airtechy wrote:

I don't understand the reasoning behind "Delta will leave the Japan to beach markets". These are mostly Japanese people traveling from Japan to the beaches...with a few connecting people. ...and they have been doing this on Northwest and now Delta for years. It is a built up leisure market and a market that cannot be transferred to Korea. My understanding is that it is a money making market as is the one to Hawaii. I can see building up a "new" beach market from Korea, but that would be Koreans traveling.

In the context of 2017 as opposed to 1957, Delta is not a "natural" competitor in Japan beach markets. It may seem as though Delta is because Delta, or its predecessor Northwest, has been in these markets continuously for decades. But that is, in large part, an anachronism reflected of the unique and (in the context of its time) irregular "privileged position" that Northwest long held in Japan. Northwest cultivated, over the decades, a very prominent position in the Japanese market that was extremely competitive and relevant for many Japanese O&D passengers. But those days are long gone. And today, a confluence of two primary modern factors lead me to conclude that much if not all of Delta's Japan beach market flying will likely be gone within 3-5 years of the Korean JV.

First, the Korean JV will simply accelerate the movement already steadily underway for well over a decade away from a connecting hub at NRT. In the world of 777s and 787s, let alone U.S.-Japan "Open Skies," a U.S. carrier connecting hub at NRT was never going to be sustainable. United saw that writing on the wall a long time ago and moved accordingly, but Northwest, with an inferior U.S. hub structure for nonstop flights to Asia, steadfastly stuck to NRT. Now that's nearly gone. And as Delta's overall presence in Japan declines, so too will its relevance for Japanese O&D passengers traveling to beach markets, and that will inevitably lead to depressed yields in order to fill planes. And that leads to the second dynamic in play - competition. What is also unnatural about the Japan beach markets is that they are, today at least, almost entirely devoid of low cost/low fare competition, despite being near tailor-made for this type of entrant. There are a few examples here and there of Asian low fare airlines flying fifth freedom rights over Japan to Micronesia and Hawaii, but I think the further growth of this type of flying is just a matter of time. And as emerging Asian low-fare carriers (e.g., Jetstar, etc.) start flying to Micronesia and Hawaii, this, too, will inevitably lead to depressed yields on those Delta planes.

All that's to say - I may well be proven wrong, but at the moment, the "natural" direction of the market seems pretty clear to me, and I just don't see how these routes are going to remain viable for Delta as this (inevitable, in my view) market evolution continues.

airtechy wrote:

I'm sure Delta knows exactly how many people on the US-NRT flights connect in Japan and how many stop in Japan and will maintain the number of flights to retain the "stay in Japan" traffic even if they transfer all the connecting traffic to ICN. How many US gateways that entails I have no clue...maybe they will cut some, but they are down to 5 now so I doubt if more than one will be cut.

Indeed. As said, I fully expect that - Korean JV or no Korean JV, beyond-NRT network or no beyond-NRT network - Delta should certainly be able to economically support, at a minimum, nonstops from hubs in ATL, DTW, SEA, and LAX, and probably MSP and HNL, to TYO, plus also likely DTW-NGO.

airtechy wrote:

A Delta/KA joint venture alone will not get people to Japan.

Actually, the Delta/Korean JV will likely be quite competitive for connections between the U.S. and secondary Japanese cities, many of which are linked, at convenient times, to/from ICN.

commavia wrote:

All that's to say - I may well be proven wrong, but at the moment, the "natural" direction of the market seems pretty clear to me, and I just don't see how these routes are going to remain viable for Delta as this (inevitable, in my view) market evolution continues.

In Cranky Flier's interview with Ed Bastian, he seems pretty emphatic about keeping the Japan beach markets:

Cranky: Talking about Tokyo again just briefly. I know it’ll be an important destination and that’s about it. How do you view things like the beach markets? Is that something that it’s worth to continue trying to do that? I assume it’s more about the local market.

Ed: Yeah. Ninety-five percent of the traffic is the local market. We’ve got longstanding relationships in the local market. Delta’s well known within the trade on those trades. Historically they’ve been the most profitable part of the Narita operation, the beaches, and I think they will continue to be a sought after destination.

http://crankyflier.com/2017/05/08/perfe ... r-pacific/

The way I read it, DL will continue to operate those markets even after the drawdown of the NRT hub unless if Asian carriers enter the market and trash yields. Things can always change, but that reads as a fairly strong commitment to those markets in the near term.

This would be as good of a time as any to point out that DL’s gateway to Asia at DTW is the largest single carrier gateway to Asia from east of the Mississippi – larger than UA at ORD, EWR, or IAD. In addition, for all of those that think SEA is still a developmental hub, DL offers almost identical numbers of seats from SEA to Asia as UA offers from ORD or EWR – and that is all the more impressive since a good chunk of DL’s flights from SEA to Asia are on 767s.
DL is clearly not an also-ran to Asia and it has viable hubs and Asia gateways.

The NGO-MNL tag won’t be reinstated. First, NW put the MNL tag behind NGO because the only aircraft that NW had that could fly DTW to Asia was the 744; NGO cannot support an aircraft that large from the US so NW added MNL to the flight to fill the plane with traffic, even if it was low-yielding. DTW-MNL would not only add MNL capacity to the eastern US which has a smaller Philippine population/business connections, but it also would compete with DTW-NRT-MNL which remains as one of the few intra-Asia flights to East Asia cities. The NRT-MNL flight exists today on local Japan passengers and connections solely from ATL, DTW, SEA, PDX and HNL connections; there are very few PDX or HNL-MNL passengers so siphoning off DTW-MNL passengers further imperils the NRT hub. On top of that, LAX no longer has single connection service to MNL since DL dropped LAX-NRT and upgraded LAX-HND. DL understands full well that it needs to serve Asia from the cities where demand exists which for much of Asia is heavily Southern California. DL is not going to serve MNL on a one-stop basis from DTW and the same is true of every remaining city in Asia that DL wants to retain service to with its own aircraft. There were rumors for years that DL wanted to start LAX-MNL service and, aside from LAX or SEA, it makes little sense to retain SIN or MNL if they aren’t served from the west coast.

The idea that so many people embrace that DL will give up service to MNL and SIN and route traffic through ICN is problematic for the same reason as existed with NW’s NRT hub – you create single carrier service from perhaps a dozen cities in the US which have nonstop service to Asia but the rest of the network becomes double connection service. (ie RDU-DTW-NRT-SIN becomes RDU-ATL-ICN-SIN compared to UA RDU-SFO-SIN) The whole reason why DL is building SEA and LAX as gateways to Asia is because they offer far more connectivity throughout the US than there are US cities that will ever have service to ICN. LAX also has an enormous local market to Asia.

Finally, the whole idea behind the DL-KE JV being for ALL of E. Asia except for China is because KE recognizes they need to be able to get a piece of the high value business from the US directly to other cities in Asia that KE will never capture via ICN connections. The other part is that DL recognizes that it will benefit from KE’s size and sales ability throughout Asia to support new flights from Asia to the US that bypass ICN. DL has every incentive to have an Asia route system outside of China that is comparable to KE – or else DL will get a smaller portion of the total JV revenues. Both of those principles were seen in the months after the AA-JL JV was implemented as BOTH SIDES added new routes – some to NRT and others from the US directly to Asia as part of the JV but flown by AA. The same principles will apply to the DL-KE JV.

DL’s Asia strategy will be 1. Its own service from its strongest markets – including the majority of the Asia flights being from DTW, SEA, and LAX 2. DL service to the primary cities of China with connections in China distributed by China Eastern 3. The JV to connect scores of medium and small cities in Asia to medium and small cities in the US. All 3 of those parts will work together to connect mainland US to Asia. And 4. DL will operate point to point routes including the beach markets where there is proven demand and where DL and NW before it had a strong presence and where no one including KE can replace DL.

btw, DUS is also served from ATL but nowhere else on DL metal... there might be more.

commavia wrote:

First, the Korean JV will simply accelerate the movement already steadily underway for well over a decade away from a connecting hub at NRT. In the world of 777s and 787s, let alone U.S.-Japan "Open Skies," a U.S. carrier connecting hub at NRT was never going to be sustainable. United saw that writing on the wall a long time ago and moved accordingly, but Northwest, with an inferior U.S. hub structure for nonstop flights to Asia, steadfastly stuck to NRT. Now that's nearly gone. And as Delta's overall presence in Japan declines, so too will its relevance for Japanese O&D passengers traveling to beach markets, and that will inevitably lead to depressed yields in order to fill planes. And that leads to the second dynamic in play - competition. What is also unnatural about the Japan beach markets is that they are, today at least, almost entirely devoid of low cost/low fare competition, despite being near tailor-made for this type of entrant. There are a few examples here and there of Asian low fare airlines flying fifth freedom rights over Japan to Micronesia and Hawaii, but I think the further growth of this type of flying is just a matter of time. And as emerging Asian low-fare carriers (e.g., Jetstar, etc.) start flying to Micronesia and Hawaii, this, too, will inevitably lead to depressed yields on those Delta planes.

It is interesting that you believe that DL's ability to hub at NRT is hindered but AA and UA will do fine with joint ventures.

The reason why NRT won't work as a hub for any carrier for the long-term is because the highest value passengers will move from NRT to HND. NRT cannot exist as a hub based on connecting passengers. The Japanese government is trying as hard as it can to not accelerate the process of killing NRT as a hub by dribbling in access to HND at a slow pace - just enough for DL to decide kill its NRT hub. The DOT will impose the same principle for new HND access as it has twice already - DL will get twice as many slots as AA or UA because DL doesn't have a Japanese JV partner while AA and UA do. DL will be able to move its entire transpacific operation over to HND while AA and UA will operate split operations that will become increasing weakened. It is also a given that low cost transpacific flights will start at NRT which will further pressure finances on remaining NRT transpacific flights. The Japanese government's split airport strategy in Tokyo was a failure for a number of reasons while it lasted and it will be a failure as it is pulled down because they are trying to drag out the process of opening up HND in a move that will hurt its own carriers' ability to compete in transpacific connections even as Japan's economy continues to shrink.

But the same fate will eventually hit AA/JL and UA/NH as will hit DL at NRT; 2 competing transpacific hubs in the same city will do a poor job of competing against stronger single airport hubs including ICN and HKG. Accelerating the process will simply result in DL gaining more access to HND than AA and UA who can look forward to outsourcing their Tokyo flights to their joint venture partners or watch their NRT connecting revenues continue to be siphoned off via other hubs.

DL has made the decision that Tokyo will no longer be a hub and instead will be a spoke. DL's Asia strategy is built upon hubbing elsewhere while AA and UA continue to hold onto the hope that Japan's failed aviation strategy will benefit them because of DL's inability to hub at Tokyo in the future. The reality is that the same reasons that will kill DL's NRT hub also hurt AA, UA and their joint venture partners.

atl100million wrote:

The idea that so many people embrace that DL will give up service to MNL and SIN and route traffic through ICN is problematic for the same reason as existed with NW’s NRT hub – you create single carrier service from perhaps a dozen cities in the US which have nonstop service to Asia but the rest of the network becomes double connection service. (ie RDU-DTW-NRT-SIN becomes RDU-ATL-ICN-SIN compared to UA RDU-SFO-SIN) The whole reason why DL is building SEA and LAX as gateways to Asia is because they offer far more connectivity throughout the US than there are US cities that will ever have service to ICN. LAX also has an enormous local market to Asia.

Okay, except that this is already pretty much the case now. Today, every single one of Delta's U.S. markets - except the five Delta still serves from NRT - require a double-connection on Delta to get to MNL and SIN. All that is going to change now is that the Asian hub Delta customers connect through to get there will likely soon be ICN instead of NRT - but of course that dramatically increases the number of Delta/Korean JV passengers who will have 1-stop access to MNL and SIN since Korean flies to far more U.S. cities from ICN than Delta does from NRT. SEA and LAX are largely irrelevant to this conversation since it is highly unlikely Delta was ever going to fly nonstop to either MNL or SIN from the U.S., anyway.

atl100million wrote:

It is interesting that you believe that DL's ability to hub at NRT is hindered but AA and UA will do fine with joint ventures.

Not sure why that would be "interesting." Delta's ability to hub at NRT is, indeed, hindered - as it has been since it was a Northwest hub. But ANA and JAL - Japan's two largest airlines - both have dramatically more extensive networks out of NRT specifically and TYO in general, and don't face the same hindrance and thus, by extension, nor do their U.S. ATI/JV partners.

atl100million wrote:

The reason why NRT won't work as a hub for any carrier for the long-term is because the highest value passengers will move from NRT to HND. NRT cannot exist as a hub based on connecting passengers. The Japanese government is trying as hard as it can to not accelerate the process of killing NRT as a hub by dribbling in access to HND at a slow pace - just enough for DL to decide kill its NRT hub.

There is so much wrong with that grossly oversimplified and simply false logic that I don't even know where to begin. NRT can and will remain a major hub going forward for the airlines who dominate it - namely ANA and JAL. There's no question that the further opening up of HND - when/if it happens - will certainly undermine the economics of some NRT capacity. But NRT offers extensive connectivity between the U.S. and Asia and also, incidentally, happens to still serve as the primary international airport for the world's largest metro area and the capital of one of the world's largest, wealthiest and most advanced economies. Bottom line: I highly doubt that ANA, JAL, AA, United and the Government of Japan are nearly as bearish as Delta's fanboys.

atl100million wrote:

The DOT will impose the same principle for new HND access as it has twice already - DL will get twice as many slots as AA or UA because DL doesn't have a Japanese JV partner while AA and UA do. DL will be able to move its entire transpacific operation over to HND while AA and UA will operate split operations that will become increasing weakened.

It is by no means guaranteed that U.S. regulators will continue to give Delta "twice as many slots" as American or United going forward. In fact, I highly doubt that. I think Delta gets to play that card maybe on more time - and then after that point, all competitors would be on equal footing. I highly doubt the U.S. DOT is going to be too sympathetic to Delta's pleas that it's NRT hub is being undermined by not allowing Delta to move its entire operation to HND when, of course, the writing on the wall about the hub's future (or lack thereof) has been plain for all to see since literally the days of Northwest.

atl100million wrote:

But the same fate will eventually hit AA/JL and UA/NH as will hit DL at NRT

No it won't - at least not until such time as HND is expanded so dramatically that it can literally handle the shifting of virtually all premium longhaul flying between TYO and the U.S., and that isn't happening anytime soon (if ever).

atl100million wrote:

DL has made the decision that Tokyo will no longer be a hub and instead will be a spoke. DL's Asia strategy is built upon hubbing elsewhere while AA and UA continue to hold onto the hope that Japan's failed aviation strategy will benefit them because of DL's inability to hub at Tokyo in the future. The reality is that the same reasons that will kill DL's NRT hub also hurt AA, UA and their joint venture partners.

"Japan's failed aviation strategy." Hahaha. First off, Japan's aviation strategy doesn't appear to be failing at all. Second, AA and United don't "continue to hold onto the hope" of making NRT hubs viable - they've already achieved that, unlike Delta, through tie-ups with the local giants that operate those hubs. And finally, it's somewhat laughable to assert that Delta is allegedly moving to hub elsewhere, and this is somehow a stroke of genius, but AA and United are clinging to Japan when, obviously, United has diversified away from Japan far more, and far faster, than Delta could ever dream of, and AA, too, has rapidly diversified away from Japan to the point that, today, nearly 60% of branded transpacific flying is to Korea and China.

This creative rewriting of history, tinged with Delta fanboyism, just belies reality. The reality is that all three U.S. network carriers have dramatically diversified their Asia networks in recent years through a combination of (1) building ATI/JV hubs with Asian partners at major northeast Asia connecting points and (2) launching nonstop flights directly over Japan deeper into Asia. It's just that Delta was the odd man out in Japan where it was the weakest "local" competitor and had no partner, so it's Asian ATI/JV partner connecting hub is moving from NRT to ICN.

As long as you color any opinion other than your own as fanboy-ism, it is not likely that productive conversation can occur.
I’ll restate one more time….

NW’s strategy of hubbing at NRT is as hindered as any other US carrier that hubs on another continent because a pretty limited number of cities in the US will ever support nonstop service to Asia.

The ideal way for a US carrier to serve international markets is exactly the way AA serves Latin America via MIA or DL serves Europe via JFK or UA serves Asia from San Francisco– connecting the most markets in other regions of the world from a strong US gateway that serves many more cities than will ever receive nonstop service to Asia, allowing single connection service from more of the US to more of Asia. DL realized that principle as soon as it merged with NW which is why DTW was quickly built into the largest US carrier gateway to Asia east of the Mississippi, even if DL hasn’t added any new service there for years. KE gains by being able to tap into DL’s nonstop US-Asia flights in addition to the strength of ICN as a hub.

From DL’s perspective, there is little gain if DL’s Asia network simply moves from being hubbed at NRT to being hubbed at ICN. If DL wants to be a viable competitor to UA to Asia– which it does – DL has to add a strong portfolio of routes nonstop from the US to Asia besides what flows through ICN. UA has a strong presence in the top 5 Asia markets from multiple hubs, AA has built that from up to 3 hubs, DL serves the top 5 from up to 3 hubs and has supplemented it with additional service to Japan.

Foreign carriers of necessity hub in their country which gives them greater connectivity in their home region but do not have the connectivity in the US. Joint ventures simply allow two carriers to link their strengths in their home regions and create even more connections – some of which will still be double connect but there will be far more single connection opportunities available than either carrier could do on their own. Network reach under a JV is far greater. Those who argue that the DL-KE JV will look like DL’s transatlantic JV should see that DL serves the most cities in Europe from the most gateways in the US. A JV properly managed doesn’t outsource flying to foreign carriers but leverages both carriers’ strengths in their home regions to build a bigger network in which both carriers benefit. DL’s transpacific JV will allow DL to build an Asia network that will look more like UA’s network than that of any other carrier.

NW built its network around the 744 which is a huge airplane. DL hasn’t developed its network from the US to other parts of Asia because at best it would be using the 777 which is much less economical than the 787 which is now heavily used over the Atlantic. DL opted for the A350 which took even longer for DL to put into service but DL has the A350 and A330-900 coming into service plus the JV plus a growing number of hubs.
Further, DL’s presence in Japan other than from PDX is likely to remain what it is even if the aircraft types change. ATL, DTW and SEA can support service to Tokyo regardless of which airports are available and whether there is a hub in Tokyo or not. MSP-HND is a very viable route despite the a.net folklore; it not only carried more passengers than any other HND-US mainland flight except for DL’s LAX-HND flight but a very high percentage of passengers are Tokyo local passengers.

DL still is the 3rd largest airline between the US and Japan behind UA and JL. As DL carries fewer and fewer connections through NRT, its share of the local US-Japan market has been maintained even as DL has shrunk capacity. DL’s presence in Japan is becoming less dependent on connecting capacity even while DL maintains its share of the local market. That same principle explains why AA has as high of a principle of the CDG market compared to DL and UA has so much higher share of the LHR compared to AA; when capacity serves only the local market and is not dependent on feeding your partner’s hub, you have a higher share of the local market.

Yes, Japan’s aviation policy regarding Tokyo airports has been a failure. Tell me what other cities in the world have twin global hubs successfully serving the same city by the same airlines. (EWR does not equal JFK in terms of NYC coverage and DL and UA chose ONE of the two airports for their largest international operations). Japan never fully developed NRT so it was limited in size. They now have decided to shift premium international traffic back to HND but are imposing a lengthy transition process which simply allows the best Tokyo local passengers to be siphoned off. It is not fanboy-ism to recognize that is happening and will happen even more over the next few years. Further, Japan agreed to open all of Japan except for HND to Open Skies which has distorted the Tokyo local market and allowed each carrier to try to figure out how to maximize their own Asia networks under market access limitations.

The DOT’s decision to give DL additional HND flights compared to AA and UA had nothing to do with DL’s NRT hub but in order for each of AA, DL and UA to have comparable access to Tokyo. AA and UA just happened to agree to allow part of that to come from its joint venture partners. That principle will be borne out the next time the Japanese government tries to allow a few more HND-US flights. Many other foreign airlines have now completed their transition to HND or can complete it with a few more HND flights; because of the size of the Japan market, it will take many more flights to complete the transition but NRT cannot continue to function as a viable hub based solely on the remaining US-Asia connecting demand. The Japanese government will either open HND up enough for all carriers to transition US-Tokyo flights to HND or US-HND flights will continue to siphon off Tokyo local traffic to HND where DL has and will have a greater share of the traffic than AA and UA. AA and UA and their JV partners pushed for a gradual opening of HND in hopes of killing DL’s NRT hub.

DL has decided it will walk away from NRT as a hub anyway but DL will still maintain enough presence in Tokyo to maintain its local Tokyo market even while also building its own JV as well as its own US to Asia network that touches neither Japan or Korea. Given that UA has done exactly that in Asia and multiple carriers have done to Europe, I’m not sure why it is hard to see how DL is building its Asia network post NRT hub. DL's Asia network will be built by service on its own aircraft to the big 5 Asia cities from several hubs, facilitated by partnerships in both Korea and China and a JV which will extend DL's reach deeper into Asia outside of China and service beyond the top 5 Asia cities including point to point service which will benefit both DL and KE.

atl100million wrote:

This would be as good of a time as any to point out that DL’s gateway to Asia at DTW is the largest single carrier gateway to Asia from east of the Mississippi – larger than UA at ORD, EWR, or IAD. In addition, for all of those that think SEA is still a developmental hub, DL offers almost identical numbers of seats from SEA to Asia as UA offers from ORD or EWR – and that is all the more impressive since a good chunk of DL’s flights from SEA to Asia are on 767s.

Nitpick: I think you meant to say East Asia, since EWR also has service to TLV, DEL, and BOM.

atl100million wrote:

The NGO-MNL tag won’t be reinstated. First, NW put the MNL tag behind NGO because the only aircraft that NW had that could fly DTW to Asia was the 744; NGO cannot support an aircraft that large from the US so NW added MNL to the flight to fill the plane with traffic, even if it was low-yielding. DTW-MNL would not only add MNL capacity to the eastern US which has a smaller Philippine population/business connections, but it also would compete with DTW-NRT-MNL which remains as one of the few intra-Asia flights to East Asia cities.

NW had A332s starting in the mid-2000s yet never (to my knowledge) ran them on DTW-NGO. Since that flight is currently 4x weekly, I wonder whether that's enough frequency to satisfy business traffic long-term. If it isn't, I could possibly see the flight upgauged to an A359, increased in frequency, and extended to MNL, especially if/when NRT-MNL is dropped (and I believe that is a question of when, not if).

atl100million wrote:

DL still is the 3rd largest airline between the US and Japan behind UA and JL.

Surely NH is also larger than DL?

atl100million wrote:

NW’s strategy of hubbing at NRT is as hindered as any other US carrier that hubs on another continent because a pretty limited number of cities in the US will ever support nonstop service to Asia.

No argument. As said - Northwest's NRT hub has been in steady decline for nearly two decades, since long before the Delta/Northwest merger.

atl100million wrote:

From DL’s perspective, there is little gain if DL’s Asia network simply moves from being hubbed at NRT to being hubbed at ICN.

Incorrect. There is an enormous amount to gain. As the center of gravity for Delta in East Asia reorients from NRT to ICN under the auspices of a metal-neutral JV with Korean, Delta instantly gains two things that it could never achieve at NRT: (1) nonstop connectivity from a major East Asian hub to a dozen of the largest and most important U.S. markets (with a few more, like BOS and maybe PDX, likely to follow), and (2) a dominant position aligned with the local giant. That, coupled with Delta's own nonstop U.S.-Asia network out of DTW, SEA and LAX, is quite a competitive force.

atl100million wrote:

If DL wants to be a viable competitor to UA to Asia– which it does – DL has to add a strong portfolio of routes nonstop from the US to Asia besides what flows through ICN.

Obviously, and Delta's doing that. But let's keep some perspective, here. I don't know exactly what "viable competitor" means, but to be blunt, if "viable competitor" means equal, that will never happen. Delta will never be a true equal of United across the Pacific - United has insurmountable, structural advantages that Delta simply cannot overcome. Delta will not, for instance, been flying multiple flights per day from SEA to interior China. The best Delta - and for that matter, AA - can hope for is to offer, essentially, competitively relevant networks with nonstop access from U.S. hubs to the most important Asian markets, and extensive connectivity over partners' East Asian hubs for everything else.

atl100million wrote:

Further, DL’s presence in Japan other than from PDX is likely to remain what it is even if the aircraft types change. ATL, DTW and SEA can support service to Tokyo regardless of which airports are available and whether there is a hub in Tokyo or not.

Again - no argument. I've been saying that for years. Delta should be able to profitably operate, at a minimum, nonstop flights from all its U.S. hubs to TYO. I remain skeptical about the continuing economic viability of PDX-NRT and the Japan beach markets, but as Delta's presence in Japan evolves into more of a "natural" structure for a foreign airline - which is to say, oriented more towards nonstop flights from Japan to that foreign airline's home market - I think Japan certainly can and will remain a huge market for Delta.

atl100million wrote:

Yes, Japan’s aviation policy regarding Tokyo airports has been a failure.

"Failure," perhaps, from the perspective of Delta in ATL. "Failure" from the perspective of the Japanese government, which has every interest in continuing to see the growth, development and profitability of its two "national champion" global airlines, and also has set a goal of dramatically increasing tourism arrivals into the country in coming years? Hardly. Again - it is transparently obvious why Delta and its fans are unhappy about the present arrangement at TYO's airports these days, just as it was transparently obvious in some of the more brutally honest comments from Delta executives on the subject in recent years. But the world doesn't revolve around Delta and the Japanese government isn't setting public policy to benefit any foreign airline.

atl100million wrote:

The DOT’s decision to give DL additional HND flights compared to AA and UA had nothing to do with DL’s NRT hub but in order for each of AA, DL and UA to have comparable access to Tokyo.

I remain unconvinced that the U.S. DOT has an explicit interest in ensuring that AA, Delta and United enjoy "comparable access to Tokyo." Again - that is a very Delta-centric view and one I'm sure Delta fans would love to advance. But history indicates to me that the U.S. DOT is far more interested in broad public access, whether that's "comparable" or equivalent among U.S. carriers or not.

atl100million wrote:

The Japanese government will either open HND up enough for all carriers to transition US-Tokyo flights to HND or US-HND flights will continue to siphon off Tokyo local traffic to HND where DL has and will have a greater share of the traffic than AA and UA.

First, I do not agree that demand at NRT is necessarily going to get "siphoned off" to anywhere, and second, I do not agree that Delta will necessarily always have a "greater share" of traffic at HND than AA or United. We'll see.

atl100million wrote:

DL has decided it will walk away from NRT as a hub anyway but DL will still maintain enough presence in Tokyo to maintain its local Tokyo market even while also building its own JV as well as its own US to Asia network that touches neither Japan or Korea. Given that UA has done exactly that in Asia and multiple carriers have done to Europe, I’m not sure why it is hard to see how DL is building its Asia network post NRT hub. DL's Asia network will be built by service on its own aircraft to the big 5 Asia cities from several hubs, facilitated by partnerships in both Korea and China and a JV which will extend DL's reach deeper into Asia outside of China and service beyond the top 5 Asia cities including point to point service which will benefit both DL and KE.

Obviously. It's not "hard to see" the above at all. I and others have been saying it for literally a decade.

intotheair wrote:

The way I read it, DL will continue to operate those markets even after the drawdown of the NRT hub unless if Asian carriers enter the market and trash yields. Things can always change, but that reads as a fairly strong commitment to those markets in the near term.

That is the problem with the beach markets, their yields are going to go down the gutter very soon. They have been profitable as the Japanese carriers drew down the massive capacity they use to have to Hawaii (all the 747s). But we have Air Asia X starting tomorrow. Scoot has indicated it wants to fly to Hawaii via Japan by the end of the year. Its only a matter of time before JetStar Japan is in the market. ANA is believed to be using the A380s for the HNL market. There are going to be losers, and it is likely going to be UA and DL (who will find better uses for their aircraft than chasing trash yields).

Polot wrote:

That is the problem with the beach markets, their yields are going to go down the gutter very soon. They have been profitable as the Japanese carriers drew down the massive capacity they use to have to Hawaii (all the 747s). But we have Air Asia X starting tomorrow. Scoot has indicated it wants to fly to Hawaii via Japan by the end of the year. Its only a matter of time before JetStar Japan is in the market. ANA is believed to be using the A380s for the HNL market. There are going to be losers, and it is likely going to be UA and DL (who will find better uses for their aircraft than chasing trash yields).

This. Exactly. The direction the Japan beach markets are heading is quite clear. And equally clear, at least to me, is that the most likely "loser" from that direction is Delta. I'm not saying Delta will exit the Japan beach markets tomorrow, but I still don't think they'll be in much if any of those markets 3-5 years from now.

commavia wrote:

Polot wrote:

That is the problem with the beach markets, their yields are going to go down the gutter very soon. They have been profitable as the Japanese carriers drew down the massive capacity they use to have to Hawaii (all the 747s). But we have Air Asia X starting tomorrow. Scoot has indicated it wants to fly to Hawaii via Japan by the end of the year. Its only a matter of time before JetStar Japan is in the market. ANA is believed to be using the A380s for the HNL market. There are going to be losers, and it is likely going to be UA and DL (who will find better uses for their aircraft than chasing trash yields).

This. Exactly. The direction the Japan beach markets are heading is quite clear. And equally clear, at least to me, is that the most likely "loser" from that direction is Delta. I'm not saying Delta will exit the Japan beach markets tomorrow, but I still don't think they'll be in much if any of those markets 3-5 years from now.

I think that's a fair assessment. Even UA has cut back slightly from what they offer from GUM. It's hard to imagine any scenario in which DL is flying those markets a decade from now.

The problem with half of the arguments in this discussion is that they assume different outcomes for DL than for Japanese carriers from the very same macro-level event.

If low cost carriers invade the Japan beach markets, the Japanese carriers will be impacted as much and possibly more than DL will. AA, DL and UA all have far more history of successfully competing with low cost carriers than foreign carriers do. The Japan beach markets are point to point markets that are not dependent on a hub in Japan to make them work. If those markets begin to fail for DL due to low cost competition, they will fail for Japanese carriers too.

DL has maintained its share of the local Tokyo market despite reducing capacity from NRT because capacity that served connecting markets is being reduced while capacity to serve the local market is still there.

DL can continue to successfully operate from NRT as long as Japan maintains a dual Tokyo airport strategy because AA/JL and UA/NH will have to do the same thing.

The US will continue to give DL more access to HND relative to UA and AA because the current US-Japan air services agreement violates the DOT's basic principle of Open Skies which is that JVs and Open Skies are not permitted where airport access is restricted. Japan gained JVs for its carriers while restricting access to HND which limits every carrier, notably DL in this case, from being able to compete at HND relative to AA/JL and UA/NH. As long as there are JVs which touch HND, the DOT will give DL and HA (as much as there is sufficient demand for its flights relative to mainland flights) increased access.

DL's NRT hub is failing because Japan is splitting Tokyo access between two airports. One can't argue that DL will be harmed by a split airport operation with restricted access to HND while AA/JL and UA/NH will not. The same rules and outcome apply to AA/JL and UA/NH as apply to DL. NRT as a hub for everyone is less valuable because of nonstop flights to other parts of Asia, including China which aren't part of the JV. Japanese and Korean carriers are carrying less and less of that US-China traffic while US and Chinese carriers are carrying more of it.
DL is shifting connecting traffic from Japan to Korea under the JV and to China under a codeshare arrangement with China Eastern even while developing DL's own flights from the US to destinations in Asia other than Korea or Japan.

DL made the decision to quit fighting for increased access to HND and is now focusing on using its position as the largest single carrier between the mainland US and HND based on seats to serve the local Tokyo market while AA/JL and UA/NH will be forced to divide connecting traffic between two airports and end up with a smaller share of the local HND market.

It isn't hard for anyone who wants to be objective to see that DL has a better plan to serve Asia than AA or UA which still have tied a significant amount of their Pacific presence to connecting service over Japan. DL is shifting its connecting capacity to ICN, a market with far greater ability to grow in a growing market than can take place in Japan. DL is, like UA, developing a network of flights beyond the big 5 cities in Asia and has as much potential to do that from its primary Asia gateways at SEA, LAX and DTW as UA can do from its hubs. UA clearly has a headstart in serving more cities than DL nonstop from the US but there is nothing that limits DL's ability to eventually serve the same cities as UA does nonstop from the US.

atl100million wrote:

The problem with half of the arguments in this discussion is that they assume different outcomes for DL than for Japanese carriers from the very same macro-level event.

Absolutely right! Of course people assume "different outcomes" for Delta versus Japanese carriers ... in Japan! It's honestly stunning that this concept seems so difficult to grasp.

atl100million wrote:

DL has maintained its share of the local Tokyo market despite reducing capacity from NRT

With respect, that's just alarmingly disconnected from reality. Delta's share of local TYO traffic has remained the same despite the fact that, in the decade since the merger, Delta has dismantled virtually all of its network from NRT to Asia? Sorry, but no.

atl100million wrote:

The US will continue to give DL more access to HND relative to UA and AA

By all means keep repeating this definitively over and over, but it doesn't make it any more certain.

atl100million wrote:

because the current US-Japan air services agreement violates the DOT's basic principle of Open Skies which is that JVs and Open Skies are not permitted where airport access is restricted.

Ha. Yeah, Delta tried barking up that tree and it got them nowhere. The revised U.S.-Japan civil aviation bilateral definitely did disproportionately hurt Delta - not by explicit intent or design, but in practice - just as the prior five decades of U.S.-Japan civil aviation bilaterals disproportionately hurt everyone but Northwest and Pan Am/United. So goes life. Again, much as some may not want to accept it, public policy - in the U.S. and Japan - isn't crafted just to help Delta.

atl100million wrote:

DL's NRT hub is failing because Japan is splitting Tokyo access between two airports.

No, Delta's NRT hub is failing for the same reason that Northwest's NRT hub was already in decline well before the merger - which is that the advent of new aircraft technology, combined with global market liberalization, and an overall weaker local sales presence created a structural, permanent and intractable disadvantage for Northwest/Delta versus the local Japanese carriers.

atl100million wrote:

One can't argue that DL will be harmed by a split airport operation with restricted access to HND while AA/JL and UA/NH will not. The same rules and outcome apply to AA/JL and UA/NH as apply to DL.

Uh, yes, one can argue that - and I and many others am/are. The benefit that AA/JAL and United/ANA have at NRT, HND and TYO overall is that these two JVs benefit from very large connecting hubs at both TYO airports. Both ANA and JAL offer extensive international and domestic connectivity at both NRT and HND. Delta couldn't compete with that, and still can't.

atl100million wrote:

It isn't hard for anyone who wants to be objective to see that DL has a better plan to serve Asia than AA or UA which still have tied a significant amount of their Pacific presence to connecting service over Japan.

Haha. It's hilarious for someone to feign "objectivity" and then say that Delta has a "better plan to serve Asia" than United. That is, again, just laughably disconnected from reality. Delta has "a" plan to serve Asia - which is to say, the plan that's oriented around Delta's only options given its structural, insurmountable competitive disadvantage to United across the Pacific. But Delta is not now, nor is it ever likely to be, the equal of United across the Pacific. For a variety of reasons, it's just not going to happen.

atl100million wrote:

If low cost carriers invade the Japan beach markets, the Japanese carriers will be impacted as much and possibly more than DL will. AA, DL and UA all have far more history of successfully competing with low cost carriers than foreign carriers do. The Japan beach markets are point to point markets that are not dependent on a hub in Japan to make them work. If those markets begin to fail for DL due to low cost competition, they will fail for Japanese carriers too.

The Japanese carriers have their own LCCs. Practically every airline in Japan can trace some of their ownership to either NH or JL. JetStar Japan, for example, is 33.33% owned by JL. NH has Peach (partial ownership) and Vanilla (full ownership).

atl100million wrote:

The US will continue to give DL more access to HND relative to UA and AA because the current US-Japan air services agreement violates the DOT's basic principle of Open Skies which is that JVs and Open Skies are not permitted where airport access is restricted. Japan gained JVs for its carriers while restricting access to HND which limits every carrier, notably DL in this case, from being able to compete at HND relative to AA/JL and UA/NH. As long as there are JVs which touch HND, the DOT will give DL and HA (as much as there is sufficient demand for its flights relative to mainland flights) increased access.

This whole "DL vs UA/AA in HND access" is all moot because it is entirely dependent on one thing: Japan opening up more HND slots for US flights. Considering how long it took just to get daytime flights I would not be holding my breath. It is also ignoring the Japanese side gets an equal number of slots for the Japanese carriers...which benefits UA/AA as the only realistic airlines that will get them are their partners NH and JL. The DOT will never give all future slots that open up solely to DL, they will still spread the wealth some.

atl100million wrote:

DL's NRT hub is failing because Japan is splitting Tokyo access between two airports.

DL's NRT hub is failing because they lack a strong local partner and newer long range jets have lessen the importance of needing to connect in NRT (can overfly it) to get to destinations in East Asia from the US. Asian airlines (especially LCC) have grown leaps and bounds from decades ago and have natural competitive advantages in the intra-Asia flight segments. The fact that Tokyo is a split hub market is just icing on the cake.

Look how many beyond NRT flights UA now operates (hint: it is soon to be zero), or how many beyond AMS/CDG flights DL currently operates. That is going to clue you in on how DL/KE and ICN will work. It will be a DL "hub" because it is KE's hub, not actually DL's.

atl100million wrote:

DL made the decision to quit fighting for increased access to HND and is now focusing on using its position as the largest single carrier between the mainland US and HND based on seats to serve the local Tokyo market while AA/JL and UA/NH will be forced to divide connecting traffic between two airports and end up with a smaller share of the local HND market.

Again you are ignoring the Japanese's share of the HND slots. AA/JL(3 flights daily) and UA/NH (5 flights daily) both have more US-HND flights than DL (2 flights daily). You can't just start ignoring JVs and only talk about single carriers because it makes your argument more convenient. JL/NH/AA/UA don't have to divide connecting traffic at all...they can send all the connecting traffic through NRT and primarily keep their HND seats for O&D. That is an advantage of having two hubs in a single market. How do you think DL makes JFK/LGA work?

atl100million wrote:

DL is shifting its connecting capacity to ICN, a market with far greater ability to grow in a growing market than can take place in Japan

A market where DL lacks the ability to grow. With all the slots and the hubs JL/NH have they don't have as much of an issue in Tokyo.

atl100million wrote:

UA clearly has a headstart in serving more cities than DL nonstop from the US but there is nothing that limits DL's ability to eventually serve the same cities as UA does nonstop from the US.

Well, other than the Asian market strength of where DL actually has hubs at.

Can someone explain how the Delta and Korean JV was approved by the Department of Transportation, but not the AA and QF JV?

There is a fundamental difference between HND and NRT: the former is a domestic connecting hub. The latter is an international connecting hub. HND and NRT are slot-constrained now and will remain so, and both have curfews. Neither will have more runways. ICN has no curfews, is not slot-constrained, and can add runways and terminals at will... as it is doing with the new Skyteam terminal. Moreover, JP carriers are anal about carryon size (esp., domestically) while KE and DL are not. Bottom line: the DL/KE JV will work as an Asian strategy much better than that of the competitors. The loss of JP O&D traffic to CONUS will be greatly overshadowed by the gain in overall TPAC traffic. Were it not for Mr. Prickles, the JV would have happened a decade ago and the JV would now dominate TPAC traffic, and ICN would have grown even faster.

Turning to DL's beach markets ex-NRT, I think the JP carriers and therefore *A and OW will be hurt far more than ST by the LCCs to HNL from Asia. It will be Asians, and predominately JP, not Americans, flying the LCCs. Far more JP will switch from *A and OW than from ST. LF and yields will have to drop a long way before DL drops its BEST yielding markets in Asia. I predict low adoption of the LCC service HNL/Asia by American pax.

tkoenig95 wrote:

Can someone explain how the Delta and Korean JV was approved by the Department of Transportation, but not the AA and QF JV?

Well, DL/KE hasn't even been submitted to the DOT yet, but QF/AA was denied due to the sheer dominance of that pairing in the US-Australasia market (something like 59% share, if memory serves me correctly).

WPvsMW wrote:

Turning to DL's beach markets ex-NRT, I think the JP carriers and therefore *A and OW will be hurt far more than ST by the LCCs to HNL from Asia. It will be Asians, and predominately JP, not Americans, flying the LCCs. Far more JP will switch from *A and OW than from ST. LF and yields will have to drop a long way before DL drops its BEST yielding markets in Asia. I predict low adoption of the LCC service HNL/Asia by American pax.

The fact that there are more Star and Oneworld members than Skyteam actually helps the Japanese carriers and hurts DL. Most Japanese passengers are loyal to NH/Star and/or JL/Oneworld, not DL/Skyteam (or to UA/AA to be honest). If they are selecting their Hawaiian vacation carrier with any thought about miles/FF benefits they are far more likely to choose JL/NH than DL. If all they care about is price they will just select whoever is the cheapest, which means the way DL would have to win them over is by being the cheapest.

There is NOTHING in the beach markets that makes DL any less able to compete than any other legacy Japanese or US carrier. DL has long been established in the beach markets, they operate separately from the NRT hub, and as long as DL has to operate from NRT for flights to the mainland US, there is good reason for them to continue to operate beach market flights.

When low cost carriers take out DL but not Japanese legacy carriers out of the beach markets, let me know.

I haven't forgotten the HND access that JL and NH have that supplements AA and UA's own HND service. But both of those alliances CONNECT traffic at HND which removes some of their capacity from being able to serve the local Tokyo market.

DL is simply moving to a Japan network that no longer involves connections but it will still get more access to HND than AA/UA which can watch their Tokyo operations be outsourced to their Japanese partners. The other option is for the Japanese government to allow sufficient access to HND for the US DOT to consider the market truly open and then DL will be able to move all of its flights or at least enough to compete in the local Tokyo market.

ICN is simply a larger hub in a country w/ a growing economy. Shifting connecting traffic to ICN while focusing Tokyo on local traffic makes tons of sense.

DL and KE were approved for antitrust immunity years ago because the US and S. Korea have Open Skies at airports that allow open competition. DL and KE never implemented a joint venture but there is little reason for it not to be approved without restriction.

WPvsMW wrote:

There is a fundamental difference between HND and NRT: the former is a domestic connecting hub. The latter is an international connecting hub. HND and NRT are slot-constrained now and will remain so, and both have curfews. Neither will have more runways. ICN has no curfews, is not slot-constrained, and can add runways and terminals at will... as it is doing with the new Skyteam terminal.

And that's all nice, and that's all a testament to what an incredible - and incredibly powerful - hub ICN unquestionably is. But that's also not really that important in the context of the U.S.-Asia market. The U.S.-Asia market is very much a Pareto situation - the top 15-20 markets in East Asia likely generate 4/5 or more of all the traffic to/from the U.S., and virtually all of those top 15-20 markets are easily and conveniently connected with United/ANA's and, to a lesser extent, AA/JAL's NRT hubs, not to mention that the very largest of those markets also now have multiple nonstop flights from both United's and AA's U.S. hubs. So it's awesome that ICN offers lots of connectivity to lots of places and it's great that ICN is getting new terminals and has room for more runways, etc. And that all may well be to the advantage of the Delta/Korean JV, but I'm not sure how massive an advantage it will be since, by and large, United/ANA and AA/JAL are able to offer broad connectivity to all the major places that matter.

WPvsMW wrote:

Moreover, JP carriers are anal about carryon size (esp., domestically) while KE and DL are not.

To each their own. I've connected over NRT multiple times onto multiple Japanese carriers and never once had any issue.

WPvsMW wrote:

Bottom line: the DL/KE JV will work as an Asian strategy much better than that of the competitors.

We'll see. It very much depends on the definition of "better." Will the Delta/Korean JV, with the combination of DTW, SEA, LAX and ICN, offer an extremely compelling and competitive proposition between the U.S. and Asia, arguably better than the AA/JAL JV? Yeah, probably. But better than United, with its hubs in NYC, WAS, ORD and of course SFO, plus the ANA JV? Not even close.

WPvsMW wrote:

The loss of JP O&D traffic to CONUS will be greatly overshadowed by the gain in overall TPAC traffic.

Again, we'll see. I'm still curious to see where, specifically, people think all this alleged growth will come from for the Delta/Korean JV? What markets, specifically, do people think are going to get added? I can think of three obvious candidates - BOS-ICN, MSP-ICN and the shifting of PDX-NRT to PDX-ICN. Beyond that, where else is all this growth going to take place?

WPvsMW wrote:

Turning to DL's beach markets ex-NRT, I think the JP carriers and therefore *A and OW will be hurt far more than ST by the LCCs to HNL from Asia.

Okay, but if "hurt far more" means that JAL and ANA cut their frequencies to Hawaii in half, and/or hand over some or all of their beach flying to their low fare brands, but Delta exits the market entirely, does that mean they're truly "hurt far more" than Delta/SkyTeam? Put differently - one way or another, I don't think there is any doubt whatsoever that the Japanese carriers will continue to fly some form of capacity to beach markets, catering to local traffic in their home market. In contrast, I don't think that is certain at all for Delta, which is not a Japanese carrier and which has an overall steadily declining presence in Japan.

WPvsMW wrote:

It will be Asians, and predominately JP, not Americans, flying the LCCs. Far more JP will switch from *A and OW than from ST.

Maybe, but as already said, both the local Star and oneworld giants in Japan each have one if not multiple low-fare brands.

WPvsMW wrote:

LF and yields will have to drop a long way before DL drops its BEST yielding markets in Asia.

Indeed, and I think that's exactly what is going to happen.

WPvsMW wrote:

I predict low adoption of the LCC service HNL/Asia by American pax.

Quite possibly true, but largely meaningless and irrelevant to this conversation since the vast majority of traffic from Japan to Hawaii and Micronesia is Japan-originating, anyway.

atl100million wrote:

The US will continue to give DL more access to HND relative to UA and AA because the current US-Japan air services agreement violates the DOT's basic principle of Open Skies which is that JVs and Open Skies are not permitted where airport access is restricted. Japan gained JVs for its carriers while restricting access to HND which limits every carrier, notably DL in this case, from being able to compete at HND relative to AA/JL and UA/NH. As long as there are JVs which touch HND, the DOT will give DL and HA (as much as there is sufficient demand for its flights relative to mainland flights) increased access.

But that is not what DL needs. Even if the DOT gave Delta every USA-HND slot that becomes open, DL needs slots for beyond-Tokyo flying; i.e., slots allowing flights to SIN, MNL, BKK... replacements for the flights that continued on from NRT. AA and UA have partners to handle those destinations; DL does not. That is the reason Delta is picking up its toys and moving to ICN.

atl100million wrote:

DL made the decision to quit fighting for increased access to HND and is now focusing on using its position as the largest single carrier between the mainland US and HND based on seats to serve the local Tokyo market while AA/JL and UA/NH will be forced to divide connecting traffic between two airports and end up with a smaller share of the local HND market. .

I am not sure they decided to "quit fighting", but with the potential of a JV with KE, there is little reason to keep fighting - except as a competitive counter-punch to keep AA/JL and UA/NH from totally swamping their Tokyo business. Whether this is a good strategy or not remains to be seen.

atl100million wrote:

There is NOTHING in the beach markets that makes DL any less able to compete than any other legacy Japanese or US carrier.

Yes, there is SOMETHING. Delta isn't a Japanese airline. As Delta's overall presence in Japan declines, and competition intensifies, it will be the weakest player in the Japan beach markets just like it's been the weakest player in a slew of other NRT markets it's steadily exited over the last decade.

atl100million wrote:

DL has long been established in the beach markets

Cool story. Delta (really Northwest) was also "long established" in the markets from NRT to ICN, PUS, PEK, HKG, BKK, KHH, TPE, SFO and JFK. We see how that went.

atl100million wrote:

they operate separately from the NRT hub, and as long as DL has to operate from NRT for flights to the mainland US, there is good reason for them to continue to operate beach market flights.

As long as the flights make money, earn a risk-appropriate return and overcome the hurdle of any potential opportunity costs - sure, Delta can and will keep operating them. But I don't think that will last much longer, for all the reasons already mentioned.

atl100million wrote:

DL is simply moving to a Japan network that no longer involves connections but it will still get more access to HND than AA/UA which can watch their Tokyo operations be outsourced to their Japanese partners.

Indeed. The problem is that with declining connections, it also undermines the economics of some of the remaining flights that now must rely more and more on O&D. Thus why Delta has, since the merger, stopped flying from NRT to ICN, PUS, PEK, HKG, BKK, KHH, TPE, SFO and JFK.

atl100million wrote:

The other option is for the Japanese government to allow sufficient access to HND for the US DOT to consider the market truly open and then DL will be able to move all of its flights or at least enough to compete in the local Tokyo market.

This "other option" will likely never happen.

atl100million wrote:

Shifting connecting traffic to ICN while focusing Tokyo on local traffic makes tons of sense.

Indeed it does make "tons of sense" - thus why many of us have been predicting it for years.

atl100million wrote:

There is NOTHING in the beach markets that makes DL any less able to compete than any other legacy Japanese or US carrier. DL has long been established in the beach markets, they operate separately from the NRT hub, and as long as DL has to operate from NRT for flights to the mainland US, there is good reason for them to continue to operate beach market flights.

Its not about being able to compete or not. It is about whether is it worth competing over or not. Right now DL gets good yields. But if yields significantly fall then DL may decide they can make more money flying the planes currently on those beach flights somewhere else.

Non-core operations (like DL's beach flights) are always fighting against the opportunity costs. That is why UA recently announced cuts to its Micronesia operations...they wanted to use the 737s on routes within the US where they can get more utilization out of the plane and make more money.

atl100million wrote:

I haven't forgotten the HND access that JL and NH have that supplements AA and UA's own HND service. But both of those alliances CONNECT traffic at HND which removes some of their capacity from being able to serve the local Tokyo market.

You are completely overstating how much connecting traffic everyone is required to put on the plane, and how much it hurts the airline. You are putting no thought into how easy it is for the airline to capture the local traffic (e.g., I bet you most people in Tokyo are far more loyal to JL/NH than DL...) and thus the yields they can get out of the traffic. I can spin your basic argument in an entirely different direction: DL is now at a disadvantage in ICN because more of their planes will be filled with CONNECTING traffic while AA/UA's flights will have more seats for the local market I suspect you suddenly won't agree with that assessment.

atl100million wrote:

DL is simply moving to a Japan network that no longer involves connections but it will still get more access to HND than AA/UA which can watch their Tokyo operations be outsourced to their Japanese partners

You don't seem to understand how these JV work. AA/JL, NH/UA, DL/KE, AA/BA, DL/AF/KL, UA/LH, etc, all (will in the case of DL/KE) view their flying as singular. The money is being split no matter who is doing the flying. It doesn't matter if it is NH flying LAX-HND or if it UA. The JVs just leverage the appropriate airline's market strength and available aircraft.

I understand that with the JV China is not included so would that mean HKG is also not included in the KE/DL JV

commavia wrote:

Indeed. The problem is that with declining connections, it also undermines the economics of some of the remaining flights that now must rely more and more on O&D. Thus why Delta has, since the merger, stopped flying from NRT to ICN, PUS, PEK, HKG, BKK, KHH, TPE, SFO and JFK.

And let's not forget too that UA will soon end all its Asia fifth freedom flights entirely. It's not just a unique-to-DL-at-NRT thing. As you and many others have said over and over again, market liberalization, new and clearly-defined JV alliances, and more efficient longhaul aircraft spell the eventual end to fifth freedom flights almost everywhere. The days of having to send a Pan Am Clipper to Calcutta by way of half a dozen stops across Asia are over. We've moved on from that. We've progressed beyond that.

klm617 wrote:

I understand that with the JV China is not included so would that mean HKG is also not included in the KE/DL JV

HKG has a separate, more liberal Air Service Agreement with the USA and will therefore (as far as I know) be part of the JV.

Sightseer wrote:

klm617 wrote:

I understand that with the JV China is not included so would that mean HKG is also not included in the KE/DL JV

HKG has a separate, more liberal Air Service Agreement with the USA and will therefore (as far as I know) be part of the JV.

Hong Kong will not be part of the JV as there is no Open Skies Agreement between Hong Kong and the United States. A separate and slightly more liberal air service agreement when compared to Mainland China? Yes, but still not Open Skies and thus no ATI and thus no JV inclusion.

winginit wrote:

Sightseer wrote:

klm617 wrote:

I understand that with the JV China is not included so would that mean HKG is also not included in the KE/DL JV

HKG has a separate, more liberal Air Service Agreement with the USA and will therefore (as far as I know) be part of the JV.

Hong Kong will not be part of the JV as there is no Open Skies Agreement between Hong Kong and the United States. A separate and slightly more liberal air service agreement when compared to Mainland China? Yes, but still not Open Skies and thus no ATI and thus no JV inclusion.

Looking for the answer to this question, I found this very nice State Dept website that lists open skies agreements and other air agreements between the U.S. and foreign countries.

This is a nice, if simplified, list of all the open skies agreements:
https://www.state.gov/e/eb/rls/othr/ata/267129.htm

It looks like the agreement with HK has not changed since 2002.

Countries that have open skies that are relevant to US/Asia JVs include Japan, South Korea, Taiwan, Singapore, Malaysia, Indonesia (partially), Thailand, and many others that are somewhat surprising and/or countries that probably have marginal passenger traffic to the U.S.

Noticeable countries that do not have open skies agreements with the U.S. are of course China, Hong Kong, Philippines, Vietnam, Cambodia, and Myanmar (Burma), among many others.

atl100million wrote:

There is NOTHING in the beach markets that makes DL any less able to compete than any other legacy Japanese or US carrier. DL has long been established in the beach markets, they operate separately from the NRT hub, and as long as DL has to operate from NRT for flights to the mainland US, there is good reason for them to continue to operate beach market flights.

Sure there is--they're not Japanese, and they're not a low-cost carrier. DL won't compete on price when the low cost Asian carriers enter the market. You're seriously claiming that DL will compete with Air Asia X? You should look up how much Air Asia X is charging for some medium-haul routes.

The crowd will choose the hometown team, if not anything else based on price. DL will be undercut by the lower cost carriers, especially as currency pressures kick in.

atl100million wrote:

I haven't forgotten the HND access that JL and NH have that supplements AA and UA's own HND service. But both of those alliances CONNECT traffic at HND which removes some of their capacity from being able to serve the local Tokyo market.

Most of the HND traffic for US carriers are not connecting. East coast-HND arrives after 9pm, perfect if you are local & want to rest up before heading to the office the next day, but too late to connect. West caost-HND could connect, but there's much more connection opportunities at NRT. HND is primarily for local O&D that wants easy access to the city.

atl100million wrote:

DL is simply moving to a Japan network that no longer involves connections but it will still get more access to HND than AA/UA which can watch their Tokyo operations be outsourced to their Japanese partners.

First, you keep insisting DL will magically get more access to HND. I don't see it being more than 1-2 slots in the near to medium future, which is hardly anything to write home about.
Second, "outsourcing the Tokyo operations" isn't going to happen to UA and AA. UA has an incredible number of flights to TYO that aren't going anywhere soon.

ICN is simply a larger hub in a country w/ a growing economy. Shifting connecting traffic to ICN while focusing Tokyo on local traffic makes tons of sense.

So you mean DL will be "outsourcing" their flying?

DL is going to be strengthened by this JV, no question. Nobody is arguing that. But UA/NH is a major player that isn't standing still, and DL/KE have a ways to go.

BTW you're focusing a lot on east Asia, but the real growth opportunities for ASia are in inland China and India, markets that DL is not even trying. Those are where we need to see if KE can help DL--or if KE is just interested in growing them themselves, since connections are much harder to those destinations from the US due to stage lengths.

intotheair wrote:

winginit wrote:

Sightseer wrote:

HKG has a separate, more liberal Air Service Agreement with the USA and will therefore (as far as I know) be part of the JV.

Hong Kong will not be part of the JV as there is no Open Skies Agreement between Hong Kong and the United States. A separate and slightly more liberal air service agreement when compared to Mainland China? Yes, but still not Open Skies and thus no ATI and thus no JV inclusion.

Looking for the answer to this question, I found this very nice State Dept website that lists open skies agreements and other air agreements between the U.S. and foreign countries.

This is a nice, if simplified, list of all the open skies agreements:
https://www.state.gov/e/eb/rls/othr/ata/267129.htm

It looks like the agreement with HK has not changed since 2002.

Countries that have open skies that are relevant to US/Asia JVs include Japan, South Korea, Taiwan, Singapore, Malaysia, Indonesia (partially), Thailand, and many others that are somewhat surprising and/or countries that probably have marginal passenger traffic to the U.S.

Noticeable countries that do not have open skies agreements with the U.S. are of course China, Hong Kong, Philippines, Vietnam, Cambodia, and Myanmar (Burma), among many others.

So a country does need full Open Skies to be eligible for a JV. That's good to know. Interestingly, that may increase the odds of DL both continuing to serve MNL in some form and possibly resuming DTW-HKG. I'm assuming the smaller non-Open Skies markets will simply be served via codeshare where applicable.

IIRC, AA's HKG flights are part of its JV with JL but AA does not have a JV with CX.

It is no more logical to argue that DL will be hindered from competing in the Japan beach markets - which are to the US or US territories - than it is to argue that AA can't compete in the Brazil market because it is a US carrier. The Brazil-US market and most Asia to US markets are predominantly filled by foreigners and yet US carriers manage to do just fine in them. DL has a viable market from Japan to the beach markets that AA does not have on its own metal but is somewhat offered by JL via the JV while UA has some of the same routes as DL. UA hasn't cancelled its beach market routes and UA and DL will continue to offer beach market flights on their own metal.

UA pulled planes out of Micronesia because they determined they could be used more efficiently elsewhere. There is still nothing about DL's beach market routes that make them less valuable than for any other carrier. Changes in the value of the yen have and will continue to affect ALL carriers flying from Japan to US dollar denominated destinations.

yes, the Japanese government's aviation policy has hurt DL. The only thing wrong with that assessment is that some people don't realize how the same policies will hurt AA/JL and UA/NH's ability to compete in the transpacific aviation market because of the split Tokyo hub they have to operate which DL will not do. There will always be some people that think that market distortion is fine if it affects someone else. The reality is that market distortions such as exists in the US-Tokyo market affect all players.

DL simply made the decision to no longer operate beyond NRT on a connecting basis from the US and is shifting that role to KE and ICN to markets which DL, like AA and UA, do not serve nonstop from the US on their own metal. DL, like UA, happens to serve more than just the big 5 Asia markets and the chances are very high that when DL's transpacific restructuring is complete they will continue to do so but with nonstop flights from the US instead of via NRT. Given that UA has made the same transition over the past several years, it isn't hard to see how DL will do something similar. The difference between DL and both AA and UA is that DL's primary JV partner will be outside of Japan which will give DL the ability to focus on the local Tokyo market in a position that is as good or better than AA and UA.

Let's also not forget that DL doesn't lose the 5th freedom authority it has from NRT. It could decide to no longer flow widebody, premium international aircraft through NRT and instead decide to operate as many intra-Asia flights as it operates flights to the US (currently 5) but do it on A321s sold only as coach and premium economy. DL doesn't want to use its intra-Asia authorities to operate domestic configured narrowbody aircraft to connect from the US but it most certainly could compete in the local Japan to Asia market esp. if Japan takes forever to give US carriers enough HND slots for DL to move all of its transpacific operations.

The arguments about how loyal Japanese customers are to DL go only as far as how many passengers DL is boarding at HND on flights to LAX and MSP and the answer is that DL is #2 behind HA in the number of passengers per flight out of HND. DL continues to be able to easily fill widebody flights from NRT to beach markets which could not possibly be the case if DL were as incapacitated in the Japan market as some want to believe. The only thing that is happening in the beach markets is that DL is removing the 744 - but that is true of JL and NH as well. The only thing that impacts DL or any other carrier's ability to compete in the US-Japan market including the beach markets is the number of seats that are offered.

jbs2886 wrote:

klm617 wrote:

I understand that with the JV China is not included so would that mean HKG is also not included in the KE/DL JV

That's a good question, HKG does operate outside of Chinese air authorities, but is part of China. UA has fifth freedom flights from HKG, correct? If so, it probably is part of the JV.

See I can come up with some intelligent stuff every now and again LOL. All kidding aside if HKG is not part of the JV than a DTW-HKG link become much more likely with the A350

atl100million wrote:

It is no more logical to argue that DL will be hindered from competing in the Japan beach markets - which are to the US or US territories - than it is to argue that AA can't compete in the Brazil market because it is a US carrier. The Brazil-US market and most Asia to US markets are predominantly filled by foreigners and yet US carriers manage to do just fine in them. DL has a viable market from Japan to the beach markets that AA does not have on its own metal but is somewhat offered by JL via the JV while UA has some of the same routes as DL. UA hasn't cancelled its beach market routes and UA and DL will continue to offer beach market flights on their own metal.

Because flying US-Brazil is more valuable to the US3's network as a whole than Japan-Hawaii. But I'm done talking about the Beach markets as it is clear you are not understanding what anyone is telling you about them.

atl100million wrote:

Let's also not forget that DL doesn't lose the 5th freedom authority it has from NRT. It could decide to no longer flow widebody, premium international aircraft through NRT and instead decide to operate as many intra-Asia flights as it operates flights to the US (currently 5) but do it on A321s sold only as coach and premium economy. DL doesn't want to use its intra-Asia authorities to operate domestic configured narrowbody aircraft to connect from the US but it most certainly could compete in the local Japan to Asia market esp. if Japan takes forever to give US carriers enough HND slots for DL to move all of its transpacific operations.

Only in your head is this intra-Asia flying that valuable to DL. DL (and UA when they use to operate them) can't compete in those segments without significant discounting. Enjoy them while they last, with the DL/KE JV they will quickly be dropping like flies and never coming back.

atl100million wrote:

The arguments about how loyal Japanese customers are to DL go only as far as how many passengers DL is boarding at HND on flights to LAX and MSP and the answer is that DL is #2 behind HA in the number of passengers per flight out of HND.

Now compare the number of premium, high yielding, seats on DL's planes compared to its competitors out of HND (minus HA) UA/JL/NH/AA would rather soak up that traffic. They don't care if the cheap people in Y looking for the best deal fly DL.

atl100million wrote:

The only thing that is happening in the beach markets is that DL is removing the 744 - but that is true of JL and NH as well. The only thing that impacts DL or any other carrier's ability to compete in the US-Japan market including the beach markets is the number of seats that are offered.

Well that and the Asian LCCs are starting to move in. But I guess we can just ignore that. Obviously will have no effect on DL's yields. All that matters is number of seats, not price Fun fact btw: that Air Asia X A330 that is flying to Hawaii tomorrow from Japan? It has more seats in it than DL's 747s. The 789 Scoot is likely to use seats 1 person less than DL's 747.

atl100million wrote:

It is no more logical to argue that DL will be hindered from competing in the Japan beach markets - which are to the US or US territories - than it is to argue that AA can't compete in the Brazil market because it is a US carrier. The Brazil-US market and most Asia to US markets are predominantly filled by foreigners and yet US carriers manage to do just fine in them.

That comparison isn't apples and oranges, it's apples and lawn furniture. These continued theoretically arguments with reality are fun, but the bottom line is that all of this is just conjecture and hypotheticals at this point. I and others have repeatedly articulated the reasoning for our conclusion that Delta is unlikely to be able to continue profitably operating the Japan beach markets long term. We'll see who's right.

atl100million wrote:

The only thing wrong with that assessment is that some people don't realize how the same policies will hurt AA/JL and UA/NH's ability to compete in the transpacific aviation market because of the split Tokyo hub they have to operate which DL will not do. There will always be some people that think that market distortion is fine if it affects someone else. The reality is that market distortions such as exists in the US-Tokyo market affect all players.

And one of the (multiple) things wrong with the above "assessment" is that it totally misses the bigger picture. Does the split NRT/HND setup in TYO arguably negatively affect AA/JAL and United/ANA, to some extent? Yeah, probably. But it also affords those carriers new and different opportunities that Delta does not have. That's the key. Even if we accept the premise that the negative effects of the TYO airport setup affect all three competitors (AA/JAL, United/ANA and Delta) equally - flawed and inaccurate as that premise is - that's offset by the fact that the first two of those three competitors also derive far greater upside from HND that Delta simply cannot.

atl100million wrote:

DL, like UA, happens to serve more than just the big 5 Asia markets and the chances are very high that when DL's transpacific restructuring is complete they will continue to do so but with nonstop flights from the US instead of via NRT.

Setting aside beach flying, the only two Asian cities Delta doesn't already serve nonstop from at least one U.S. gateway are MNL and SIN. And even if we include the beach flying, that adds KIX and FUK. I don't see any plausible prospect of Delta being able to profitably fly to any of those cities nonstop from any of its U.S. gateways except maybe KIX from SEA (although that route has already been tried unsuccessfully). I continue to believe that, at best, the only other Asian market Delta could realistically make work nonstop from the U.S. would be SEA-TPE. Beyond that, it's all about the same "big five" markets Delta already serves, and that are also already served from one or multiple U.S. hubs by AA as well (TYO, SEL, SHA, PEK and HKG).

atl100million wrote:

Given that UA has made the same transition over the past several years, it isn't hard to see how DL will do something similar.

Well obviously not. Again, that's what many of us have been saying literally for years. Delta would continue the steady de-emphasis on NRT and shift as much as possible to nonstop flights linking U.S. hubs with major East Asian markets. Unfortunately for Delta, its U.S. hub structure is just structurally and insurmountably inferior to United's when it comes to Asia - thus why the realistic potential for Delta in terms of nonstop flights into East Asia is less than for United.

atl100million wrote:

The difference between DL and both AA and UA is that DL's primary JV partner will be outside of Japan which will give DL the ability to focus on the local Tokyo market in a position that is as good or better than AA and UA.

Cool story, bro. AA/JAL and United/ANA will have more seats, between more places, offering more nonstop options for more O&D customers, than Delta can ever match. I strongly suspect that within a decade, and probably within half that time, the entirety of Delta's Japan network will encompass 5-6 daily flights from major U.S. hubs to TYO (NRT/HND) plus DTW-NGO, and the vast majority of Delta's traffic (far greater than today) will be U.S.-originating/point of sale.

atl100million wrote:

It could decide to no longer flow widebody, premium international aircraft through NRT and instead decide to operate as many intra-Asia flights as it operates flights to the US (currently 5) but do it on A321s sold only as coach and premium economy.

That sounds like an awesome way to burn money.

atl100million wrote:

DL continues to be able to easily fill widebody flights from NRT to beach markets which could not possibly be the case if DL were as incapacitated in the Japan market as some want to believe.

Again, we're not talking about today. We're talking about how the Japan beach markets are inevitably going to evolve in the coming years. Let's check back on this in 3-5 years and see where Delta stands in the Japan beach markets.

Having lived and worked in Tokyo for a top 20 JP multinational, NH or JL get the mega corporate contracts from Nikkei listed companies, but when a sarariman with no miles pays personally... it's lowest price. The sarariman with miles with JL or NH will use those miles, but the pure leisure pax will book lowest price, esp. to the beach markets. DL and KE direct booking are never lowest price ex-TYO (maybe different through a consolidator.). Therefore, the LCCs will poach the leisure pax from the JP carriers, not from DL or KE, and it is OW and *A that will lose much more revenue than ST by the advent of the LCCs.

An unexplored new market for ST will be a Seoul/Hawaii package. Shopping. Many JP tourists in the Islands and in Seoul are there primarily to shop, as strange as that may seem.

WPvsMW wrote:

Therefore, the LCCs will poach the leisure pax from the JP carriers, not from DL or KE, and it is OW and *A that will lose much more revenue than ST by the advent of the LCCs.

I remain highly skeptical for all the myriad of reasons already described by myself and others. I think the far more likely outcome is that JAL and ANA respond to the natural and inevitable growth of low fare carriers in Japan beach markets by shifting more of their capacity in these markets to their own low fare brands and/or, in ANA's case, super-high-density A380s. And when all of those market machinations happen, Delta will simply exit much or all of this flying.

Again - we'll all see soon enough how it ultimately shakes out.

commavia wrote:

WPvsMW wrote:

Therefore, the LCCs will poach the leisure pax from the JP carriers, not from DL or KE, and it is OW and *A that will lose much more revenue than ST by the advent of the LCCs.

I remain highly skeptical for all the myriad of reasons already described by myself and others. I think the far more likely outcome is that JAL and ANA respond to the natural and inevitable growth of low fare carriers in Japan beach markets by shifting more of their capacity in these markets to their own low fare brands and/or, in ANA's case, super-high-density A380s. And when all of those market machinations happen, Delta will simply exit much or all of this flying.
Again - we'll all see soon enough how it ultimately shakes out.

I think you have to delineate "beach markets" into two categories: Japan-Hawaii, and Japan to GUM/SPN/ROR. While I am sure the LCC's will find Hawaii flying interesting - and we will see some build-up there - I think both DL and UA, along with HA, will want to maintain a presence there; I don't see those flights completely disappearing. Just as Spirit and Frontier have done in the USA, some airlines will grab the bottom-feeders whose only consideration is cost, but other airlines will continue to attract the less price-conscious traveler.

And as far as GUM/SPN/ROR are concerned, I am not sure any of those markets have enough demand for any LCC to enter the markets. If someone does, then UA and DL both may retrench... but I think that is not likely anytime soon.

IMO, The KE/DL JV will have little impact on either the PDX NRT or DTW NGO flights. As some observed from my commentary, the NGO flight is heavily driven by Corporate Contacts related to the auto industry, fed by (believe it or not) SE Michigan and numerous DTW spokes like EVV, DAY, CMH, IND, LEX, SDF, and CLE, home to numerous Tier I and Tier II suppliers related to a large Aichi Prefecture based auto maker.

Regarding MNL, the JV could add add'l traffic to the ICN MNL city pair on KE, as DL's relationships in Consolidator markets moves and funnels new traffic over KE/DL city pairs between North America and MN via ICN. Improved inter-airline pro rates between MNL and the USA via the JV will give DL more room to financially negotiate and leverage with their long-term Balikbayan Consolidator partners in cities such as NYC, CHI, SEA and LAX. I don't see a reason to add additional DL flights to MNL, when the KE ICN MNL flight can be dual designated, and upgraded to an A380 from a 777 . Situations like this are the less obvious proceeds of a JV.

And I suggest in the JPN beach markets- DL ain't going anywhere. This market is driven by Tour Operators. And Japanese Tour Operators are unlikely short-term to move to a new entrant as this goes against traditional Japanese relationship-driven business decisions. NW/DL have years of experience and personal relationships in this market that control the traffic. A new entrant doesn't just walk into JTB and say "hey- we have new service to GUM and SPN- and we want our fair share". It don't work that way.

I do not really think that DL will maintain intra-Asia service from Japan other than to beach markets but it is a possibility, esp. if Japan is slow to open HND to additional flights which would allow DL to move its transpacific flights to HND.

If there is a concern about the beach markets, it is if Japan opens up enough new slots at HND so that DL can move its flights to HNL and the mainland but not its flights to GUM, SPN etc. There simply is no reason why DL can’t compete in the beach markets in 5 years just as NW/DL has done for decades unless DL gains enough slots to operate everything from HND except for its narrowbody beach markets. As long as DL is forced to operate widebody transpacific flights from NRT, NRT is not only a viable airport for US carriers but DL has every reason to maintain a two airport operation in Tokyo just like AA/JL and UA/NH will have to do. If NH and JL can operate from NRT to Asia with connecting traffic, I can assure you that DL can operate narrowbody point to point Asia flights and be profitable.

commavia wrote:

Again, we're not talking about today. We're talking about how the Japan beach markets are inevitably going to evolve in the coming years. Let's check back on this in 3-5 years and see where Delta stands in the Japan beach markets.

I absolutely agree with you that the best course of action is to check back not just on DL’s beach market flights but on DL’s entire Pacific network. I strongly believe there will be a number of route announcements involving DL and KE over the Pacific in the next few months. The NRT hub is not necessary in light of DL’s new A350s and coming 330s, the expanded facilities at LAX which allow DL to grow in LAX, the growing SEA hub, and the JV itself.

Either you believe that free and open markets are good for everyone or market restrictions hurt everyone. You cannot believe that Japan’s convoluted process of semi-Open Skies hurts DL but does not hurt AA and UA. DL simply said “enough is enough” with trying to connect in Tokyo and has come up with a plan to shift connections to ICN and develop its mainland US to East Asia network.


And there certainly is a market outside of E. Asia but it is beyond the JV and can be reached via the Atlantic or the Pacific from the US. DL and Jet Airways are aggressively increasing their cooperation so India access is as fluid as to E. Asia.

I am tired of seeing DL cut capacity across the Pacific but I suspect we are through seeing that. I believe that DL will hold onto its position in Japan other than to MNL, SIN, and PVG; will add more nonstops from the US to cities outside of the big Asia 5, will add ICN service to new cities in the US. Market like TPE and secondary cities in China could well work on DL but they won’t happen first.

I believe the next few years will see a DL focus on Asia that hasn’t ever be seen; DL merged with NW knowing that radical changes were necessary to the NW Pacific network because NW ordered the 787s with that same realization of a need for change. The NW merger laid the framework and provided the presence in key markets including Japan; the KE JV will provide access to dozens of new cities for DL; the A350s, 339s, and refurbished 777s will allow DL to cost-effectively offer a high quality product across the Pacific; and the China Eastern equity partnership will provide important feed to DL’s China flights.

I’m very much looking forward to see not only how DL’s Pacific network looks in 3-5 years but also that of AA, UA and other carriers.

beerbus wrote:

IMO, The KE/DL JV will have little impact on either the PDX NRT or DTW NGO flights.

As said, I totally agree on DTW-NGO - I see no reason that need go anywhere. PDX-NRT, on the other hand, I see ending in the not too distant future. My personal expectation is that Delta/Korean will shift PDX-NRT to PDX-ICN, and then one of the Japanese carriers will start a daily 787 PDX-NRT.

atl100million wrote:

If there is a concern about the beach markets, it is if Japan opens up enough new slots at HND so that DL can move its flights to HNL and the mainland but not its flights to GUM, SPN etc.

This relentless fixation on a significant expansion of traffic rights for Delta at HND is incredible - particularly since it's not going to happen.

atl100million wrote:

There simply is no reason why DL can’t compete in the beach markets in 5 years just as NW/DL has done for decades

Fascinating logic. "There simply is no reason" that something shouldn't work in five years because it worked well 25 years ago. Okay. We'll see.

atl100million wrote:

I strongly believe there will be a number of route announcements involving DL and KE over the Pacific in the next few months.

I'm still eager to hear peoples' thoughts on what all these route announcements will be? I've thrown out three of my ideas - BOS-ICN, MSP-ICN and PDX-ICN. What else?

atl100million wrote:

You cannot believe that Japan’s convoluted process of semi-Open Skies hurts DL but does not hurt AA and UA.

Um, yes, I can believe it - very strongly - and do. And so do many others. The 2010 market liberalization, whatever one calls it, between the U.S. and Japan has been extremely lucrative for both AA and United, and extremely detrimental to Delta. I'm not really sure how that's even debatable.

atl100million wrote:

I am tired of seeing DL cut capacity across the Pacific but I suspect we are through seeing that. I believe that DL will hold onto its position in Japan other than to MNL, SIN, and PVG; will add more nonstops from the US to cities outside of the big Asia 5, will add ICN service to new cities in the US. Market like TPE and secondary cities in China could well work on DL but they won’t happen first.

I remain highly skeptical of Delta's ability to profitably fly to "secondary cities in China," or "cities outside of the big Asia 5," from any of its U.S. hubs. The only one I could plausibly imagine is TPE. SIN is too far, MNL too low-yielding, and secondary China too competitive, low-yielding, China-originating and United-aligned.

If the Japan-US treaty were as detrimental to DL and as beneficial to AA, UA, then perhaps you have an explanation for why DL managed to report a profit over the Pacific for every quarter of 2016, something AA and UA did n, t do.

yes, I know, profitability is so subjective because costs and revenues can be shifted around at will - so say some. But DL also managed to report far larger profits as an entire company; something has to give somewhere. If DL were doing so badly over the Pacific, it would mean something else has to be doing much better someplace else. I'd LOVE to hear where DL is killing it so much more than AA and UA in order to make up for its Pacific system that is clearly so detrimental because of the Tokyo situation. Likewise, AA and UA have to be losing a whole lot of money elsewhere to make up for how much they are making to/from Asia.

OR

OR

OR

maybe, DL has reduced its capacity because its network during a period of transition and has the pieces in place to become a much more aggressive competitor in the Pacific

AND

The Pacific including Japan really isn't the gold mine for AA and UA that you and others think it is.

If you disagree, let me know where AA and UA is losing money to make up for its huge profitability to/from Asia.

jbs2886 wrote:

atl100million wrote:

I do not really think that DL will maintain intra-Asia service from Japan other than to beach markets but it is a possibility, esp. if Japan is slow to open HND to additional flights which would allow DL to move its transpacific flights to HND.

If there is a concern about the beach markets, it is if Japan opens up enough new slots at HND so that DL can move its flights to HNL and the mainland but not its flights to GUM, SPN etc. There simply is no reason why DL can’t compete in the beach markets in 5 years just as NW/DL has done for decades unless DL gains enough slots to operate everything from HND except for its narrowbody beach markets. As long as DL is forced to operate widebody transpacific flights from NRT, NRT is not only a viable airport for US carriers but DL has every reason to maintain a two airport operation in Tokyo just like AA/JL and UA/NH will have to do. If NH and JL can operate from NRT to Asia with connecting traffic, I can assure you that DL can operate narrowbody point to point Asia flights and be profitable.

commavia wrote:

Again, we're not talking about today. We're talking about how the Japan beach markets are inevitably going to evolve in the coming years. Let's check back on this in 3-5 years and see where Delta stands in the Japan beach markets.

I absolutely agree with you that the best course of action is to check back not just on DL’s beach market flights but on DL’s entire Pacific network. I strongly believe there will be a number of route announcements involving DL and KE over the Pacific in the next few months. The NRT hub is not necessary in light of DL’s new A350s and coming 330s, the expanded facilities at LAX which allow DL to grow in LAX, the growing SEA hub, and the JV itself.

Either you believe that free and open markets are good for everyone or market restrictions hurt everyone. You cannot believe that Japan’s convoluted process of semi-Open Skies hurts DL but does not hurt AA and UA. DL simply said “enough is enough” with trying to connect in Tokyo and has come up with a plan to shift connections to ICN and develop its mainland US to East Asia network.


And there certainly is a market outside of E. Asia but it is beyond the JV and can be reached via the Atlantic or the Pacific from the US. DL and Jet Airways are aggressively increasing their cooperation so India access is as fluid as to E. Asia.

I am tired of seeing DL cut capacity across the Pacific but I suspect we are through seeing that. I believe that DL will hold onto its position in Japan other than to MNL, SIN, and PVG; will add more nonstops from the US to cities outside of the big Asia 5, will add ICN service to new cities in the US. Market like TPE and secondary cities in China could well work on DL but they won’t happen first.

I believe the next few years will see a DL focus on Asia that hasn’t ever be seen; DL merged with NW knowing that radical changes were necessary to the NW Pacific network because NW ordered the 787s with that same realization of a need for change. The NW merger laid the framework and provided the presence in key markets including Japan; the KE JV will provide access to dozens of new cities for DL; the A350s, 339s, and refurbished 777s will allow DL to cost-effectively offer a high quality product across the Pacific; and the China Eastern equity partnership will provide important feed to DL’s China flights.

I’m very much looking forward to see not only how DL’s Pacific network looks in 3-5 years but also that of AA, UA and other carriers.

Dude, I'm a big Delta fan, too...but your fanboyism is blinding you to some facts that aren't necessarily "bad". Like DL's lack of a JV partner in Asia has really cost DL in Japan (and Asia as a whole). The HND flights stuck a knife in what was otherwise a bleeding operation - the fifth freedom style is just going away, largely, I suspect due to JVs and the fact that it isn't optimal use of aircraft. Furthermore, home-country carriers have a HUGE advantage, and, because they have JVs with AA and UA, they, too, have an advantage over DL. There are a number of other things, but DL makes mistakes and some things won't work out for them.

Either way, people are losing and ignoring some of your good points because you are blinded by DL.

You are free to come up with your own definition but fanboy-ism is coming up with theories that are counter to actual facts.
I have read page after page of why DL isn’t doing well because of Japan, why it can’t match UA, etc etc etc – but I have read NO FACTS to support any of those contentions.

On the other hand, it isn’t hard to come up with actual data to support that 1. DL is carrying more passengers per flight out of HND to the mainland than any other carrier (if HND slots are so valuable then why aren’t UA, AA, NH and JL using their LARGEST aircraft? Hint – it’s because they really DON’T want to pull too much traffic off of their NRT flights) 2. DL IS running a profitable Pacific operation and even if you believe that profitability by global region can be manipulated the way an airline wants, then there has to be someplace on DL’s network that is making way more money than AA and UA if Japan is hurting DL while AA and UA have to be losing lots of money elsewhere since they don’t match DL’s system level profitability 3. DL’s beach markets really do make money and DL competes successfully against Japanese carriers and there is no reason why that will change (plus CEOs can get in big trouble for making false statements about their operations) and 4. That KE really has the largest transpacific network that can participate in joint ventures (since routes to China cannot be part of US airline joint ventures) and therefore the combination of DL and KE’s networks with DL’s own Japan network plus China really will be a serious contender in the US-Asia market.

Fanboy-ism is failing to provide facts and data or coming to conclusions that are counter to facts and data. I would love to see the facts and data to back up the theories that validate the theories that are counter to what I have proposed. Really. I. Would.

The best proof will be over the next couple months. (and to commavia’s question I believe there are as many as 4 longhaul new routes that could be launched by DL from LAX over the next couple years alone. And for the DTW guy, I think DTW-HKG will be back. Gotta make sure he is happy)
The next few years will be very interesting for transpacific aviation and there are plenty of facts and data to support the idea that will be a major part of it all and will be building on a position of strength.

atl100million wrote:

I have read page after page of why DL isn’t doing well because of Japan

No, nobody has read that, because nobody has said that - nobody has said that "Delta isn't doing well."

Rather, multiple people have said that Delta's (and before it Northwest's) presence in Japan has been steadily declining for decades - and that isn't debatable. It's just reality. What multiple people have hypothesized, in essence, is that this steady decline will continue - that's opinion, but one that seems fairly well-placed.

atl100million wrote:

why it can’t match UA, etc etc etc – but I have read NO FACTS to support any of those contentions.

Delta can't match United because Delta doesn't have SFO. SFO is a singular gateway to Asia in the way that MIA is a singular gateway to South America - the airline with a hub in SFO will, necessarily and naturally, be dominant across the Pacific. It's as simple as that. SFO generates a level of local traffic, and in particular high-yielding local traffic, coupled with a level of domestic connectivity, that no other U.S. gateway will ever be able to rival for any U.S. airline.

atl100million wrote:

DL’s beach markets really do make money and DL competes successfully against Japanese carriers and there is no reason why that will change

Well, actually, for the final time, multiple people have offered opinions that encompass multiple suggestions as to why that may well change. What I've read in return is, essentially, that it's worked in the past and therefore it will work in the future. I doubt it. We'll see.

atl100million wrote:

I believe there are as many as 4 longhaul new routes that could be launched by DL from LAX over the next couple years alone

I'm still waiting for specifics. Delta/Korean are going to grow so much over the Pacific. Okay. Examples, please. I'll repeat again that I think BOS-ICN, MSP-ICN and PDX-ICN all seem plausible. But I suspect all three of those markets will, ultimately, be offset by capacity being removed by Delta from elsewhere in its existing Pacific network. So if there is allegedly all this net growth ahead for Delta/Korean across the Pacific, I continue to be curious as to where it's supposedly going to occur. Still waiting.

commavia wrote:

atl100million wrote:

I have read page after page of why DL isn’t doing well because of Japan

No, nobody has read that, because nobody has said that - nobody has said that "Delta isn't doing well."

Rather, multiple people have said that Delta's (and before it Northwest's) presence in Japan has been steadily declining for decades - and that isn't debatable. It's just reality. What multiple people have hypothesized, in essence, is that this steady decline will continue - that's opinion, but one that seems fairly well-placed.

atl100million wrote:

why it can’t match UA, etc etc etc – but I have read NO FACTS to support any of those contentions.[/quoDelta can't match United because Delta doesn't have SFO. SFO is a singular gateway to Asia in the way that MIA is a singular gateway to South America - the airline with a hub in SFO will, necessarily and naturally, be dominant across the Pacific. It's as simple as that. SFO generates a level of local traffic, and in particular high-yielding local traffic, coupled with a level of domestic connectivity, that no other U.S. gateway will ever be able to rival for any U.S. airline.

atl100million wrote:

DL’s beach markets really do make money and DL competes successfully against Japanese carriers and there is no reason why that will change

Well, actually, for the final time, multiple people have offered opinions that encompass multiple suggestions as to why that may well change. What I've read in return is, essentially, that it's worked in the past and therefore it will work in the future. I doubt it. We'll see.

atl100million wrote:

I believe there are as many as 4 longhaul new routes that could be launched by DL from LAX over the next couple years alone

I'm still waiting for specifics. Delta/Korean are going to grow so much over the Pacific. Okay. Examples, please. I'll repeat again that I think BOS-ICN, MSP-ICN and PDX-ICN all seem plausible. But I suspect all three of those markets will, ultimately, be offset by capacity being removed by Delta from elsewhere in its existing Pacific network. So if there is allegedly all this net growth ahead for Delta/Korean across the Pacific, I continue to be curious as to where it's supposedly going to occur. Still waiting.

"Delta can't match United because Delta doesn't have SFO. SFO is a singular gateway to Asia in the way that MIA is a singular gateway to South America - the airline with a hub in SFO will, necessarily and naturally, be dominant across the Pacific. It's as simple as that. SFO generates a level of local traffic, and in particular high-yielding local traffic, coupled with a level of domestic connectivity, that no other U.S. gateway will ever be able to rival for any U.S. airline."

Well said... Because ATL is mostly a cattle fold hauling tens of millions of domestic transfer passengers. So the 100M becomes perhaps 10M originated pax. But in places like SFO or JFK, the picture is vastly different because those markets support origin and destination type travel, often with a premium.

Do you experts think the Atlanta to Tokyo flight will survive? I have read here sometime past that a high percentage of the current Atlanta to Tokyo passengers have a different final Asian destination.

ehaase wrote:

Do you experts think the Atlanta to Tokyo flight will survive? I have read here sometime past that a high percentage of the current Atlanta to Tokyo passengers have a different final Asian destination.

ATL is Delta's largest hub and the largest single airline hub on earth. Tokyo is the largest single population center, and largest metropolitan economy, in the world, and is also the capital of one of the wealthiest, most advanced societies in the world. And, needless to say, Delta is one of the world's largest airlines. All that is to say - I cannot conceive of a scenario under which Delta would not be able to profitably operate a daily flight linking these two cities into perpetuity - I think that route is about as "safe" as it gets.

Delta has been flying ATL-NRT since long before the NW merger and even before NW was part of Skyteam. I'm pretty sure it can hold its own without the NRT connections.

Polot wrote:

Delta has been flying ATL-NRT since long before the NW merger and even before NW was part of Skyteam. I'm pretty sure it can hold its own without the NRT connections.

DL will continue operating ATL-NRT to serve the O&D customers, and also to route a number of connecting pax originating in the U.S.' South and Latin America bound for Tokyo.