And here's a WSJ piece about Delta's growth in the Pacific, some quotes from Ed, who is in Singapore right now at an Airline conference:
Delta Shifts Focus From Japan as Trans-Pacific Hub
Move Underscores Growing Importance of China, Elsewhere in Asia
By JEFFREY NG -- WSJ
Feb. 10, 2014
SINGAPORE— Delta Air Lines Inc. increasingly is forgoing its Tokyo hub for trans-Pacific flights in favor other parts of Asia.
The shift underscores the growing importance of other Asian markets for the world's third-biggest airline, given the significantly weaker Japanese yen and a growing middle class of Chinese and other Asian travelers who are willing to pay more for direct flights.
Stronger relationships with Chinese state carriers also are helping push the rapid development of nonstop flights into China, with passengers connecting on to the nation's smaller cities, Delta President Ed Bastian said.
"The network structure is realigning based on customer demand, [people] wanting to go direct…and the fact that we are building out Seattle geographically" as an international hub, he said in an interview here.
By summer Japan will account for just 48% of Delta's trans-Pacific passenger capacity, with other direct flights accounting for 52%. The changes will come as the Atlanta-based airline introduces direct flights from Seattle to Seoul, South Korea, and Hong Kong.
Japan's share of total trans-Pacific capacity also has fallen below 50% for United Continental Holdings Inc. and American Airlines Group Inc., according to consulting firm CAPA Centre for Aviation.
United Continental, the biggest trans-Pacific carrier among the U.S. airlines, for several years has been reducing reliance on its hub at Tokyo's Narita airport. More flights use San Francisco to connect to Asian cities nonstop.
Northwest Airlines, which merged with Delta in 2008, for many years operated a Narita hub, flying from a handful of U.S. gateways to the Japanese capital before continuing to about 10 other Asian cities. Most of Delta's flights before the merger terminated in Japan.
But as more Asian airlines began offering new nonstop flights to the U.S. from markets such as China, Hong Kong and South Korea, Delta and other U.S. airlines have had to rethink their trans-Pacific strategy. Robust demand out of China and other countries is helping speed the changes.
Delta has remained profitable in Asia over the past five years, with revenue growth of around 60% outpacing a 25% expansion in capacity.
"Demand continues to grow" in Asia, Mr. Bastian said. "These are the greatest growth opportunities in the global market place." He cited China's economic growth, which is running at 7% to 8%.
While U.S. capacity to Japan among Delta, United and American has fallen from 2008, according to CAPA, capacity between the U.S. and China has increased threefold.
In China, Delta hopes to work more closely with SkyTeam alliance partners China Eastern Airlines Corp. and China Southern Airlines Co. to develop hubs in Shanghai and Beijing. Delta currently serves Beijing and Shanghai direct from Seattle and Detroit.
The partnerships won't allow the airlines to operate routes jointly because the U.S. and China don't have an open-skies agreement on traffic rights.
Joint-venture arrangements that Delta has with several partners on trans-Atlantic services are "the model for international collaboration," Mr. Bastian said. "Hopefully, with the Chinese, we can get there as well." He said he expected that a U.S.-China open-skies deal would be forged over the next five to 10 years.
Growth in other Asian markets doesn't mean that Delta is pulling out of or cutting flightsto Japan and Narita, which Mr. Bastian said would remain a hub.
The airline is, however, throttling back on flights from Japan to resort destinations including Hawaii and Saipan, in the Pacific Ocean's Northern Mariana Islands. "We will probably be a bit cautious where the yen is the most vulnerable, such as the beach offerings, where we'll see a pullback in some offerings," Mr. Bastian said.
Write to Jeffrey Ng at
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