fromYXU

From my point of view a JV between DL and KE is only a positive. Flying through NRT to get elsewhere in Asia is a crap shoot at best, needing to use weak ST partners. Flying through ICN and using KE flights would be a step up.

DL2SXM

Sorry if this has already been answered but can Delta turn ICN into there Asia hub and dump NRT altogether, sans N/S flights? In other words, can DL do a complete role reversal between NRT and ICN? That would afford people booking on Delta TONS of more options for connecting into South East Asia, China, Japan, Oceania etc...

FireEmblemPride

Because DL's NRT strategy would be to decrease capacity using smaller planes, while the LHR strategy increased capacity.

It doesn't have enough O&D for Delta to be competitive. That belongs to the JVs on the other two alliances.

This wasn't even the main point made earlier, but I'll answer the question: the Japanese are said to pay a premium to fly a local airline and are more conscious of this in choosing an airline than demographics in other countries. Japanese who fly non-local airlines will often have gotten a special deal through travel agencies, and this is true of DL today (dating back to the NW days). That's also why the weak Yen harms DL's trans-Pac ops and they have stated as much in their fiscal reports.

DL can get away with a non-localized product today because they have a hub in NRT and fly a diverse set of pax through it everyday. Turning NRT into an O&D airport means the reliance on Japanese passengers goes UP, not down. It's a simple concept. Still, it's one point among many as to why DL would be placed at a severe disadvantage.

Your data is outdated.

http://www.nippon.com/en/features/h00070/

In 2013, 26% were South Korean, 13% were Chinese, 13% were Taiwanese and 7% were Hong Kongese. Not only that, but the Chinese are the highest spenders. So, your original comment about Japan's tensions with Asian neighbors having an adverse effect on their aviation market is not really valid.

No one said that. My understanding of this debate is that NRT should be dehubbed, and I'm presenting arguments against that.

KE is competitive as a single airline, but this is the era of JVs and alliances.

LH competes just fine because Germany is also a well-developed market, with a large and wealthy demographic, is the biggest economy in Europe, and is the most stable there overall (and in the whole world in fact). France and the UK could only dream of having an economy as resilient as Germany's.

Meanwhile, Korea is a very strong economy, but it is no Japan and certainly is no parallel to Germany. If anything, Japan is the parallel to Germany in Asia for the points in the above paragraph.

pbarnette

O/D depends upon frequency, more than the size of the planes. But again, if having a hub in the most important city in a region were the be-all and end-all, then AA/BA would have already destroyed the competition for TATL traffic.

Who says there isn't enough O/D? And if that is true, then DL can't compete without a Japanese partner anyway, so why double-down on a market you can't win? It would be like DL opening a hub in SFO or IAH. Small fish, big pond, etc., etc.

Lot's of things are said. And even if true, DL will never be a local airline.

Actually, it likely means that their reliance on US-sourced O/D to Japan, along with traffic to places like ATL, DTW, and MSP goes up.

1) No, my data is not outdated. http://www.tourism.jp/en/statistics/
2) Your article does not dispute the above.
3) DL doesn't and shouldn't care how much the Chinese spend when on the ground in Japan.
4) Your own linked article starts off with a discussion about how Japan's tensions with China have depressed demand! Read what you post, it saves embarrassment. Why do you think KE and OZ each serve 20+ cities in China?
5) Even using your numbers, 13% + 13% does not equal a majority or "bulk". Indeed, it only places it even with South Korea.

You know what Korea is a good parallel to? The Netherlands. Larger economy. Strong geographic location for connecting flows. You'll note that AMS works quite well as a connecting hub. And Seoul is a MUCH bigger local market (by GDP) than AMS will ever be to boot.

rylan

Problem is, DL still doesn't have a 'seamless' JV experience on the TATL side. Think about how many issues there are with seat assignments not sticking, EC seats not being available or dropped/lost etc... and then the whole SWU/GUC issues with ticketing difficulties and waitlists. I can't imagine that a KE-JV would make the situation any better.

pbarnette

There are problems with any JV. The benefits are not undone by a handful of issues like that.

Pathfinder813

Yeah, it depends which chaebols like Hanjin (KE's parent corporation). What's funny is that some of my friends who work for Samsung have had to travel to the US for biz. When they did, they were put on UA in Y because it was the cheapest flight to SFO which is a horrible flight in terms of IFE.

Also, right on that there's going to be a need for TYO-USA flights. I've also seen that GMP has grown substantially in the past 10 years, especially domestically. A lot of this is because of the added flights to Jeju; GMP-CJU is currently the busiest air corridor in the world.

I think that this is definitely possible and probably one of the reasons why DL wants to do a JV with KE. One thing no one has mentioned on this thread is the current construction for new Terminal 2 going on at ICN. I'm not sure if KE or OZ will be moving to the new facility but this will certainly provide for two distinct terminals for ST and *A. The new terminal is slated for completion by 2016 so that it'll be good to go for the Winter Olympics in 2018. The new terminal is supposed to add 72 gates so there will be plenty of room to move the NRT hub to ICN.

FireEmblemPride

Frequency? Good luck to DL getting more slots to NRT anytime soon then. Also, oneworld is quite formidable in Europe and in a better position there than Skyteam is in Asia. (Not in terms of number of airlines per se, but in terms of cohesion as an alliance)

Well, SFO/IAH are not the best comparisons to TYO. For example, all of DL's major partners serve SFO direct from LHR/CDG/AMS/ICN/MEX/PVG/TPE at competitive prices with good products. What's missing from that list? NRT. Does KE solve that? No. IAH is a smaller market and probably not as important as SFO.

Let's ignore the competition for a moment. How does DL magically make this historic shift happen? Provide me with some realistic scenarios here. I'm curious. The weak JPY helps U.S.-sourced pax, but that is still a source of DL's recent stated weakness in the Japan market.

Let's not forget that Japan is probably the only country where you automatically earn Gold Medallion for having the Gold DL Amex. Clearly, value is placed on them in some form.

1. Okay, so South Korea is the number one country for inbound arrivals. Fair enough.

2. Missing the point again.

3. This has nothing to do with DL's strategy and more with your statement earlier that there are some countries that, well, ain't Japan's biggest fans? This is hyperbolic at best, untrue at worst, and most of all, seriously irrelevant because...

4. China to Japan tourism demand shot back up to historic highs in less than a year! Your point would only be valid if the numbers never recovered, which shows that Asian political tensions have no long term negative effect on tourism in Japan. There are fluctuations and such things are caused by many factors. You might as well call bad weather, a financial crisis, or a viral outbreak as valid excuses for dehubbing an airport while you're at it.

5. With Hong Kong, the number rises to 33%, which is a majority that continues to rise. You should also consider that South Koreans have visa-free access to Japan, while Mainland Chinese do not.

And just as AMS cannot replace LHR or CDG by itself for any alliance, ICN is a fantastic hub that cannot replace NRT+HND on its own.

I think we'll just have to agree to disagree here. My final word on my existing opinion is that accepting the KE JV as the end all be all for DL's Pacific ambitions is short sighted, doesn't really solve any of the lingering deficiencies they've had in Japan, and in the end only serves to reduce their presence in the TYO market without anything special to offer in return that would set them apart from competitors. The KE JV is the best DL can settle for after they failed to bring JAL onto their side, and I find it only a partial solution.

Pathfinder813

I think DL's failure for bringing JAL into a JV really hinders their ability to connect passengers to domestic Japanese destinations for US passengers.

If I'm not mistaken, ST does not have a good way to connect passengers from the US to domestic Japanese destinations at NRT nor does it have a good partner. I think the NRT hub is mainly to connect passengers to other destinations in Asia rather than to domestic destinations in Japan. If negotiations with Japan go well on HND, I suppose this could change but DL would still need JAL or ANA as a partner to really take advantage of domestic connections in Japan.

I think DL has made a decision that this is highly unlikely given that ANA is in *A and JAL is now in OW. The next best option for DL is to go with KE. KE flies to almost all of the Japanese cities from ICN that ANA/JAL fly to from NRT .

By moving the hub from NRT to ICN, this solves the issue of getting passengers to other Japanese cities outside of TYO. Additionally, I think ICN is less prone to delays than NRT because of NRT's failure to be able to add the runways necessary. I'm not too knowledgeable on this but it's just my opinion.

cdubose98

1. What is your solution to DL's "lingering deficiencies" in Japan? Clearly the status quo (the NRT "hub") isn't viable, and absent something extreme happening neither JL nor NH will be available as partners anytime soon, if ever.

2. How would finally getting an Asian JV (with a partner that offers significantly more intra-Asia service than either JL or NH) not offer anything special and set them apart from competitors? The only customer group that might be adversely affected would be US-Japan O&D, but apart from some downgauging the only outright loss of service would likely be PDX-NRT, which would have a decent shot of being replaced by PDX-ICN.

moondog

If DL puts the final nail in the "NRT as hub" concept, I can't imagine them ever needing to beg for more slots.

FWAAA

If Delta and KE can get together and form a joint venture (and get US gov't antitrust immunity), then DL and KE would cooperate at ICN just like AA does with JAL at NRT and just like UA does with ANA at NRT. And DL could still collect revenue for passengers flying USA-SIN/BKK/MNL, albeit on KE metal from ICN.

Delta was desperate to take JAL out of Oneworld for two reasons:

1. It would have killed AA's chances of ever competing to those distant Asian cities that are uneconomical to serve nonstop from the USA (SIN, BKK, MNL, etc); and

2. It would have permitted DL to draw down the interport flying even faster and letting JAL handle the NRT-SIN/BKK/MNL traffic.

Had DL been successful, DL would have eliminated a competitor (JAL) and would have neutered another (AA).

But, alas, there are three major alliance airlines in the USA and only two major full-service airlines in Japan, meaning someone would be the odd man out. That's Delta. Delta is still huge in the USA-Japan O&D market.

So, yes, if DL and KE form a joint venture, then ICN would be the connecting point for USA-Asian traffic where DL doesn't fly nonstop from the USA (SIN, BKK, MNL, etc). KE metal would fly the ICN-SIN/BKK/MNL flights, saving DL plenty of money.

That doesn't make any sense to me. Are you saying that USA-Tokyo lacks sufficient O&D for Delta to be competitive?

Currently, Delta flies more seats in and out of Japan than is necessary for the local traffic (the USA-Japan O&D market). If DL and KE get together, then DL would simply downgauge some of its flights between the USA and NRT to take those connecting seats out of the market. Wouldn't harm DL, since those connecting seats would be flown to/from ICN instead.

dmorbust

Korea is top 15 in the world by GDP, and a little over a third the size of Germany's GDP. One big difference though is that for airport traffic, Seoul is the end all be all for business in Korea, while for Germany it is split between various airports (Frankfurt, Munich, Berlin, Dusseldorf, Hamburg, Stuttgart, Cologne etc.). So Seoul is a very strong airport in terms of O&D.
I do hope this JV goes through.

MSPeconomist

Plus, what happened to all the NRT slots that PMNW had? They served many more intraAsia destinations than DL does and which TPAC service to some "new" DL habs was added, frequencies from at least MSP and DTW are reduced from what they had been--i.e., MSP-NRT is now daily but for a long time PMNW flew it twice daily, at least in high season.

MSPeconomist

1. AA is increasingly sending its SIN etc. traffic over HKG rather than NRT.

2. PMNW cooperated with JAL (and QF) for its circle pacific fares and routings; I think there was additional cooperation around 2000.

In the meantime, JAL has been reducing its route network and otherwise following somewhat of a retrenchment strategy with premium cabin offerings being reduced or eliminated on some routes. We see nice lounges and good service, but behind that is a troubled airline.

Pusan/Busan is also a major business destination that was once served by PMNW (and maybe DL too for a while after the merger) from NRT. I don't know the numbers but it impresses me as a more major airport than Koln/Bonn for example from your list and the etc. airports in Germany.