Virgin deal gives Heathrow berths to Delta Air Lines: Transatlantic tie-up will offer frequent flyers more destinations

VIRGIN Atlantic has struck a ticket code-sharing deal with Delta Air Lines of the US, under which Delta will buy at least pounds 100m worth of seats a year on Virgin flights to London.

The airlines have also set up a Frequent Flyer partnership, beginning in July, which will give Virgin's frequent flyers access to hundreds more destinations.

The partnership allows Delta access to Heathrow, where the main transatlantic operators with Virgin are British Airways, United Airlines and American Airlines. The issue of whether Heathrow should be more open to US airlines has been at the heart of a dispute between the Government and the US Transportation Department.

Richard Branson, chairman of Virgin Atlantic, said that he expected the agreement to win the approval of both governments as it promotes competition.

'Today marks a milestone in our history as it will enable us to remain independent and competitive in the face of an increasing number of global alliances,' he said. 'At the same time we now have a big brother in America.'

Mr Branson said the airlines had not ruled out an equity agreement in the future but it was not an immediate issue. Any such arrangement would involve a stake in Virgin of no more than 20 per cent.

Under the ticket code-sharing agreement, Delta will buy the minimum pounds 100m worth of seats a year, irrespective of whether it sells them or not. Delta will independently price and market the seats in competition with Virgin. At this stage in the partnership, Virgin is not taking seats on Delta flights.

The plan will operate on Virgin flights between Heathrow and Los Angeles, New York's Newark and JFK airports, and San Francisco. The arrangement also covers Virgin flights between Gatwick and Orlando, Miami and Boston. Delta passengers from hundreds of other US cities will be fed through airports such as JFK on to Virgin flights to London and will be told they are flying on the UK airline.

Delta will continue to use its own aircraft on services between Gatwick and Atlanta, Cincinnati, Detroit and Miami.

Ron Allen, Delta's chairman, said: 'This is a pro-competitive and pro-customer agreement. It is a win-win situation.' He said that the partnership with Virgin would be a long-term one, irrespective of 'open skies' negotiations between the UK and US governments.

Mr Branson said that, depending on the success of the partnership, the number of flights from Heathrow to JFK might be increased from two or three a day to four or five. He said that the arrangement would also make it more economical for Virgin to operate flights from London to Chicago and Washington. But he added that the problem of obtaining more take-off and landing slots at Heathrow remained a nightmare and was the one obstacle that could slow the growth of competition.

British Airways, which has a ticket code-sharing arrangement and a 24.6 per cent equity stake in USAir, had no comment on the Virgin deal.

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