It seems strange to be talking about any kind of thawing of relations in Korea considering what North Korea has been up to lately, but of course, this is a different kind of thawing. After years of strained relations, it sounds like Delta and Korean Air are on a path to reconciliation. And the first big public step was taken last week when the airlines jointly announced increased codesharing and new service.
The basics of the announcement are as follows:
- Delta will begin flying nonstop from Atlanta to Seoul/Incheon daily next June 3. This will be in addition to the flight Korean already operates in the market.
- Korean will begin codesharing on the new Delta flight as well as on flights beyond Atlanta, Los Angeles, and New York to 115 places in the US and Canada.
- Korean will put its code on the Delta flights from Atlanta and New York to Sao Paulo. This is useful since Korean is ending its own flight to Sao Paulo (via LA).
- Delta will put its code on more destinations beyond Seoul, now 32 different places with new destinations including Taipei, Osaka, Singapore, Nagoya and Okinawa.
- Delta will put its code on Korean’s flights from San Francisco and Houston to Incheon
As you can see, there’s a lot here. But what isn’t here is any kind of joint venture operation or restoration of elite and bonus SkyMiles benefits for people flying on Korean-marketed flights. I would imagine those would be the next steps if this truly a reconciliation. But for now, all we can do is read the tea leaves.
At first I assumed this was transactional, more about solving specific need as opposed to repairing a broader relationship. After all, Delta is pulling down its Tokyo hub and is finding it harder to serve certain places in Asia. At the same time, it wanted to beef up its Atlanta operation to Asia, but it couldn’t do it without more feed. Korean, meanwhile, wanted more feed for its flights in the US.
Upon further review, however, it seems like there could be something deeper here. Most notably, look at Atlanta. This past summer, Korean started by flying a mix of 777s and 747-8s on the route and then went to a mix of 777s and A380s. At the beginning of September, that went down to all 777s, but next year, there is no upgauge back to the A380. Korean is keeping a lid of capacity next summer, just in time for Delta to enter, and this didn’t just happen. That sounds like there were some real, meaningful discussions over time.
You might think this sounds like illegal capacity coordination, but it’s not. Remember, even without a joint venture, Delta and Korean have had anti-trust immunity since 2002. They can talk to each other about anything if they want. They just haven’t wanted to for some time.
Maybe Delta under new CEO Ed Bastian is kinder and gentler? If so, that’s the best news of all. If they’re talking and coming to terms on agreements like this, then that could lead to something greater down the road. Undoubtedly there are most obstacles to be overcome, but you have to at least start talking to get there.
And as a starting point, this is great since there is real benefit for both.
Korean has long made hay flying travelers between the US and China. But the avalanche of new service by Chinese carriers in secondary Chinese markets to the US has to be causing concern. This codeshare is going to help Korean fill more seats (if necessary) by taking people deeper into secondary US cities, or even primary ones. It’s crazy that today, Korean has no codeshare into cities as large as Miami.
And of course, Delta has struggled with finding a way to replace its fading Tokyo hub. Remember, Delta just announced it was canceling service from Tokyo to Osaka and Bangkok. That meant that there would be no way to get to Osaka on a Delta code. (Delta already codeshares to Bangkok with both Korean and China Eastern.)
Now, however, Delta can do it via this Korean codeshare through Incheon. Keep in mind, the only cities that Delta continues to serve from its Tokyo hub in Asia are Manila, Shanghai, Singapore, and Taipei. Those latter two will now be reachable via Incheon on Korean metal as well, just like Osaka. Could this be foreshadowing more Tokyo cuts? Possibly, the relationship really is on the mend.
It would seem to me that the startling inability to earn elite and bonus SkyMiles on Korean flights would be the next hurdle to overcome. If that happens, then the really hard work starts: working on a joint venture. It’s not clear to me that they can get to that point, but chances appear better now than they have been in years.
