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Delta, WestJet announce plans for U.S.-Canada joint-venture

The deal, if it's ultimately approved, could make the airlines a juggernaut on 'transborder' flights between the USA and Canada.
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Delta Air Lines' first Airbus A321 narrow-body airplane rests outside a company hangar at Atlanta's airport on April 29, 2016.  Jeremy Dwyer-Lindgren, Special for USA TODAY

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The nose of a Delta Air Lines Airbus A330-300, seen at the airline's Atlanta hub on April 29, 2016.  Jeremy Dwyer-Lindgren, Special for USA TODAY

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Several Delta Air Lines jets rest outside a hangar at the company's Atlanta hub on April 29, 2016.  Jeremy Dwyer-Lindgren, Special for USA TODAY

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A Delta One first class seat, seen on April 29, 2016 at Atlanta Hartsfield-Jackson International Airport.  Jeremy Dwyer-Lindgren, Special for USA TODAY

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Delta Air Lines jets at the company's Atlanta hub on April 29, 2016.  Jeremy Dwyer-Lindgren, Special for USA TODAY

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Workers at Delta Air Lines' TechOps facility change an engine out on an MD-88 jet on April 29, 2015, at Atlanta Hartsfield-Jackson International Airport.  Jeremy Dwyer-Lindgren, Special for USA TODAY

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Members of the media take photos of Delta Air Lines jets outside a hangar at its Atlanta hub on April 29, 2016, during the company's media day.  Jeremy Dwyer-Lindgren, Special for USA TODAY

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Delta Air Lines' logo, seen inside an Airbus A330 long-haul jet, at Atlanta Hartsfield-Jackson International Airport on April 29, 2016.  Jeremy Dwyer-Lindgren, Special for USA TODAY

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The first class cabin, on board Delta Air Lines' new Airbus A321, is seen during the company's media day at Atlanta's airport on April 29, 2016.  Jeremy Dwyer-Lindgren, Special for USA TODAY

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The first class cabin, on board Delta Air Lines' new Airbus A321, is seen during the company's media day at Atlanta's airport on April 29, 2016.  Jeremy Dwyer-Lindgren, Special for USA TODAY

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A member of the media checks out Delta Air Lines' new Airbus A321 aircraft during a tour at the airline's Atlanta hub on April 29, 2016.  Jeremy Dwyer-Lindgren, Special for USA TODAY

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Delta Air Lines and Canadian carrier WestJet announced plans Wednesday for a joint-venture partnership that would allow them to coordinate flights and fares between the USA and Canada. 

If it materializes, Delta and WestJet could act together in setting prices and flight times on their U.S.-Canada flights. The airlines also pledged the deal would pave the way for new non-stop routes and “enhanced frequent flier benefits."

The tie-up, which the airlines described as “a preliminary memorandum of understanding,” would deepen an existing partnership between the two. 

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The airlines already offer customers some reciprocal frequent-flier benefits and “codeshare” on some of each other’s flights. But a joint-venture partnership would go far beyond that. It would let them to coordinate flights to better compete against other rivals that fly between the USA and Canada. Typically, carriers in such partnerships share revenue – and sometimes costs – on flights that operate under the joint venture. 

However, regulators must agree to give antitrust immunity that would be needed for the sides to legally be able to cooperate on fares and schedules. Approval from regulators – and the boards of each company – must still be secured before the joint-venture plan can advance. 

TODAY IN THE SKY: Delta shows off new 'flagship' Airbus A350 in Atlanta (story continues below)

On the regulatory front, airline joint-venture requests for anti-trust immunity have largely been OK’d by U.S. regulators in recent years. But not all have; the U.S. recently denied a planned joint venture between American and Australian carrier Qantas on concerns about competition in the U.S.-Australia/New Zealand market.

Delta, of course, has a deep history of joint-venture alliances. It’s long been part of a joint-venture pact with Air France-KLM that allows those carriers to cooperate on flights across the Atlantic. More recently, Delta has entered a similar pact with Aeromexico and announced plans for one with longtime frequent-flier partner Korean Air. 

But perhaps Delta’s most noteworthy joint-venture moves in recent years have come with Virgin Atlantic. Earlier this decade, Delta bought a 49% stake in the U.K. airline and quickly established a joint-venture pact with the airline. The move greatly expanded Delta’s presence at London’s lucrative Heathrow Airport, where Virgin Atlantic and Delta can now coordinate, sell tickets on and share revenue from each other’s flights. 

TODAY IN THE SKY: Blockbuster deal: Delta, Air France, KLM and Virgin Atlantic eye alliance

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That partnership grew even more formidable in July, when Delta, Virgin Atlantic and Air France-KLM announced plans for a unified joint-venture set-up that would create a blockbuster trans-Atlantic alliance of those airline brands. 

Now, Delta’s joint-venture interests have expanded north, where Air Canada has been the top player on flights between Canada and the United States. 

“With its strong brand and employee- and customer- centric culture, WestJet is the perfect partner for us in the U.S./Canada transborder segment and together we will produce great results for our respective employees, customers and investors,” Steve Sear, Delta’s chief for Global Sales, said in a statement. “We look forward to applying Delta’s experience building successful joint venture partnerships to this important segment of transborder travel, the second largest international segment for U.S. travel.”

The move also looks to strengthen WestJet’s position at a time when the low-cost carrier has started to look more like a traditional airline as it has expanded its reach, both within Canada and internationally. Its partnership with Delta would significantly enhance its access to the U.S. market, by far the top international market for Canadian airlines. 

“This agreement will bring heightened competition and an enriched product offering to the transborder segment, both of which will benefit our guests,” Ed Sims, WestJet EVP, Commercial, said in a statement. “This is an important step in WestJet’s mission to become a global airline. We are delighted to be working with the premier U.S. carrier, Delta Air Lines, in this joint venture.”

The move also comes as Air Canada has become increasingly aggressive in expanding, both in the U.S. market and on overseas routes from Canada. 

TODAY IN THE SKY: New-look Air Canada woos Americans

Part of Air Canada’s aim has been to court more international-bound U.S. fliers, tempting them to connect via its hubs in Toronto, Montreal and Vancouver for flights to Europe and Asia. 

“To many of our customers in the United States, we’re this little secret that nobody knows about; this airline north of the border that actually flies internationally,” Air Canada’s Smith told Today in the Sky earlier this year. “If you want to go to Europe or Asia, you’ve got to fly over Canada if you’re originating or ending in the U.S. That puts us in a very privileged position to offer connections.”

The proposed WestJet-Delta deal seems certain to up the competitive stakes with Air Canada as the latter also looks to increase its U.S. footprint. It also could renew pressure on Air Canada and United to consider deepening their own ties. The airlines have long been partners via the Star Alliance frequent-flier group, but do not have an” immunized” joint-venture that would allow them to closely coordinate schedules and fares in the way that Delta and WestJet have proposed. 

Stay tuned …

A WestJet Boeing 737-700 takes off from Vancouver International Airport in December 2016. (Photo: Jeremy Dwyer-Lindgren, special to USA TODAY)

Mt. Rainier looms in the background as a Delta Air Lines Boeing 717 lands at Seattle-Tacoma International Airport in February 2017. (Photo: Jeremy Dwyer-Lindgren, special to USA TODAY)

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