American carrier Delta Air Lines and Canadian airline WestJet have deepened their partnership with reciprocal elite benefits. This enhanced partnership is good for elite members of both airlines. It represents the two carriers seeking to continue to partner as closely as possible outside of a joint venture agreement. While the two airlines sought to form a joint venture (JV), the US Department of Transportation (DOT) sought some conditions that led the two airlines to drop plans for the JV in a scathing rebuke.
Delta and WestJet deepen partnership
Delta and WestJet have launched enhanced elite reciprocal loyalty benefits for Delta SkyMiles Medallion members and WestJet Rewards members. Though both airlines have had an earn and burn ability for miles, additional benefits have been limited.
The deeper partnership will allow both airlines’ elite customers to receive priority boarding, priority check-in, lounge access, preferred seats (with waived seat selection fees), additional checked baggage allowance, and priority handling. Where available, elite members can take advantage of priority security checks.
Alain Bellemare, EVP and President – International at Delta, shared the following in a statement:
“These enhanced customer benefits are the foundation for creating a more seamless travel experience for our joint customers as we work towards improving our products and services. Even though the transborder network is limited at present, due to the COVID-19 pandemic, these improvements will be available as the network rebounds and customers are ready to travel again.”
Delta and WestJet axed JV plans
In late-November, Delta and WestJet abandoned their JV plans. The two airlines, initially very optimistic about a joint venture, dropped the plans. In a strong rebuke to the DOT, the airlines called the DOT’s requirements to move forward with the JV “draconian.”
After examining the JV, the DOT asked the two airlines to give up slots at New York’s LaGuardia (LGA). The DOT wanted a divestiture of 16 LGA slot pairs in total. Delta and WestJet strongly opposed this, mainly because the two airlines do not compete against each other out of LaGuardia.
For Delta, in particular, LGA is one of the most important hubs for the carrier. The leading short-haul gateway out of New York City, the airline is building up a New York hub, which is a very competitive market, and they do not want to lose any sort of slots to potential competitors.
Delta and WestJet cannot cooperate very deeply
The Delta-WestJet joint venture would be a “metal-neutral” partnership for transborder routes between the US and Canada. The two airlines will be able to share incremental profits and losses, which would make operations indifferent as to which carrier’s planes are flying a route.
Delta and WestJet wanted to create a more extensive network that also includes WestJet’s ultra-low-cost-carrier brand Swoop. Hoping to compete against the Air Canada and United Airlines partnership, the airlines sought to create a more comprehensive and extensive transborder network.
WestJet and Delta would come in with 27% of the US-Canada transborder market, while Air Canada and United make up 57% of capacity.
The airlines now are mostly focused on a codeshare relationship. Customers can book codeshare tickets on either Delta or WestJet’s booking tool.
Codeshare relationships are a little different compared to JV relationships. Delta and WestJet are mostly unilaterally adding routes instead of partnering with operations and jointly determining which routes would work well for an airline. It matters which airline operates the route with a codeshare relationship while the same is not true for metal-neutral joint ventures.
There are limits to the Delta-WestJet partnership, but elite reciprocal benefits are nothing new in the industry. Airline partners typically try to make elite members feel valued across both airlines, and it does help drive some incremental passenger revenue to the other airline on transborder routes.
The two carriers are getting a little close to the edge of their limits on partnerships. Unless WestJet and Delta reapply for a JV and the DOT gets a change of heart, requiring fewer conditions for the JV to move forward, the two airlines are nearing the end of the depth of their cooperation.
Do you think Delta and WestJet should get an immunized JV? Are you going to benefit from the enhanced elite reciprocal benefits? Let us know in the comments!