Airline acquisitions could have a significant impact on business travel sector

Tuesday, December 11, 2012

Airline acquisitions could have a significant impact on business travel sector

While budget-conscious executives can save money by staying in serviced apartments and corporate housing, there is less room to maneuver when it comes to airfare. The cost of business-class flights can be one of the greatest expenses faced by executives seeking to travel internationally, and finding cost-effective fares without compromising on quality can be a significant challenge. New developments in the aviation industry could have a lasting impact on the business travel sector in the coming year.

Solidifying positions
Business Travel News reports that officials at Delta Airlines and Virgin Atlantic are currently discussing the possibility of a collaborative transatlantic partnership. The potential arrangement is still being examined by regulatory professionals, but should the move be given the green light, both carriers would cement their position as leading airlines for business travelers.

Delta and Virgin Atlantic's collaboration will involve the sharing of routes between the U.S. and the U.K., one of the busiest corporate routes in the world. In addition to coordinating flights, the collaboration would also incorporate a revenue sharing scheme and joint initiatives to promote corporate sales. The discussions follow Delta's successful acquisition of Singapore Airlines' 49 percent share in Virgin Atlantic, which was valued at approximately $360 million.

"The partnership allows both carriers to offer a greatly expanded network at Heathrow and to overcome slot constraints, which have limited the growth and competitive capability of both airlines," read a statement from the two airlines, as quoted by the news source. "The two carriers will operate a total of 31 peak-day roundtrip flights between the U.K. and North America, 23 of which operate at London Heathrow."

Intense competition
According to The New York Times, the move is seen as a direct bid to challenge British Airways' significant market share of business flights to and from the U.K. The partnership will result in increased service between major financial hubs such as London and New York, with flights departing every 15 minutes. This could be seen as a positive thing for frequent business travelers, but it remains to be seen how the partnership will affect the price of executive-class seats.

Many experts in the aviation industry claim that Delta's move to take a greater share of the transatlantic market has been well timed. The lingering financial instability of Delta's main competitor American Airlines has meant that Delta is well positioned to assume a greater share of the fiercely competitive transatlantic business flight market.