MIAMI — DFW Airport, which has been in steady, “growth mode” for the past five years on the international air service front, welcomed the return of Japan Airlines on November 30, 2015 after over 14 years since the carrier cancelled its previous service in October 2001. Though the service initially commenced with 4 weekly flights, JAL announced during the inaugural flight ceremony that service will increase to daily frequencies on 27 March 2016 due to strong forward bookings.
Oneworld carrier airberlin also announced in November that it will commence four weekly services to Dusseldorf from Dallas/Ft. Worth effective May 6, 2016, which will be operated year-round. airberlin will be the fourth European carrier to fly to DFW and be the first non-U.S. carrier to launch service from DFW to Europe since 2008.
The Tsurumaru returns to DFW, but in a completely different era
JAL had previously operated a daily service to Tokyo Narita from March 1999, alternating between a Boeing 747-400 and MD-11 “J-Bird” before canning the service shortly after the terrorist attacks of September 11, 2001.
When JAL announced it would commence service to DFW in the late 1990’s, the news was extremely high-profile. Back then, DFW did not have a consolidated terminal used to house international flights, and had to construct a new 35,000 square foot Federal Inspection Service facility at Terminal B and a common use VIP lounge. Additionally, the airport had to reconfigure four bridge-served gates to accommodate widebody aircraft. That same year, DFW had launched a Carrier Support Program, which provided marketing funds to attract new airline entrants.
The JAL service to DFW previously operated side-by-side with American Airlines in the late 1990’s and early 2000’s, with American providing a single daily flight to Tokyo Narita from its DFW hub, also on an MD-11 (and later on a 777-200ER). During that era, JAL was not a member of the OneWorld alliance, but the carrier did enjoy an extensive bilateral agreement with American on transpacific services. Each offered a reciprocal codeshare on transoceanic flights between the U.S. and Japan, and when JAL eventually became part of OneWorld in 2007, it was the largest carrier in the Asia-Pacific region in terms of both revenue and passengers carried.
In many respects, the return of the “Tsurumaru” to North Texas is symbolic: the Japanese carrier scrapped its iconic crane circle logo in 2002 shortly after pulling the plug on its DFW service, adopting its “arc of the sun” livery for nearly a decade before reverting back to the crane in 2011.
But the years of the Arc livery were turbulent for Japan Airlines: the carrier filed for bankruptcy in January 2010 following a painful 2009 USD $1.7 billion loss that required a government-led turnaround. One of the most sensitive issues in the earlier part of the bankruptcy exercises was the future of JAL’s partnerships as the government entertained the possibility of JAL ditching American and OneWorld in favor of Delta and SkyTeam. JAL cut 40% of international capacity in 2010, and shrank to a shell of what it once was as it entered into one of the largest corporate restructuring programs in Japanese history. Though JAL ultimately opted to remain in OneWorld, the carrier was on the brink of insolvency.
However, in 2011, JAL achieved a major milestone the following year once it gained anti-trust immunity with American Airlines that eventually paved way to a transpacific joint venture agreement that exists today. The following year, JAL achieved an industry-leading profit margin of 17% in 2012, leapfrogging global carriers and stunning the global aviation community. The Tsurumaru livery was reinstated and the “Arc” was placed in sunset mode following a cadre mentality that abandoning the crane had been of bad omen for the company in the 2000’s.
But now the tides have cleared, and JAL is a much leaner, albeit smaller, competitor, and the landscape has changed completely. JAL will soon celebrate its 5th year of its revenue-sharing Joint Business agreement with American come April 1, 2016, which covers trans-pacific service operated on both carriers between North America and Japan, China, South Korea and Hong Kong, as well as on JAL’s intra-Asia and domestic Japanese network and American’s North American network between the domestic U.S., Canada, Mexico, Puerto Rico and U.S. Virgin Islands.
Secondly, JAL may be smaller, but it is nevertheless strategic. Compared to rival All Nippon Airways, which has chased after market share rather than yield in its global network, JAL has stuck to a conservative approach of opening a mere 6 new long-haul routes since its bankruptcy, according to CAPA, including Narita to Boston, San Diego, Helsinki and Dallas, as well as Osaka to Los Angeles and Nagoya to Bangkok. Purportedly, JAL must undergo an approval process in order to launch new routes, as its restructuring was state-sponsored (per CAPA).
It has also helped that JAL has been able to add several transpacific services from Haneda airport, which now offers nonstop connections to San Francisco and Honolulu, and new service to Los Angeles will commence in spring 2016 via JV partner American.
Finally, DFW itself has emerged as a much more attractive transit point, as well as end-of-line market, than it was before in 2001. For starters, JAL will be operating into DFW’s International Terminal D, already a decade old but a far cry from its former real-estate at the now regional gate-oriented Terminal B. DFW has invested in or is in the process of up-grading its other terminal facilities, airline VIP lounges and now has a state-of-the-art Automated People Mover System to ferry connecting traffic between terminals.
Japanese automaker Toyota announced in May 2014 that it would move its U.S. Headquarters from Southern California to Plano, a suburb of Dallas, and will continue to ramp-up its production facilities in Mexico. One of the biggest selling points is the connectivity options available from DFW to Latin America. DFW has added service to Bogota, Buenos Aires, Chihuahua, Cozumel, Guatemala City, Ixtapa, Liberia, Managua, Mazatlan, Morelia, Puebla, Queretaro, Quito, Panama City, Roatan, San Luis Potosi, San Salvador and Torreon since JAL’s earlier DFW days. American has also reinstated a nonstop service to Lima, Peru from DFW. The sole Latin American market that has been dropped from DFW’s roster of nonstop markets is Caracas due to political and financial turmoil in Venezuela.
JAL opts for an early morning arival and departure from DFW
Japan Airlines’ DFW services will depart Tokyo mid-morning and arrive into DFW early morning the same day. Outbound return services will leave DFW around noon and arrive into Narita the following afternoon.
JL012 NRT1120 – 0905DFW 788 D
JL011 DFW1245 – 1615+1NRT 788 D
JAL operated similar schedules into DFW back in the late 1990’s and early 2000’s with slightly later departure and arrival times into DFW. American’s daily service into Tokyo also adheres to similar times as it did back when it competed alongside JAL during that same era. Although technically both forces were competitors at that juncture, the limited-agreement partnership between the two carriers was viewed more from a cooperation, rather than purely competitive, standpoint.
July 2001 Timetable for Dallas/Ft. Worth – Tokyo on American Airlines and JAL (shown in AA codeshare numbers):
Japan Airlines (utilizing AA flight numbers per codeshare agreement):
AA7205 DFW1300 – 1620NRT+1 M11 126
AA7205 DFW1430 – 1750NRT+1 M11 3457
AA7204 NRT1455 – 1235DFW M11 3457
AA7204 NRT1315 – 1055DFW M11 126
AA061 DFW1110 – 1420NRT+1 777 D
AA060 NRT1745 – 1535DFW 777D
*Source: American Airlines July 2001 Worldwide Flights Timetable, available on DepartedFlights.com
JAL withdrew from DFW in late-2001 following the September 11 tragedies, but American backfilled capacity to Tokyo and added a second daily flight between DFW and Narita. AA flights 060/061 were pushed to depart at the same times voided by JAL with an early evening departure from Narita and mid-afternoon arrival into DFW, and an early afternoon departure from DFW and mid-afternoon arrival into Narita the following day. Subsequently, AA 175 was added as a morning departure from DFW with an early afternoon arrival into Narita the following day, and an early morning departure from Narita which returned back into DFW that same day via AA 176.
Although it was rumored initially that JAL would return to DFW and replace one of American’s two daily flights to Narita, it appears that American intends to keep its two daily flights from DFW to Tokyo, as shown below.
July 2016 Timetable for Dallas/Ft. Worth – Tokyo on American Airlines and JAL:
Japan Airlines (AA code 8481/8478):
JL011 DFW1245 – 1615+1NRT 788 D
JL012 NRT1120 – 0905DFW 788 D
AA175 DFW1055 – 1400+1NRT 777 D
AA176 NRT1040 – 0825DFW 777D
AA061 DFW1330 – 1630NRT+1 777 D
AA060 NRT1830 – 1630DFW 777D
The logic behind JAL’s schedule plan to DFW, which overlaps AA 061 and AA 176, may seem redundant, but the justification is that the 16:00 arrival into Narita on AA 175 and JL 11 connects to JAL’s largest departure bank from Narita, which occurs between 18:00 and 19:59. Schedules from CAPA’s scheduling database shows that JAL offers outbound services to Singapore, Bangkok, Beijing, Nagoya, Jakarta, Kaohsiung, Fukuoka, Seoul, Taipei, Hanoi, Busan, Osaka, Hong Kong, Manila, Sapporo, Shanghai and Sydney during that block. It makes sense, then, that both AA and JAL would offer two flights arriving at similar intervals to cater to such demand.
On the return journey from Narita, JAL 12 and AA 176 both depart Narita within 40 minutes of each other, although the connections bank is much smaller. CAPA scheduling database shows inbound arrivals from Kuala Lumpur, Jakarta, Hanoi, Delhi, Nagoya, Fukuoka, Osaka, Busan and Sapporo. However, the early morning arrival into DFW permits a full work day upon deplaning, as well as supports a full day of connections from the DFW end. However, the connections afforded by AA 60, with an evening departure from Narita, supports a far larger plethora of connections given that JAL’s largest arrival bank into Narita occurs between 15:00 and 17:59. Similarly, the flight is well-timed to connect to an evening bank of departures from DFW, especially its peak Latin American flow flights.
The 10 AM earlier departure from DFW to Narita on AA 175 is also timed ideally to connect with American’s inbound bank of arrivals from Latin America, including Santiago, Sao Paulo, Buenos Aires, Lima, Bogota, Mexico City, Monterrey and Quito.
DFW’s Asian network has more than doubled in the past four years
When JAL increases its DFW services to daily, the DFW-Asia market will be nearly three times as large in April 2016 as it was in April 2012. This attributed to new services on American Airlines to Seoul, Hong Kong, Beijing and Shanghai as well as JAL’s new Tokyo service. Prior to April 2013, DFW only offered service to Tokyo on American Airlines (2 daily flights) and a 5 weekly service to Seoul on Korean Air.
Though a relatively large number of new Asian frequencies have been added to DFW in a short period of time, the overall seat capacity has varied as both American and Korean have adjusted gauge on their DFW routes and/or cabin configuration. American is in the process of re-configuring its 777-200ERs, used to Tokyo and Seoul from DFW, from 3 cabins to 2 cabins, eliminating First Class while increasing seat density in Business Class by converting them to true lie-flat seats. American also placed its 787-800s on its DFW – Beijing and DFW – Shanghai routes within a fairly short window after commencing both of these routes. Korean has alternated between serving Dallas with a larger gauge 777-300ER and a 777-200ER on certain days of the week which seats an 40 additional passengers per trip.
Surprisingly, though, Tokyo is not the largest Asian O&D market from DFW, despite boasting the highest number of weekly frequencies to and from North Texas. While the local per-day, each-way (PDEW) market is roughly 60 passengers traveling between Dallas/Ft. Worth and Tokyo, nearly twice as many passengers travel between DFW and Seoul at 110 PDEW. The local market draws between DFW and Beijing and Hong Kong are not too far behind Tokyo at 45 PDEW each, and Shanghai currently stands at 35 PDEW, according to US DOT O&D data.
Based on flow traffic, however, the largest flow markets from Dallas over Narita airport are to Ho Chi Minh City, Taipei, Manila, Bangkok, Seoul and Singapore. In the reverse direction, the largest Tokyo-originating flow markets over DFW travel to Cancun, Orlando, Miami, Austin, Lima, Sao Paulo and Mexico City.
Including double connects, or passengers who originate their journeys in cities other than DFW or Tokyo, but fly between DFW and Tokyo as part of their itineraries, the largest markets are from Pusan, South Korea and Cancun, Seoul and Cancun, Ho Chi Minh City and Oklahoma City, Osaka and Orlando, Osaka and Cancun, Ho Chi Minh City and New Orleans, Ho Chi Minh and Atlanta, and Nagoya to Cancun.
Furthermore, additional alignment with Japan Airlines is expected when American rolls out its International Premium Economy class product, which will be priced as its own cabin offering positioned between the Main Cabin and Business Class. The product will feature similar amenities offered by JAL in that it will feature larger seats with more legroom, width and recline, as well as enhanced catering, premium in-flight entertainment, amenity kits and dedicated check-in and boarding processes. Cathay Pacific also offers a Premium Economy product on its long-haul flights, and American intends to deploy its new class of service on all of its long-haul fleet within the next three years, thereby hoping to bridge the gap between it and its Asian partners.
International connections continue to be American’s bread-and-butter, but the future of Visa Waiver Program will be impactful
American has built up its Dallas/Ft. Worth, and to a lesser extent, Los Angeles, hubs to efficiently connect Asia to Latin America, where the market demand is strong and does not show signs of slowing in the near future, despite weaknesses in some foreign currencies such as Japan, Australia and Brazil. The difficulty in attracting passengers that fall into this category is the restrictions imposed by the U.S. Visa Waiver program, which permits travelers of specific countries to transit between international flights over U.S. hubs without having to obtain a Visa. To date, the only Latin American countries where Visas are not necessary to transit in the U.S. are Chile and French Guiana, and Australia, New Zealand, Japan, Taiwan and South Korea in Asia – Pacific. Brazil, Argentina and China are particularly large markets that warrant exemption from the policy, and U.S. carriers have kept close watch on foreign carriers in the Gulf, European Union, Canada and Mexico which have been successful at luring this type of transit traffic.
However, JAL’s decision to extend the schedule for its DFW operations is a strong early indication that the route is performing at or above expectations. Furthermore, as American continues to re-configure its fleet by removing First on its 777-200ERs and simultaneously adding Premium Economy Class, and its new Business Class cabins, JAL will be able to offer a more consistent product with its JV partner while also sharing the benefits and costs with American in the interim.
Longer-term, however, both carriers will need to keep an eye out for the movements at Tokyo Haneda airport and balance the contributions that each airport (Narita and Haneda) as a whole provide to the Joint Venture network between Japan Airlines and American across the Pacific and within Asia and North America. That endeavor is a bit more nebulous and may require further tweaking to discover a more optimal model, but suffice to say that both carriers have solid track records in their respective home countries and are coordinating in ways that are mutually very beneficial towards one another.
Finally, the bleak memories of financial turmoil which plagued both American and JAL between 2010 and 2013 are in the past. Though commercial, political and economic challenges will always be part of the picture, nimble behavior and strategic cooperation will help both airlines stay in predator mode with decent return on investment.