an all-narrowbody fleet. During the Voluntary Administration process, the carrier decided to shed the widebody aircraft it used to fly between the US and Australia, leaving it unable to serve the marketplace.

Delta Air Lines did return to Sydney with an Airbus A350. However, Virgin Australia made clear that it would be several years, at least, before the airline returned to transpacific US operations. Then, in late 2021, Virgin Australia announced it would be pursuing a partnership with United Airlines and ending its cooperation with Delta Air Lines.

Virgin and United partnership

Virgin Australia and United Airlines announced a new partnership that will roll out progressively through 2022. The two airlines are not looking at a joint venture. Rather, they are pursuing the sale of codeshare flights and reciprocal elite benefits, and mileage earning and burning opportunities.

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Photo: Virgin Australia

Under the Virgin-Delta partnership, Virgin Australia was doing the bulk of flying between the two countries. Delta only flew from Los Angeles to Sydney, while Virgin flew to Los Angeles from Sydney, Melbourne, and Brisbane. With Virgin Australia out of the international marketplace, Delta's sole Los Angeles to Sydney service would not be enough for the airline's international reach.

United Airlines has a much larger pre-crisis network than Delta between the two countries. It flew from Sydney to San Francisco, Los Angeles, and Houston, while also flying from Melbourne to San Francisco and Los Angeles. United is not currently flying all of these routes. Still, it expects to resume them eventually and get its Australia network back in full force off the strength of its partnership with Virgin Australia. With Virgin Australia still undecided on a long-haul return between the US and Australia, United's offerings will go a long way in helping the airline challenge dominant Qantas in the marketplace.

Delta's joint venture strategy

For over the last ten years, Delta Air Lines has pursued a joint venture strategy with airlines worldwide. This included Virgin Australia and Korean Air, Air France, KLM, Virgin Atlantic, and it is pursuing one with LATAM. Delta has billed these joint ventures as ways of getting more customers to more destinations while also building the opportunity for it to add new long-haul international service.

Delta Air Lines does not have a lot of options in the South Pacific for a joint venture partner. It will maintain its flights to Australia for now, and a turnaround is certainly possible, but Delta's response in this market has yet to be seen.