Delta, Air France Hail Routes Kicking Off 'Open Skies' Cooperation

LONDON — At a packed news conference Monday, Delta Air Lines and Air France-KLM executives hailed the launch of three trans-Atlantic routes from London's Heathrow airport that take advantage of the new "Open Skies" aviation pact.

Under their joint venture agreement, the partners will operate three nonstop routes: daily Air France flights between Heathrow and Los Angeles, daily Delta flights between Heathrow and Atlanta, and twice-daily Delta flights between Heathrow and New York's JFK.

In addition, the carriers will share revenues and costs on all flights operated by both carriers between Heathrow and the United States, as well as on flights between Air France's Paris and Lyon hubs, and Delta's Atlanta, New York, Cincinnati, and Salt Lake City hubs.

Last week, the two airlines and their partners in the SkyTeam Alliance asked the U.S. Department of Transportation to approve expanded antitrust immunity that would let them eventually integrate their trans-Atlantic operations.

"We're hopeful that antitrust immunity will be approved any day now," said Delta Executive Vice President Glen Hauenstein.

Under current plans, the partnership is to expand by 2010 to include all trans-Atlantic flights operated by Air France and Delta between Europe and the Mediterranean on one side and North America on the other side, as well as all flights between Los Angeles and Tahiti.

But many questions were raised over the future of the joint venture. For example, it's still not clear when — or if — Delta will merge with Northwest Airlines, and how that merger could affect the Air France partnership.

At the same time, Air France has made a play for Italy's national carrier, Alitalia.

"We are in discussions, but it's in the hands of our Italian colleagues now," said Pierre-Henri Gourgeon, deputy CEO of Air France-KLM.

In October, Delta signed its joint venture agreement with Air France, which merged with Dutch carrier KLM in 2004. Northwest and KLM forged an alliance in the 1990s, and today there are ongoing discussions to merge Delta and Northwest.

Hauenstein said that one of the goals of a four-way venture is to link large U.S. domestic networks with Heathrow, Europe's busiest airport.

Under the Open Skies pact, which ends limits on which airlines can fly between the U.S. and Europe, Heathrow has been opened up to all U.S. carriers. Previously only British Airways and Virgin Atlantic of Britain and U.S. carriers United Airlines and American Airlines have been allowed to fly from Heathrow to the United States.

"This is the world's top business destination and, as a global player, Delta will now be able to offer two options for travelers into this city," said Hauenstein.

Delta also serves Gatwick airport, about an hour's drive from London.

Hauenstein said that Delta has been increasingly focused on international expansion over the past three years.

"By summer some 41 percent of our capacity will be deployed in international markets," he said.

Airline consultants predict that Open Skies will boost trans-Atlantic traffic between the EU and the United States by one-third, to 37.5 million passengers a year, by 2011.

Already, scheduled flights from the EU to the United States in April have climbed by 11 percent compared with the same month last year, according to the International Air Transport Association.

Despite U.S. economic woes, "U.S. corporate travel remains very strong internationally," Hauenstein said.

Questions were raised at the news conference over whether it's really a good idea to be plugging new access to Heathrow.

The disastrous opening of Heathrow's Terminal 5 last week resulted in delayed luggage and flight cancellations.

British Airways canceled 54 short-haul flights from Terminal 5 on Monday, and more cancellations were expected on Tuesday.

Hauenstein played down the negative publicity, arguing that every new terminal suffers initially from "a little indigestion."

"Over the long term Heathrow has been preferred by the customer," he said. "Heathrow's reputation won't be damaged."

Indeed, Hauenstein said that Delta is continually searching for more slots at Heathrow.

Finally, it's still not clear whether more trans-Atlantic competition will bring down prices for consumers.

But Hauenstein was hopeful.

"We believe increased competition will put downward pressure on fares," he said.