Air France and Delta Trans-Atlantic JV

17 Oct

The International Herald Tribune reported today “Air France and Delta forming joint venture for trans-Atlantic flights.” This is yet another development in the airline industry as different players line up to take advantage of the impending change in regulation controlling flights between the United States and the European Union.

Many airlines are jockeying to take advantage of the “Open Skies” deal, which will allow airlines to fly from anywhere in the European Union to any point in the U.S. as of March 30.

The effect will inevitably play both to the favor of customers and airlines.

Customers will benefit from lower costs and more direct-flight options as more operators are allowed to cross the Atlantic, and to fly between markets which were previously not connected. Perhaps some intrepid airline will begin flying from San Francisco to Riyadh and make my life easier (yes, I realize Saudi Arabia isn’t part of the EU… yet).

With more possible destinations, airlines will be able to operate internationally at much lower cost (by, for instance, flying into London Luton rather than Heathrow or Gatwick). As different airports become viable options, airlines should have improved bargaining power when negotiating prices on landing slots and gates.

Could this be the way that US airlines break free from there historically abysmal profit levels?

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