Delta strikes joint venture deal with Canadian carrier WestJet

WestJet. Source: WestJet.

WestJet. Source: WestJet.

Delta Air Lines announced Wednesday it has struck an agreement for a joint venture with Canadian carrier WestJet.

The deal, if approved by the companies' boards and regulatory authorities, would deepen a partnership between the two carriers. WestJet and Atlanta-based Delta have had a code-share marketing partnership since 2012, and have agreed to a preliminary memorandum of understanding for a joint venture.

The two carriers aim to get antitrust immunity, which would allow them to coordinate on schedules and pricing on flights between the U.S. and Canada to better compete against rivals. Canada’s largest carrier is Air Canada, which is a United Airlines partner.

For Delta passengers, the deal would mean a more "seamless" experience when traveling between the U.S. and Canada and connecting to WestJet flights, when using frequent flier miles between the two carriers, accessing airport lounges and making transfers, according to Delta international president Steve Sear. WestJet's operations in Calgary, Vancouver and Toronto offer connecting points for Delta travelers, he said. WestJet does not fly to Delta's largest hub in Atlanta.

The U.S.-to-Canada market is the second-largest international market from the United States, “with a very rich base of business and leisure customers,” Sear said. Mexico is the largest international market from the U.S.

Sear expects the process for regulatory approvals from the U.S. Department of Transportation, U.S. Department of Justice and Canadian authorities to be complete by early 2019.

Dallas-based Southwest Airlines had struck a deal in 2008 to partner with WestJet, but Southwest pulled out of the deal in 2010 due to differences over terms of the deal. The deal soured after Southwest said it was surprised to learn from media reports that WestJet was discussing a partnership with Delta.

While there are limits on cross-border airline mergers, joint ventures offer a way for airlines to broaden their international footprint. The deals can also reduce competition in international markets.

For WestJet, the tie-up is an opportunity to expand from its roots as a low-cost Canadian carrier into a larger airline with global reach.

Delta already has joint venture deals with other airlines around the world, including Virgin Atlantic, Virgin Australia, Korean Air, Aeromexico and Air France-KLM. It also has investments in some foreign carriers, including Brazilian carrier GOL and China Eastern, and joint venture partners Virgin Atlantic, Air France and Aeromexico.