Delta to add Seattle-Osaka, Drops SEA-HKG
Jun 15, 2018, 1:30 pm
#136
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There are always demands for the HKG-US market. The question is how an airline can make it work. It is apparent that while CX has gradually expanded in this market, DL does not know what to do. DL's strategy, sorry to say, is extremely embarrassing.
FWIW - smart people do not always run profitable businesses.
Not necessary. In some cases, airlines fly routes to ensure market share over profits.
Jun 15, 2018, 1:31 pm
#137
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Want to look at international revenue for 2007? Want to look at pre-merger destinations?
https://en.wikipedia.org/wiki/List_o...s_destinations
https://en.wikipedia.org/wiki/List_o...s_destinations
But you are 100% right on this, that is what this should be based on. I posted, obviously in typical FT fashion a clearly overblown for impact statement, what I am quite certain is the case, seeing all the evidence around. But, to be really certain it should be indeed so validated.
Jun 15, 2018, 1:50 pm
#138
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Jun 15, 2018, 2:23 pm
#139
Join Date: Apr 2016
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With all the bickering back and forth, it doesn't seem anybody has done any back of the envelope math. SEA-HKG is 6485 miles. DL's CASM ex-fuel in 2017 was 10.57. Assuming CASM is in line with average and assuming the small 332, the cost of a one way flight, not including fuel, $160K. Fuel probably added ~20% to cost in 2017, probably higher now. Let's assume DL sells 30 J seats at an avg cost of $3,000 OW and all 200 Y seats for a $400 OW avg. With mileage tickets and non-revs, there is no way that these numbers are as high as my model. That flight generate $180K in revenue, but its probably costing $200K each way to run. So that roundtrip flight is losing $40,000 every single day. No matter how important certain customers think they are, you cannot justify the business case for a $40,000 bath every single day.
Jun 15, 2018, 2:33 pm
#140
Join Date: Apr 2004
Location: Washington, DC
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There are always "demands" in every market. That doesnt meant that every airline has to have a spot in every market, nor that their network can serve it well.
Cathay is the home town carrier in Hong Kong so of course it's going to have as big a network as possible. That network allows cathay to both serve the USA - HKG market as well as connections beyond.
For Delta, Cathay is just an end point.
Since you seem to think delta doesnt know what it's doing, what would you do? At the end of the day, their network just doesnt allow them to profitably serve this one market, although it's a big one. No need to get emotional or huffy over that.
Cathay is the home town carrier in Hong Kong so of course it's going to have as big a network as possible. That network allows cathay to both serve the USA - HKG market as well as connections beyond.
For Delta, Cathay is just an end point.
Since you seem to think delta doesnt know what it's doing, what would you do? At the end of the day, their network just doesnt allow them to profitably serve this one market, although it's a big one. No need to get emotional or huffy over that.
This is where I would put a big pause.
There are always demands for the HKG-US market. The question is how an airline can make it work. It is apparent that while CX has gradually expanded in this market, DL does not know what to do. DL's strategy, sorry to say, is extremely embarrassing.
FWIW - smart people do not always run profitable businesses.
I have my reservation on this. At the minimum - why is DL the only airline that fails in this market, which practically all others succeed?
Not necessary. In some cases, airlines fly routes to ensure market share over profits.
There are always demands for the HKG-US market. The question is how an airline can make it work. It is apparent that while CX has gradually expanded in this market, DL does not know what to do. DL's strategy, sorry to say, is extremely embarrassing.
FWIW - smart people do not always run profitable businesses.
I have my reservation on this. At the minimum - why is DL the only airline that fails in this market, which practically all others succeed?
Not necessary. In some cases, airlines fly routes to ensure market share over profits.
Jun 15, 2018, 2:36 pm
#141
Join Date: Apr 2004
Location: Washington, DC
Posts: 1,309
I never said they're smarter than us. But they do know the financials of their network and company, and they've clearly made what they thought was the right decision for their company. Why is that such a difficult thing for some people here to comprehend?
it’s impossible to have any constructive discussions on anything then when every time there’s a downgauge , frequency reduction, route cancellation, station closure, benefit reduction, or mileage devaluation, instead of discussing based on the merits of the event, it’s always met with a “they’re smarter than you” response to shut down all dissenting opinions. (And the “consistent” profitabilty is only achieved by artificially backing out fuel hedge losses)
and it’s a strange “perspective”, to put it mildly, to have for anyone who doesn’t financially benefit from the airline. Many of these decisions may be financially sound for the company, but they’re frequently unpopular for consumers. “Metal neutral” is only a concept for the Airlines. It’s no different than flying a codeshare flight from the pax perspective.
if your argument is that Delta must be smarter than us due to profits, I’d love to hear their explanation for picking Nokia phablets running the dead end Windows Phone platform other than just paying lip service to Microsoft and its contract. MSFT completely abandoned the platform, and DL is stuck with going through the entire procurement and training process again on 30,000 iOS devices instead.
it’s impossible to have any constructive discussions on anything then when every time there’s a downgauge , frequency reduction, route cancellation, station closure, benefit reduction, or mileage devaluation, instead of discussing based on the merits of the event, it’s always met with a “they’re smarter than you” response to shut down all dissenting opinions. (And the “consistent” profitabilty is only achieved by artificially backing out fuel hedge losses)
and it’s a strange “perspective”, to put it mildly, to have for anyone who doesn’t financially benefit from the airline. Many of these decisions may be financially sound for the company, but they’re frequently unpopular for consumers. “Metal neutral” is only a concept for the Airlines. It’s no different than flying a codeshare flight from the pax perspective.
if your argument is that Delta must be smarter than us due to profits, I’d love to hear their explanation for picking Nokia phablets running the dead end Windows Phone platform other than just paying lip service to Microsoft and its contract. MSFT completely abandoned the platform, and DL is stuck with going through the entire procurement and training process again on 30,000 iOS devices instead.
Jun 15, 2018, 2:43 pm
#142
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Jun 15, 2018, 2:49 pm
#143
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With all the bickering back and forth, it doesn't seem anybody has done any back of the envelope math. SEA-HKG is 6485 miles. DL's CASM ex-fuel in 2017 was 10.57. Assuming CASM is in line with average and assuming the small 332, the cost of a one way flight, not including fuel, $160K. Fuel probably added ~20% to cost in 2017, probably higher now. Let's assume DL sells 30 J seats at an avg cost of $3,000 OW and all 200 Y seats for a $400 OW avg. With mileage tickets and non-revs, there is no way that these numbers are as high as my model. That flight generate $180K in revenue, but its probably costing $200K each way to run. So that roundtrip flight is losing $40,000 every single day. No matter how important certain customers think they are, you cannot justify the business case for a $40,000 bath every single day.
Jun 15, 2018, 2:58 pm
#144
Join Date: Feb 2017
Programs: DL DM, UA Gold, Alaska MVP, Bonvoy (lol) Ambassador
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With all the bickering back and forth, it doesn't seem anybody has done any back of the envelope math. SEA-HKG is 6485 miles. DL's CASM ex-fuel in 2017 was 10.57. Assuming CASM is in line with average and assuming the small 332, the cost of a one way flight, not including fuel, $160K. Fuel probably added ~20% to cost in 2017, probably higher now. Let's assume DL sells 30 J seats at an avg cost of $3,000 OW and all 200 Y seats for a $400 OW avg. With mileage tickets and non-revs, there is no way that these numbers are as high as my model. That flight generate $180K in revenue, but its probably costing $200K each way to run. So that roundtrip flight is losing $40,000 every single day. No matter how important certain customers think they are, you cannot justify the business case for a $40,000 bath every single day.
Jun 15, 2018, 3:00 pm
#145
Join Date: Sep 2012
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As a frequent JFK - Asia traveler and DM, this may be the breaking point where I have to consider other airlines. It really sucks because I also fly domestically a lot, and Delta is by far my favorite carrier for that. But with how difficult they’ve made it for me to earn status and miles on my considerable Asia flights, it is getting really hard for me to stay loyal.
Jun 15, 2018, 3:00 pm
#146
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As someone who flew NW17 JFK-NRT-HKG and NW 18 HKG-NRT-JFK from the 1980s, to see Delta pull out of HK is sad.
That being said, for the past 3 years I have flown on Korean Air, Asiana, and Air China instead of Delta. Why? A couple of reasons. First, coming from New York, the connection in Seattle adds time to the journey as opposed to Narita or Detroit (did the DTW-HKG route 2 or 3 times when DL ran it).
More importantly, I have been able to get good deals on the Asian carriers I mentioned in first class, comparable to the price for Delta One, an inferior product. I often use miles for these trips and the price is generally not close. The carriers I have been using are not the premier carriers that Cathay or Singapore Air are. But when you go in first......it's just a nice way to travel.
I did happen to take Delta through Seattle this April. SEA is a nice airport with a really great new lounge. The 777 was actually better than I remembered. But it does need upgrading.
Anyway, maybe I am typical and a reason Delta is not making it in HK. I am not making any comment on whether Delta SHOULD fly to HK. I am not going down the rabbit hole that this thread is turning into. I am just going to say that it is a bit sad to see them go, but I guess I get it. I have not been using them the last couple of years.
That being said, for the past 3 years I have flown on Korean Air, Asiana, and Air China instead of Delta. Why? A couple of reasons. First, coming from New York, the connection in Seattle adds time to the journey as opposed to Narita or Detroit (did the DTW-HKG route 2 or 3 times when DL ran it).
More importantly, I have been able to get good deals on the Asian carriers I mentioned in first class, comparable to the price for Delta One, an inferior product. I often use miles for these trips and the price is generally not close. The carriers I have been using are not the premier carriers that Cathay or Singapore Air are. But when you go in first......it's just a nice way to travel.
I did happen to take Delta through Seattle this April. SEA is a nice airport with a really great new lounge. The 777 was actually better than I remembered. But it does need upgrading.
Anyway, maybe I am typical and a reason Delta is not making it in HK. I am not making any comment on whether Delta SHOULD fly to HK. I am not going down the rabbit hole that this thread is turning into. I am just going to say that it is a bit sad to see them go, but I guess I get it. I have not been using them the last couple of years.
Jun 15, 2018, 3:01 pm
#147
Join Date: Oct 2017
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With all the bickering back and forth, it doesn't seem anybody has done any back of the envelope math. SEA-HKG is 6485 miles. DL's CASM ex-fuel in 2017 was 10.57. Assuming CASM is in line with average and assuming the small 332, the cost of a one way flight, not including fuel, $160K. Fuel probably added ~20% to cost in 2017, probably higher now. Let's assume DL sells 30 J seats at an avg cost of $3,000 OW and all 200 Y seats for a $400 OW avg. With mileage tickets and non-revs, there is no way that these numbers are as high as my model. That flight generate $180K in revenue, but its probably costing $200K each way to run. So that roundtrip flight is losing $40,000 every single day. No matter how important certain customers think they are, you cannot justify the business case for a $40,000 bath every single day.
@jasondc : sorry it’s not about the comprehension, but rather why YOU as a consumer would be cheering for a station closure unless you financially benefit from this. The firm I work for clears roughly $15B in annual net income, but that doesn’t stop me from being critical at short sighted decisions made by the top of my firm. I never say “my firm made $15B so they must be super smart and you’re just armchair CEO”
Jun 15, 2018, 4:03 pm
#148
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Jun 15, 2018, 4:30 pm
#149
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I doubt MCO is profitable with all the LCC competition. Maybe Delta should pull out of Orlando next.
Maybe just have service to places like RST, FAR, MCN, MLU, AGS, and SGU where DL can control prices.
Maybe just have service to places like RST, FAR, MCN, MLU, AGS, and SGU where DL can control prices.
Jun 15, 2018, 5:10 pm
#150
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I certainly haven't had any trouble getting to a number of international destinations in the past or present flying Delta...