Don’t hold your breath for lower fares in Delta-Virgin Atlantic deal

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If you think you’ll see a big drop in airfares to London and the rest of Europe from the big deal announced Tuesday between Delta Air Lines and Virgin Atlantic Airways, think again.

Consumer expert Clark Howard says the opposite is more likely: Fares will be higher.

“What’s going on right now with travel from the U.S. to Europe is everthing is being locked up into three cartels, and the result is that airfares to Europe have gone up quite a bit,” Howard told WSB radio after Delta announced it was acquiring a 49 percent stake in London-based Virgin. “This just accelerates that [with] definitely higher fares.”

Howard said the $360 million deal allows Atlanta-based Delta, the largest carrier serving Hartsfield-Jackson International Airport, to compete more successfully in “the world’s most important international business market, which is London.”

The addition of Virgin to Delta’s alliance with European carriers Air France and KLM will make it a more powerful partnership as Delta tries to gain a bigger share of the high-paying business travel market.

Bigger, however, will not mean better when it comes to airfares. “Definitely not better airfares,” Howard said. “This is not what this is about. This is about Delta being able to be more competitive for premium priced business travelers.”

Delta will be able to marry its extensive transAtlantic route system with Virgin’s “fantastic” system across Europe and Asia. “This is a very good strategically for Delta.

Delta investors, however, could be among the beneficiaries. The airline’s shares were trading higher on Wall Street hours after the announcement.

“If you have Delta stock, this could be very good,” Howard said.

7 comments Add your comment

RealityKing

December 11th, 2012
12:02 pm

Delta stockholders are the only people benefitting from this deal. Airline consolidation has led to terrible customer service, fewer flights, more fees, more technical problems, higher fares and…massive profits. What exactly are they even in business for anymore?

brian

December 11th, 2012
1:20 pm

Airlines are some of the worst run businesses in the world, especially here in the USA (all due respect to Southwest Airlines who are the lone exception). It won’t be long before Delta asks Virgin to lower the travel experience, raise costs using a cafeteria plan to raise revenues and call it good business. They will slowly ruin what Branson built. Not that it is a bad move, Southwest Airlines is sure to control all domestic routes within a few years, “they get it”.

Road Scholar

December 11th, 2012
1:42 pm

Now if SW would get some nonstops from Atlanta to the west coast!!!!!!!

Burroughston Broch

December 11th, 2012
3:09 pm

@ Reality King
The only way Delta shareholders benefit is if the price of their shares increases. They got a short term bounce today – let’s see if it lasts.
The Delta executives will immediately benefit.

Mitch

December 11th, 2012
4:07 pm

@ Road Scholar, SW has nonstops to both San Francisco and Los Angeles. Where else you looking to go?

Michael

December 11th, 2012
5:28 pm

Yeah so far Southwest have being cutting nonstops from Atlanta. If should have left Air Tran alone, if they continue to cut Atlanta flights.

[...] Posted by tikigod311 Why is this not on ajc.com?!?!?! Don’t hold your breath for lower fares in Delta-Virgin Atlantic deal | The Biz Beat Virgin Atlantic does not fly to Atlanta. The impact, if any, should be negligible on [...]