Delta and Korean Get Ready to Flex Their Joint Venture Muscles

It seems like we’ve been waiting for this for a long time. First we heard the news that the long-frosty relationship between Delta and Korean had begun to thaw. Then we heard that the airlines planned to create a joint venture. Now, regulatory approval has been received on both sides of the Pacific, so it’s time to hit the accelerator.

Both United/ANA and American/JAL have had years to refine their partnerships over the Pacific, but they haven’t gotten nearly as far as you might expect. Delta and Korean should have also shacked up years ago, but a disagreement between the two led to some frosty years. Not only did they fail to form a joint venture, but they also cut back their frequent flier partnership and scaled down codesharing.

I’ve written here about Delta’s Pacific perils at the ever-shrinking Narita hub. But now it’s time to stop talking about shrinking and start focusing on what this partnership can mean.

To start, Delta says there are four things coming soon.

1) Implement full reciprocal codesharing on each other’s networks and work together to provide the best travel experience for customers between U.S. and Asia
The two airlines have already started to ramp up codesharing significantly since the relationship began to thaw, but I imagine they’ll now expand it even further into smaller markets that may not have the code today.

2) Offer improved reciprocal loyalty program benefits, including providing customers of both airlines the ability to earn more miles on Korean Air’s SKYPASS program and Delta’s SkyMiles program
SkyMiles members, rejoice. Despite the warming relationship, the frequent flier partnership has remained frigid. Delta SkyMiles members, for example, earn 100 percent of miles for premium cabin and full fare coach on Korean-marketed flights. Mid-level coach fare classes earn 50 to 75 percent, and lower fares earn nothing. But most importantly, Delta frequent fliers can earn NO medallion qualifying miles at all when they fly Korean-marketed flights. That has been a huge reason for the most important Delta fliers to avoid Korean. This ridiculousness can’t end soon enough.

3) Begin implementing joint sales and marketing initiatives
This may not sound like much, but it’s incredibly important. Don’t forget that Korean is a beast when it comes to Transpacific flying with a ton of flights to more than 10 cities in the US and Canada. It has a sales organization in the US, but it’s still limited in its ability to push sales and marketing efforts beyond big cities. Likewise for Delta, it has a presence in Japan and in a couple other cities, but Korean is much stronger in Asia.

This isn’t just about knocking on doors. This means Delta and Korean can offer joint commission incentive agreements to travel agencies. With joint pricing they can really flex their muscles. American and United have done this with their partners over the Pacific for years, and now Delta can do the same.

4) Increase belly cargo cooperation across the trans-Pacific
It’s easy to underestimate cargo, but cargo is important. Working together on the cargo side should work the same as it does on the passenger side, possibly having an even bigger impact.

Now the question is… how close do Delta and Korean get, and how quickly can they get there? Unlike over the Atlantic, the Transpacific joint ventures haven’t grown as tight so far. Think about American and British Airways or United and Lufthansa. They’re thick as thieves. But over the Pacific, the relationships have remained more distant. Why? There could be a lot of reasons. It could be cultural differences, or it could be that some airlines are more focused on their home markets instead of thinking globally. Whatever the reason, this means Delta and Korean have an opportunity.

If Delta and Korean are able to forge a relationship even remotely near what Delta has with Air France/KLM, then they’ll quickly become a leader over the Pacific. They both have every incentive to try to achieve that, and now that government approvals have been received, it’s time to show what they can do.

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Neil
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Neil

Question. When I look at flights on the Delta site, and a KE option pops up – say JFK-ICN-BKK – it does have a number there for estimated MQM. Do I not get them? Do I only get them if it’s a Delta-ticketed flight? Do I start getting them soon? Because DL doesn’t fly to Asia from JFK, and that extra hop to DTW is annoying.

noahkimmel
Member
noahkimmel

Flight operated and marketed by DL earn full benefits i.e. DL 27
Flights operated by KE but marketed by DL earn full benefits i.e. DL 1001
Flights operated and marketed by KE ticketed by DL follow the table (curently no MQM)
Flights operated and marketed by KE, ticketed by KE, earn on skyteam partner based on distance. No MQM

All Korean Air marketed flights, even if ticketed by Delta (ticket number begins with “006”), are not eligible for Medallion Qualification Dollars (MQDs).

https://www.delta.com/content/www/en_US/skymiles/how-to-earn-miles/airline-partners.html

Bgriff
Member

Note that as of this year, ticketing carrier doesn’t matter — KE code earns based on the KE table as a percentage of distance flown regardless of what the ticketing carrier is. Delta just can’t keep themselves from continually tweaking the system.

A
Guest

I don’t recall all the details of the DL/KE saga but curious if this is a sign of Delta recognizing it can’t go it alone across the Pacific. Domestically they certainly have an arrogance from running fantastic ops. I’ve always felt that led to them being difficult with Korean. I have no doubts a more humble DL can use partnerships to best their competition. This should be interesting…and hopefully good for competition going east.

noahkimmel
Member
noahkimmel

I do think there was DL arrogance when they poked KE. But I think now is less of “go it alone” and more of changing dynamics. Go it alone is no longer feasible with changing Tokyo situation. As a response to opening of HND slots to US, the other 2 US airlines can consolidate Japan ops at a more desirable airport. Pair this with SEA growth and DL’s NRT hub starts to fall apart. So DL needs a strategy for a growing Asia market. Alone at NRT is a disadvantage, no partners at HND left, China still challenging with regulation,… Read more »

Tim Dunn
Member
Tim Dunn

No one knows for sure what takes place behind closed corporate doors, but reports were that original proposals from KE involved them having a disproportionately large share of the JV because they did not want to include DL’s Japan operation. KE was well-known to be aggressively discounting from JFK and LAX to Asia in the very same markets that DL was operating its own services via NRT. That is the reported reason why DL cut mileage benefits on KE metal. Remember also that KE is deeply in debt and their business is being hurt by growing Chinese airlines. DL and… Read more »

Brad
Guest

The primary difference between Delta’s JVs and those of AA and UA is that all of Delta’s are profit sharing models, while most (if not all) of the others are revenue sharing. This leads to much higher degrees of cooperation between Delta and its partners. Look for the same with Korean. This is going to be pretty explosive, IMHO. The AA/JL and UA/NH relationships are highly constrained for the above reason, along with splitting traffic between two Tokyo airports and just having less overall North America capacity to the hub(s). Also, I believe DL and KE haven’t already improved the… Read more »

Bgriff
Member

I wouldn’t be surprised if a nontrivial part of the AA/JL and UA/NH gap also comes down to JL and NH (justifiably) looking down on the products of their American partners. If I were an NH marketer I wouldn’t be all that thrilled about selling my customers on the idea of getting excited to fly AA metal.

It’s possible KE also feels that way to a degree, but if they do they would have much less justification for it, between DL generally offering a better product than AA/UA and KE mostly offering a worse product than JL/NH.

Tim Dunn
Member

You are absolutely right, CF, that the DL-KE joint venture has enormous potential. Even though DL and KE are the 2nd and 3rd largest airlines across the Pacific, they have very little overlap between their route systems. Only two cities – ATL and SEA – have duplicate DL and KE routes while some hubs such as SLC have no current transpacific service. In contrast, AA/JL and UA/NH have limited potential to grow their networks under the JV. Both have Japanese carriers for partners even as the Japanese government has tried to consolidate international operations at HND over a lengthy period… Read more »

A Kindred Soul aka Norman L. Wherrett, Jr.
Member
A Kindred Soul aka Norman L. Wherrett, Jr.

NO THANK YOU!  The idea of ‘gate waiting’ even for an hour nearby The 38th Parallel [and 10,000 artillery guns, rockets, bombs, and millions  of Norko garlic-eating troops] doesn’t sound inviting. Norman Wherrettaka  A Kindred Spirit

Andy
Member
Andy

Tokyo isn’t much further, and has pretty bad relations with North Korea as well…

MK03
Guest
MK03

The question: could this be the final nail in the coffin for Delta’s Narita operation?

Tim Dunn
Member
Tim Dunn

NRT won’t end as a transpacific hub for anyone until HND is opened further. While it is possible that Delta could move its current beyond NRT flights, MNL and SIN, to ICN, I’m not sure that DL Is willing to operate the size aircraft necessary to compete in that market. The 330-900 could change that if KE is willing to see DL operate beyond ICN. It is also likely that DL sees the need to be in those 2 markets with its own metal. I’d be surprised if DL pulls its own metal out of MNL and SIN. As long… Read more »

hk
Guest

KE has a very strict own-metal rule: at least 60-67% should be KE-coded to become the Morning Calm, the lowest tier. Unless DL flight is counted, no DL MQM for KE flight is just fair.

Andy
Member
Andy

Does that 60% have to be KE coded, or KE metal?

hk
Guest
hk

KE coded. Just like DL coded KE flights get DL MQM.

Ed
Guest
Ed

Hey cranky, I the light of this how about an article about the differences between ICN and GMP. I’ve only flown into Seoul once, ICN, but GMP is a lot closer but only has short haul international.

Is it like HND vs NRT or something different?

henry LAX
Guest

that’s quite a bit kool-aid someone drank to write this “article” that’s more like a marketing press release.

DL flies to ICN from what? 3 hubs (SEA DTW ATL) ? UA flies to NRT from *all* 7 of their CONUS48 hubs, including all 5 of the Top 5 largest population centers in the US (NY, LA, CHI, WAS, SF).

UA GSes and 1Kes can use their GPUs on NH. last time I checked, DL Diamond global certs can’t be used on KE.

Tim Dunn
Member
Tim Dunn

Obviously, Diamond global certificates are used by a small subset of passengers but even if they are more significant, the final approval was given THIS WEEK. There is plenty of time for DL and KE to decide what they want to harmonize and it is possible that Global certs aren’t one of them. It is perhaps just as significant that DL manages to still fly to Tokyo from 7 US gateways including Hawaii despite not having a Japanese partner. It is also worth noting that, as DL’s relationship with KE has deepened, UA’s presence in S. Korea has shrunk. Delta… Read more »

Pedro
Member
Pedro

Uh, SF metro is 4.7 million, Detroit metro 4.3 (pretty close) and Atlanta metro 5.7 million not to mention all the connecting opportunities at the Delta hubs including Seattle so it’s not such a stretch to think DL could carry a lot of pax over the pacific