It’s no secret that Delta isn’t happy with its situation in Japan. It wants a close partner over there, and it’s the only one of the big 3 US carriers that doesn’t have one. Now it thinks it’s found its opening with an unlikely airline… the bankrupt and directionless Skymark.
If you were to look up the word Icarus in the airline dictionary, it would have a picture of a Skymark A380 next to it. Skymark started in the late 1990s as the scrappy upstart to challenge the dominance of Japan Airlines and ANA. It wiggled its way into the coveted Haneda Airport in Tokyo, but that didn’t prevent the airline from losing money. By the mid-2000s, however, it had found its stride and started making money flying passengers around Japan with low fares.
That success was short-lived as Skymark got cocky. Really cocky. In 2010, it decided to order A380s. Why? Because… crazy. That’s why. Skymark was going to go upmarket and fly these to Europe. The airline also ordered A330s to fly in a premium configuration around Japan. These were bad ideas in their own right, but once the Japanese Yen weakened, it made things even worse. The A330s showed up but were a failure. The A380s never made it on the property, but Skymark had millions of dollars in penalties to show for it. Earlier this year, Skymark went bankrupt.
Skymark now has a couple dozen 737-800s flying around Japan and that’s it. In bankruptcy, the original plan crafted by Skymark was to partner with ANA. The two big creditors, Airbus and Intrepid Aviation (aircraft lessor), hated that idea so it was dead on arrival. On July 15, Intrepid announced that it was partnering with Delta to bring this airline out of bankruptcy.
So why the heck would Delta want to bother with this? Of course, for Delta, this is about the long game. And Skymark has 36 things that Delta really wants. That’s 36 takeoff and landing slot pairs per day at Haneda, the largest number of slots behind Japan Airlines and ANA.
You might be wondering why Delta would care about having 36 slot pairs at Haneda. After all, it just gave up a slot pair on the Seattle-Haneda route because that was performing so terribly. But again, this is about the long game.
Delta has repeatedly said that it understands Haneda is the most preferred airport in Tokyo, and it wants to move its entire hub there. There are all kinds of problems with that. First, Haneda doesn’t have the capacity for that. Second, there just doesn’t seem to be an appetite in Japan for this to be allowed. From what I can tell, unless Delta can get its whole operation in Haneda, it doesn’t think that Haneda should be opened up further at all for travel to the US.
With little capacity available, Delta’s best option to get its foot in the door is to partner. If this sounds like what Delta did with Virgin Atlantic to get beyond its paltry presence at Heathrow, that’s because it’s a similar idea. The problem is there aren’t any big dance partners left in Tokyo. American has Japan Airlines locked up. United has ANA. But Delta has nothing but its own legacy hub at Narita. You can see where this goes. Delta takes a stake in Skymark as it has in many before. Then it can guide Skymark to do its bidding.
With further liberalization, presumably Delta would be able to get Skymark to fly beyond Haneda to places Delta has to fly its own metal today. Then Delta could focus on flying its aircraft between the US and Haneda. This is all a ways off, but Delta wants to lay the groundwork.
Certainly Delta is no stranger to airline investments. There’s Gol, Aeromexico, and Virgin Atlantic. So for a little bit of cash, Delta can pick up its only real chance at finding a partner in Japan. All the Skymark insanity is gone. The A380s are forgotten, and any outstanding dispute will be resolved before the airline comes out of bankruptcy. And those A330s? You think Intrepid might find Delta interested in picking those up as part of this? Wouldn’t surprise me. After all, Intrepid picked Delta in this process.
This would certainly be the weakest airline Delta has invested in, but I just assume Delta isn’t investing in the airline. It would be investing in a platform to roll out is plans for Japanese domination. It wants a better footing in the country, and this is a way to take a step toward that goal.
[Original stable photo via Shutterstock]
