For many years, Delta seemed like an airline in search of an Asia strategy while its competitors pushed forward definitively. Now that the Korean Air joint venture is in place, however, the combined Delta/Korean efforts looks like an airline on a mission. They have plowed forward, most recently with a new Boston-Seoul flight that Korean will operate. Long having the weakest relationships in Asia, Delta is quickly working toward building the best of the big three, but this isn’t just a story about Delta. It’s also about Korean Air, Incheon’s amazing airport, and Tokyo’s problems.
Go back a few years, and Delta’s Asian strategy was basically Northwest’s old strategy. It served markets that it could fly nonstop from the US, but the real strategy focused on connecting people via its Tokyo hub. That proved unsuccessful in a changing world and Delta didn’t wait long before dismantling it. The Tokyo hub shrunk quickly as Delta moved to make Seattle a hub and Asian gateway, but a long-running rift between Delta and its obvious partner Korean Air left the airline without a major Asian option. That gave United and American a real opportunity.
United, of course, had the strongest position in Asia. It previously had a Tokyo hub as well, but more importantly, it had San Francisco, the best Asian gateway from the US. The Tokyo hub shrank down to nothing on the back of that San Francisco hub as well as the joint venture with ANA. Why would United need to fly beyond Tokyo when it could use its partner ANA to do the heavy-lifting? American had virtually nothing in Asia, so it decided that it would build up Los Angeles as its gateway. After a close call during a restructuring, American was able to keep Japan Airlines (JAL) as a joint venture partner.
While those Tokyo-focused joint ventures were nice, they had problems. The biggest issue was around capacity constraints. Tokyo’s preferred airport, Haneda, was only relatively recently reopened for international service, and it was further restricted on US flights to night-time hours until even more recently. While some US flights are now into Haneda, most are still sent into Narita due to a variety of restrictions. Narita was a thriving international hub, but it’s an airport that’s increasingly focusing on leisure travel business from low cost carriers. It’s far less convenient than Haneda for most of Tokyo. Plus, it has this problem…
I don’t need to rehash all the Godzilla-related issues, but the point is that Tokyo still has a split airport system and that makes it tougher to build and develop new service especially when that new service has to go to the airport that’s falling out of favor. Early on we saw Japan Airlines and ANA build up service into secondary US markets like San Jose, San Diego, and Boston. But they’ve been relatively stagnant since those early days.
In the meantime, Delta has done nothing but shrink Narita. Today, the only flying Delta does from there to non-hubs is to Singapore, Manila, and Honolulu. Many of the flights have moved to Haneda, when possible. In other words, it’s not really a hub anymore. At the same time, the Seattle hub has struggled to support all the service Delta wanted there. Most recently, the airline walked away from Seattle to Hong Kong. Delta needed something to fix its Asian issues. It needed Korean.
The joint venture between Delta and Korean should have happened long ago, but relations soured under Delta CEO Richard Anderson. As soon as Ed Bastian took over, it was like a switch flipped. Ed had tended to that relationship even during rocky times, and now with Richard gone, the joint venture was a no-brainer. The thaw began two years ago, and the joint venture launched this year.
The airlines have not wasted time since then. Delta previously served Incheon via Detroit with Seattle being added in the build-up back in 2014. In June 2017 in anticipation of growing ties, Delta added Atlanta to Incheon to complement Korean’s existing service. The airlines rapidly expanded codesharing to get maximum benefit.
This summer, fresh off the opening of its brand new, sparkling Terminal 2 at Incheon, Korean bulked up its schedules into the US where it was already the largest Asian carrier. Dallas/Ft Worth went from four to five weekly flights. Seattle went from five weekly flights to daily service. But this was a just an appetizer for the real growth which begins next summer.
Delta announced it would start flying from Minneapolis to Incheon in April of next year while Korean would begin flying from Boston. Why Korean and not Delta? Well, its 787s are the right aircraft to make that work, but it only works with the Delta customer base being onboard.
These early moves make a great deal of sense as the two airlines begin to mesh their networks, but will this just be an early push that flattens out like most of the other joint ventures? It doesn’t seem like it should end that way. Incheon’s new Terminal 2 is an incredible facility, and the airport has capacity for growth. That Boston flight will feed into dozens and dozens of destinations beyond Incheon. Meanwhile JAL’s Boston flight has to deal with the declining options at Narita for feed. But what may be most remarkable is that even with this just being a start, Delta/Korean already have a lead.
It’s still mind-boggling to me that JAL/American and ANA/United haven’t tried to penetrate more into the US as has been done through partnerships over the Atlantic. But JAL/American still can’t even justify a 787 into the Phoenix hub, and ANA/United haven’t added a new dot in the US from Tokyo since 2013 when San Jose joined the network. (JAL is expected to start Seattle next year, but that’s hardly inspired.) Even though Korean/Delta are years behind in developing their relationships, the others have squandered their leads.
These early moves by Delta and Korean are easy fill-in-the-blank efforts. But as time goes on, I imagine we’ll see them get even more creative.
