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What the Korean Air-American Air DFW Codeshare Means for the SkyTeam Alliance

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What the Korean Air-American Air DFW Codeshare Means for the SkyTeam Alliance

What the Korean Air-American Air DFW Codeshare Means for the SkyTeam Alliance
February 09
15:54 2015

MIAMI — Korean Air last week announced plans to codeshare with American Airlines on its flight between Dallas/Fort Worth International Airport and Incheon International Airport in Seoul, which has raised eyebrows. But analysts interviewed by Airways feel that Korean’s move with American are more the result of a spat with SkyTeam partner Delta Air Lines rather than a true threat to the alliance.

In a statement to Airways, John Jackson, Korean Air’s vice president of sales and marketing for the Americas, said his carrier was codesharing with American Airlines to strengthen its position in the South Central and Southwest U.S. “SkyTeam has approved inter-alliance codesharing in certain cases. We are a founding member of the SkyTeam alliance and have no plans to move,” he said.

The Korean flag carrier and Delta Air Lines were among the founding members of the SkyTeam alliance, founded in 2000. The alliance currently has 20 members from around the globe, including KLM, China Airlines, Aerolineas Argentina and formed Airways.

Ernest Arvai is one of the founders of AirInsight, a boutique aviation consultancy. He noted that it is unusual for airlines of one alliance to develop codeshares with a major rival alliance partner, particularly those in Star Alliance, which restricts that activity. “Oneworld, to which American belongs, is the most liberal of all alliances in terms of non-member relationships, and SkyTeam is in between, having recently relaxed its prohibition on cooperation with those of other alliances,” he said. “KAL took advantage of that liberalization with its single route operation to DFW.”

A Korean Air Boeing 747-8I. (Credits: Boeing)

A Korean Air Boeing 747-8I. (Credits: Boeing)

Although the cooperation between American and Korean is only on DFW-ICN, there have been public disagreements and trouble in the Delta-Korean relationship, said Arvai. “Apparently in 2013, Delta wanted KAL to enter into a joint venture agreement, which KAL balked at. Subsequently, Delta announced that travel on KAL would no longer earn elite qualifying miles or bonus miles,” he said.

Then KAL reacted, reducing codesharing on 96 Delta flights within the U.S., mostly out of Atlanta, said Arvai. “Delta later announced that it would introduce Seattle-Inchon daily flights as it expands its Seattle hub. It subsequently dropped the codesharing from West coast cities on KAL `prematurely,’” he said.

And apparently, the latest shot over the bow is KAL’s cooperation with America in DFW, said Arvai. “As I understand the situation from several well-placed sources, Delta wanted a joint venture, similar to the Air France-Korean joint venture on the Atlantic, in which profits on both carriers flights are shared, with Korean for the Pacific, but Korean balked,” he explained. “This caused a rethinking of the relationship on both sides, although KAL remains a SkyTeam player, and both carriers could benefit, particularly with KAL flying an A380 into Atlanta. With this recent history, it is clear that the relationship is not as smooth as the players would like, and some feathers have been ruffled. The latest [KAL] move should only further exacerbate the situation.”

Arvai doesn’t think this is a signal that KAL will move from SkyTeam. “It is a signal that KAL wants to remain independent from Delta in its trans-Pacific operations and not create a joint venture operation, and operate a traditional capacity purchase codesharing setup. Whether Delta will be satisfied with this, or want more, is the question,” he said. “Delta needs a partner in North Asia to augment its China Southern partnership in South Asia. With Japan Airlines in oneworld and ANA in Star, there are no options in Japan. Asiana in Korea is a Star Alliance member, so KAL is Delta’s only option.”

Korean Air is a different kind of company, said Brett Snyder, editor of the Cranky Flier blog, who has also followed the Korean-Delta spat. “They’re actually not really concerned about Delta. They are looking for new business,” he said. “Samsung has a major operation in the Dallas region. The Korean flight only runs four days a week, so that’s not great for a business traveler’s schedule. This codeshare with American gives them the chance to fill in those gaps. If you need to go to Dallas, the codeshare is a tiny thing, but it helps them with DFW.”

Korean has no problem going off the reservation with SkyTeam, said Snyder. The carrier has codeshare agreements with non-SkyTeam carriers including Japan Airlines, TAM and Malaysia Airlines. “I don’t see why Korean would leave SkyTeam, but I’m not sure how much benefit they get from [the alliance] because it’s good at creating bilateral deals on its own,” he said.

KAL has indicated that oneworld is an option for it, and has gained leverage, said Arvai. “We would expect DL-KAL to continue as alliance partners, but not necessarily as joint venture business partners as Delta would like,” he said. “At the senior level, we believe KAL may have been offended by Delta insisting that a joint venture should be created, and some egos have been bruised. Where this ends up depends on those interpersonal relationships being repaired, and someone has to `give’ first.”

 

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Benét J. Wilson

Benét J. Wilson

Mother, Aviation Queen, Veteran Aviation Journalist, AVgeek since age six, number one fan of the Boeing 747 and Student pilot (can't stick my landings). I would actually pay rent to live in an airport. bwilson@airwaysmag.com @AVQueenBenet

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