US clears Virgin-Delta code-share deal for takeoff

Richard Branson's Virgin Atlantic last night won US approval for its code-sharing deal with Delta Air Lines, a move that the British company described as the most significant in its history.

Virgin estimated the deal would give it extra revenue of about $150m a year. "It will seal the future of the airline,'' said a spokesman.

The deal was put on hold last year while the US Department of Transportation considered strong objections by rival airlines, especially USAir and American Airlines.

Code-sharing is in effect a merger of two airlines' flights on one ticket, allowing passengers to book with either. Such arrangements are booming among airlines, giving them access to new markets and routes without having to resort to takeovers and mergers.

Under the deal Delta, which currently flies to Gatwick Airport, will get access to Heathrow, while Virgin will be able to sell tickets to US destinations served by Delta. Last month Virgin signed a code-sharing deal with Malaysian Airlines, giving it greater access to the to Far East and Australia.

Critics said code-sharing was a deception to fool the traveller, who may end up flying on a airline he does not wish to use or having to face time-consuming transfers at airports.

However, most airlines are now involved in some sort of code-share deal, and observers say the hostility to the Delta/Virgin link had more to do with the intense rivalry in the US airline market, the biggest in the world.

Attempts by critics to link the code-sharing with the bi-lateral talks on transatlantic access seem to have failed as the Transportation Secretary, Frederico Pena, put no conditions on the Virgin deal.

Delta will purchase a designated number of seats on Virgin flights, which it will then independently price, market and sell.

Virgin, which operates three flights a week to New York, said it would step up the frequency some time this year.

The Transportation Department also approved new services between American Airlines and Birmingham.