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Delta Looks to Buy Big Share in Virgin Atlantic

December 5, 2012 by

Even with all the precautionary measures taken, dutifully taking the TSA’s advice, and charging up all your WiFi-accessible tech doodads for use on your trip, future flights may soon bring further frustrations to travelers. This time, however, it’s not about flight delays, the lack of legroom, or crying babies. It’s just business. Delta Airlines has announced plans to acquire a 49 percent stake in Virgin Atlantic, an international flier and separate company from Virgin America.

Delta aims to snatch up Singapore Airlines’ share (the company’s remaining 51 percent belong to owner Richard Branson). Delta’s motivation for the buy is not only a means of consolidation. Holding a major stake in a Britain-based international airline offers Delta the chance to procure more landing slots at London’s Heathrow Airport, one of the world’s largest hubs.
Consolidating airlines is nothing new to the industry, with mergers occurring frequently over the past several decades (remember when Continental and United were two separate airlines?). A company is better served aligning with other airlines, rather than attempting to take over individual international carriers individually. Though mergers are a better alternative to stave off bankruptcy, the practice can translate to a diminished experience for passengers. With less competition between fewer airlines, costs will continue to rack up for travelers. Customers can expect to see further fare increases, coupled with weaker overall performance.  A messy marriage between two airlines has baggage – labor integration, loyalty programs, cutting services or routes – meaning customers are paying more to get less.

The Delta-Virgin Atlantic relationship is still it talks, but should it go though, travelers can take away a silver lining. Passengers will likely see benefits in the short term, including increased spots at Heathrow. Long-term benefits and detriments are yet to be seen, but fliers should not expect the airline industry’s exercise in consolidation to end anytime soon.

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