New joint venture to add nonstop flights to Europe

WASHINGTON -- A joint venture between Air France-KLM and Delta will benefit trans-Atlantic travelers looking for more nonstop flights to airports such as London's Heathrow, though analysts anticipate little impact on fares.

Air France-KLM Group and Delta Air Lines are forming a joint venture that will allow them to share profits and up to an estimated $8 billion in annual revenue on trans-Atlantic routes.

The move announced Wednesday follows the new Open Skies agreement on airline service between the U.S. and Europe.

The venture, to launch in April, will generate an estimated $1.5 billion a year in revenue in its first phase, and $8 billion a year when fully operational, the companies said in announcing the deal at Charles de Gaulle airport in Paris.

Such a deal will be a major challenge to competitors such as British Airways, UAL Corp.'s United and AMR Corp.'s American as airlines jockey to benefit from the Open Skies deal, and some analysts said it could spur more trans-Atlantic combinations.

The venture will first apply to all nonstop flights between Air France's French hubs and Delta's Atlanta, New York-JFK, Cincinnati and Salt Lake City hubs, representing 19 flights and more than 4,500 seats per day.

Starting in 2010, numerous flights to all destinations between Europe, the Mediterranean and North America will be part of the joint venture, they added, as well as flights between Los Angeles and Tahiti.

"The partnership will be neutral for air fares, but where consumers will benefit tremendously is in more nonstop options," said Minneapolis-based travel analyst Terry Trippler.

Delta, the third biggest U.S. carrier, will benefit from three of Air France's landing slots at London's congested Heathrow airport. These routes will include a new Heathrow to Los Angeles route operated by Air France, two Heathrow-JFK flights operated by Delta and a Heathrow-Atlanta flight operated by Delta.

"You have got to have Heathrow to be competitive … and this gives Delta the plum over there," Trippler said.

In addition, Delta will operate three new nonstop trans-Atlantic routes: Paris-Orly to JFK, Lyon-JFK and Paris-Charles de Gaulle to Salt Lake City.