MIAMI — All Nippon Airways’ Mexico City flight, to be launched on February 15, 2017, will be the first-ever nonstop route between the Far East and Latin America offered on an Asian carrier.
Although the two continents are currently linked via Aeromexico’s existing 5-weekly nonstop services between Mexico City and Tokyo Narita, ANA’s designation as a first-mover among Asian carriers is noteworthy, given the generally risk-averse attitude such airlines have shown towards ultra-long haul routes, although in recent years, signs have indicated this philosophy is changing, particularly among Chinese carriers.
That being said, Japan, and Latin America, is an entirely different ball-game. To date, no Asian carrier has ever been linked to Latin America on a nonstop basis. Although several Asian carriers have flown to Latin America on their own metal for several decades—including Korean Air, Air China, Japan Airlines and Singapore Airlines—all were operated on a one-stop, fifth-freedom basis over cities in the U.S., Canada or Europe. They have all since exited due to high operating costs and macroeconomic woes— particularly in Brazil—with the one exception being Air China, which currently operates 2-weekly flights between Beijing and Sao Paulo via Madrid.
ANA’s Mexico City launch also underscores several important developments in the Mexican Aviation market that have materialized over the past several years: 1) being commercial interests, driven by ANA’s expansive transpacific growth since the advent of the Boeing 787 Dreamliner, 2) airport infrastructure, with Mexico City planning on opening up a new gateway in 2020 and 3) political, with the recent U.S. Presidential elect-Donald Trump and his rhetoric towards building a wall between the U.S. and Mexico, hence encouraging more outbound Mexican travelers to transit via Japan to beyond-Tokyo markets over Narita instead of U.S. hubs.
Mexico City will be ANA’s 9th new transpacific route launched in 5 years
ANA has added four new North American markets since 2012 (from Narita to Seattle, San Jose, Vancouver and Houston) as well as four new routes from its Tokyo Haneda hub (to Los Angeles, Honolulu, New York JFK and Chicago O’Hare). Mexico City will be the 9th transpacific market that it has launched in recent years, utilizing a 787-8 aircraft and becoming ANA’s longest operating route in the network.
Although rival carrier Japan Airlines (JAL) has similarly expanded significantly into North America over the same period, adding Tokyo Narita to Boston, Dallas/Ft. Worth and San Diego, Tokyo Haneda to San Francisco and Honolulu, Nagoya to Honolulu as well as Osaka to Los Angeles and Honolulu, the two carriers diverge in strategy when it comes to growth in the Americas.
JAL tends to chase after higher-yielding, lower-volume routes, whereas ANA tends to target lower-yielding, higher-volume routes. Absent Hawaii and Guam, ANA’s North American network offers approximately 18,000 weekly seats to Japan whereas JAL offers a little over 14,000.
Relatively speaking, JAL has traditionally posted higher profits over ANA ($680 M for 1H 2016 for JAL vs. $546 M for ANA, in USD) although JAL reported that its year-over-year net profit was down 31%, whereas ANA’s was up 6.4%.
A closer analysis of JAL and ANA’s hub structures may provide more insight into the profitability figures over time. Relatively speaking, ANA has a larger share of the international slots at Haneda airport, while also viably competitive against JAL at Narita airport.
However, it is also noteworthy that, contrary to popular belief that Tokyo Narita is playing a diminished role in connecting East-West transit flows between global regions, ANA continues to invest in Narita as a value-driver for its long-haul network. Although Haneda is still the more preferable airport for local traffic, cities that contribute mostly flow passengers are still linked to Narita (such as San Jose, Vancouver, Houston and Seattle). Mexico City will fit within this category given that both ANA and Aeromexico, a much more entrenched carrier in the Mexico City – Tokyo sector, will be competing for local traffic.
Mexico harnesses the power of Aeromexico’s robust Latin American network to Central and South America from Benito Juarez International airport. European growth has underpinned the vast majority of Aeromexico’s long-haul expansion recently, but Asia is still a high-priority.
Aeromexico managed to remove the Tijuana technical stop in each direction between Mexico City and Tokyo thanks to the 787-8’s operating capabilities. The Tijuana stop is still utilized on its over 8,000 nm (14,816km) flight to Shanghai, bidirectionally, which operates thrice weekly. Aeromexico is also rumored to announce a 3rd Asian station before the end of 2016, which is likely to be Seoul Incheon given that it is a SkyTeam hub for partner carrier Korean Air.
Tokyo Narita will offer limited connections for Mexico City – originating passengers
The scheduled arrival time into Narita airport at 0635 AM will not be ideally timed for connections beyond Tokyo. Data from OAG Schedules show that the only opportunities for Mexico City passengers within a 5-hour connect window include Shanghai, Hangzhou, Sapporo, Dalian and Phnom Penh.
However, inbound connections will be much more robust with a departure time from Narita at 16:40. Data shows connect opportunities from Delhi, Wuhan, Singapore, Guangzhou, Shenyang, Okinawa, Shanghai, Bangkok, Kuala Lumpur, Jakarta, Manila, Beijing, Osaka and Sendai.
ANA can outmaneuver SkyTeam to Asia, as well as oneworld. Star Alliance partners can connect to Central America
Currently, aside from Aeromexico’s 5-weekly flights between Mexico City and Tokyo Narita, SkyTeam offers few relevant routings over U.S. hubs. Atlanta and Detroit, both connected to Mexico City and Tokyo Narita via Delta, are too circuitous. The fastest one-stop routings between Mexico City and Tokyo currently exist via Houston (United and ANA), San Francisco (United and ANA), Dallas/Ft. Worth (American and JAL), Los Angeles (American and JAL) and Vancouver (Air Canada and ANA).
It is unclear whether ANA’s Mexico City route will be included in the Transpacific Joint Venture agreement between ANA and United on North American routes.
From Mexico City, ANA will be able to leverage a limited number of Star Alliance partnership flights on Copa and Avianca to Central America. Data from OAG shows that currently Avianca offers 21 weekly flights to Bogota, 14 weekly flights to San Salvador and daily flights to Lima from Mexico City. Avianca and ANA currently codeshare on a limited basis, with Avianca carrying All Nippon’s code on flights from the U.S. to Central America (Guatemala, Honduras, Colombia and El Salvador) as well as from London Heathrow to Bogota.
It is likely that Avianca will pursue a 2-way codeshare with ANA on the new Mexico City – Tokyo route as Avianca currently does not serve Asia on its own metal. Furthermore, Avianca currently places its code on only 3 transpacific services via Star Alliance (EVA Air from New York, Los Angeles and San Francisco to Taipei). Avianca Brazil may also consider re-entering into the Mexico City market upon receiving its Airbus A350 deliveries in 2018, competing with the 1-stop market between Brazil and Japan.
Copa, although currently not a codeshare partner with ANA, offers 35 weekly flights from Mexico City to Panama City. Similar to Avianca, Copa has limited codeshare partnership agreements on transpacific services, placing its code only on 2 routes (Asiana from New York and Los Angeles to Seoul Incheon).
It may also be worthwhile for ANA to pursue a codeshare agreement with Mexican carrier Interjet, which currently codeshares with American, Iberia and LATAM on intra-Mexico routes.