December 19, 2016 / 5:13 PM / 9 months ago

Delta Air to end codeshare deal with Alaska Air

A Delta Air Lines Airbus A330 aircraft takes off at the Charles de Gaulle airport in Roissy, France, August 9, 2016. REUTERS/Jacky Naegelen

(Reuters) - Delta Air Lines Inc (DAL.N), which has expanded its own operations in the Pacific Northwest, will end its codeshare agreement next year with Alaska Air Group Inc (ALK.N), which is acquiring Virgin America Inc VA.O, Delta said on Monday.

As of May 1, Delta said sales of flights will end under its DL-coded flight numbers and Alaska Air’s AS-coded numbers, also ending customers’ ability to earn and redeem Delta miles or mileage plan miles on flights operated by the other carrier.

Delta and Alaska codeshare on only a small number of flights as Delta’s growth in Seattle has reduced the need for codeshare flying, the company said.

In 2016, Delta put its code on just more than 78,000 Alaska Airlines scheduled flights, according to data from air travel intelligence company OAG. Alaska Airlines placed its code on 60,660 of Delta’s flights.

The decision to cease the agreement was an expected move from the two increasingly competitive airlines, said Bob Mann, an airline industry analyst at R.W. Mann & Co.

“I don’t think it will be a terrible surprise here because the relationship had become increasingly strained,” Mann said, noting Delta’s growing presence in Alaska’s hometown of Seattle, which cut into Alaska’s would-be revenue from the partnership.

“They stopped relying on Alaska codesharing.”

Both carrier’s shares were up slightly in midday trading. Delta stock rose 0.6 percent to $50.48. Alaska stock saw a 2.1 percent increase to $90.59.

Alaska’s codesharing agreement with Delta, coupled with an agreement with American Airlines Group Inc (AAL.O), netted the carrier an estimated $350 million annual revenue, according to a J.P.Morgan analysis.

Alaska Air recently closed its $2.6 billion acquisition of Virgin America to become the fifth largest U.S. carrier.

Reporting by Rachit Vats in Bengaluru and Alana Wise in New York; Editing by Martina D'Couto and David Gregorio

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