MIAMI — Delta Air Lines (DL) is once again removing transit links between the U.S. and Asia at its Tokyo-Narita (NRT) hub, which it inherited after merging with Northwest Airlines in 2008, by removing nonstop service from New York (JFK), Los Angeles (LAX) and Minneapolis/St. Paul (MSP) (conditionally) in the U.S. and Bangkok (BKK) and Osaka (ITM) in Asia.
Though technically Delta’s LAX and MSP links will be shifted to Tokyo-Haneda (HND) airport, which the carrier won in the latest round of slot distribution awards from the U.S. Department of Transportation (DOT), this will effectively remove connection opportunities from either city to the remaining Asia-Pacific markets that Delta offers out of NRT: Shanghai, Manila, Taipei, Singapore, Koror, Guam and Saipan.
Delta has stated that the future of its MSP–NRT link is uncertain and being “evaluated” in the context of the slot it received to offer nonstop service to HND, but the likelihood of Delta offering two daily flights from MSP to Tokyo serving both airports is slim.
The Atlanta-based carrier has previously tried operating side-by-side service from its west coast hubs—Seattle (SEA) and Los Angeles—to both Tokyo HND and NRT, with little success.
This does not bode well for Minneapolis given that both LAX–Tokyo and SEA–Tokyo are much larger local markets than Minneapolis–Tokyo, even though Delta is uncontested in the MSP–Tokyo market, while LAX – Tokyo and SEA–Tokyo are much more saturated among competing carriers.
In its application to the DOT advocating for service from Los Angeles, Minneapolis/St. Paul and Atlanta to HND (it only received two out of the three), Delta stressed that the lack of a Japanese joint venture partner at either NRT or HND airports place the carrier at a disadvantage relative to American Airlines (AA) and United Airlines (UA), who were competing for the same share of limited landing slots at HND.
It was implied, if not overtly, that receiving the slot pairs for LAX–HND and MSP–HND would come at the expense of the NRT flights from each airport.
Delta defended that, in its application, both LAX and MSP were poised to capture U.S. point of sale from the West Coast and Desert Mountain (LAX) and from the Midwest, Central Plains and Northeast (from MSP)
Minneapolis/St. Paul, Los Angeles, New York JFK and Bangkok are all long-standing routes that Delta inherited from Northwest
Delta’s ending of New York JFK–Tokyo and Bangkok–Tokyo service dates back to the 1950s, when Northwest received permission to fly to the Japanese Capital (along with Pan Am) as part of the bilateral aviation treaty ratified by the U.S. and Japan.
Delta had previously announced that it was cutting its LAX–NRT route earlier this year when it received approval to begin operating daytime slots into HND, beginning October 30, and therefore concluding its LAX–NRT flight on October 29. New York JFK–NRT will end on October 3, 2016 while Bangkok will end on October 30 as well.
Delta was the only remaining U.S. carrier serving Bangkok after United cancelled its NRT–BKK service in 2014. The commercial aviation market in Thailand has been crippled by economic unrest as well as the rise of Gulf carriers offering deeply-discounted fares between Europe, North America and Africa and Southeast Asia.
Osaka is also an interesting route that Delta has served off-and-on from the U.S. mainland and Japan since the merger with Northwest. It was formerly linked to Seattle, but dropped in 2013 as Delta wanted to focus on alpha-tier Asian markets in its transpacific push from Seattle, which included an expansion to Seoul and Hong Kong the following year.
Delta resumed service to Osaka in March 2016 utilizing a 757 from Narita, which served as a continuation of its JFK–NRT route. Osaka is a notoriously expensive airport to operate into with steep landing fees, which likely rendered the route as an unworthy expenditure. However, Delta will remain.
Finally, Delta’s withdrawal from New York–Tokyo will leave the market entirely to Star Alliance and oneworld. Presently, four carriers (Delta, Japan Airlines, ANA and United) offer 42 weekly services from New York area airports (JFK and Newark) to Tokyo Narita.
Beginning October 30, ANA will move one of its two daily services from JFK to HND from NRT, thereby maintaining the same number of seats and frequencies, but simply changing operations. That same day, Delta will effectively leave the market.
This will reduce ASMs in the New York–Tokyo market by approximately 21%, represented by the market share that Delta presently has in the New York–Tokyo corridor. Effectively, Star Alliance’s market share will grow from roughly 50% to 63% during that period.
At Haneda, Delta will face extremely limited codeshare and connecting opportunities, particularly for its MSP route
Delta does not have an expansive list of codeshare partnerships between it and its fellow SkytTeam carriers on any of its nonstop routes from the U.S. to Asia, let alone between the U.S. and Tokyo. Among its Asian SkyTeam partners, it carries codes for the following carriers on the routes below:
The codeshare partnerships that Delta offers on routes out of Tokyo airports are even more limited. Currently, Delta only places its code on three routes from Narita to onward Asian markets (China Airlines to Kaohsiung, and Korean Air to Seoul and to Busan), and does not offer any codeshare services on Skyteam partners operating out of Haneda airport.
There are going to be significant limitations for Delta’s LAX and MSP services given that there are only eight flights on SkyTeam carriers from Haneda airport each day, offered on China Eastern (Shanghai Pudong and Hongqiao), China Airlines to Taipei–Songshan, China Southern to Guangzhou, Korean Air to Seoul Incheon and Gimpo and Garuda to Jakarta).
Of these, only two out of the eight can realistically connect to the arrival and departure times of Delta’s services to LAX and MSP (China Eastern to Shanghai and Korean Air to Seoul – Gimpo).
Los Angeles – Tokyo Haneda
DL007 LAX1050 – 1545+1HND 777 D
DL006 HND1725 – 1020LAX 777 D
Minneapolis – Tokyo Haneda
DL017 MSP1145 – 1405+1HND 777 D
DL016 HND1635 – 1335 MSP 777 D
From LAX, this will not be as much of a problem given the abundant SkyTeam presence from Asian carriers. Excluding Delta’s daily flights to Shanghai and Tokyo, SkyTeam carriers together offer 91 weekly flights from LAX to Taipei (China Airlines), Guangzhou (China Southern), Seoul (Korean Air) and China Eastern (Nanjing and Shanghai).
Similarly, the void left by Delta between New York and Tokyo will be backfilled somewhat by the presence of SkyTeam carriers that fly nonstop between JFK and Asia, including China Airlines (five weekly to Taipei), China Southern (14 weekly to Guangzhou), Korean Air (14 weekly to Seoul) and China Eastern (14 weekly to Shanghai).
For Minneapolis, however, the situation will be far more challenging.
Delta’s Asia-Pacific operations are stagnating relative to United and American
Delta has not seen any organic growth in its transpacific network other than the proposed service from Los Angeles to Beijing, which is going to be partially offset by a competing bid from American to serve the same route. It has not added any additional service from Seattle since 2014, and its Narita operations continue to wind down.
United, on the other hand, has expanded aggressively out of San Francisco, and to a lesser extent, Los Angeles, while American has added links from Dallas/Ft. Worth and Los Angeles to Asia in recent years.
Delta’s challenge will be to balance its middle-ground position between two competitors who are playing catch-up in the Asian markets (American) or who are augmenting an already entrenched position (United) while both arguably have far better-standing relationships with their alliance partners.
For Delta, the opportunity costs of abstaining from a more traditional alliance-partnership structure with some of its SkyTeam peers may no longer be worth the effort for the sake of being number three in Asia.