AA, UA and DL in China

[commavia]

Still bitter after all these years about JAL's not choosing the "right" U.S. carrier to partner with.
 
The discussion in question is here:
http://www.airliners.net/aviation-forums/general_aviation/read.main/4703853/
(apologies in advance - I tried to find out, but couldn't figure out for sure if this violates some site policy)
 
Even four years later, I still get a laugh reading all of the hysterical, baseless, ranting diatribes (sound familiar?) contained within.  There is so much comedic gold all contained within one single discussion thread it's incredible - so many ridiculous predictions, fearmongering prognostications and extremely rude comments.
 
Just think of what we'll look back on and laugh about four years from now ...

 

[FrugalFlyerv2.0]

I do wish you would find that post. I'd love to see what you characterize as a nervous breakdown.
 
___________________

The simple fact is that DL is still the largest single carrier between the US and Japan. The NH/UA JV is larger than both DL and AA/JL.

But DL is still the largest carrier in the US-Japan local market.
 

 
1.  One does not have to go to airliners.net to witness how you tend to become unhinged.  Just have a look at the theread(s) where the 2 gates at Love Field were discussed recently.  There's lots of gems there; my favorite being your made-up definition of DL being a "new-entrant" as well as the volumes of US law lectures all of which concluded with a guarentee of a lawsuit by DL against the U.S. government. 
 
2.  I just love the qualifier(s) that you must state to establish DL the undisputed #1.  (I'm kind of reminded of the Seinfeld episode 'The Race' where Jerry tells Geroge "Well you've really built yourself up into something."   as they pretend to run into each other in the coffee shop after may years since high-school ... ... ... )

 

[700UW]

WorldTraveler

From United States of America, joined Aug 2003, 7701 posts, RR: 23
Reply 55, posted Sun Feb 7 2010 14:52:50 your local time (4 years 4 months 2 weeks 6 days 10 hours ago) and read 25573 times:

 

If true, this decision once again confirms how poorly JAL has been run and that they are unable and unwilling to do what they have to do to turn their company around.

The simple fact is that AA/JAL will be CRUSHED by NH/UA/CO alone - there is no way that AA/JAL can move fast enough to even come close to being a competitive force in Asia.

JAL is cutting thousands of jobs and parking airplanes and their management thinks they can ally with the 3rd largest US player to Japan and be competitive?

The laughing in ATL, CHI, and HOU is absolutely giddy at this point.

CO has been salivating at the prospect of being a significant competitor in US-Japan instead of sitting under the thumb of NW - you can bet your bottom dollar that CO made its presence in Asia a major topic of discussion in the Star discussions - CO alone could bury AA.

Those who think DL will pack its bags and leave its presence in Japan will be in for a rude surprise. DL still is the largest foreign airline in Japan and will still operate more than enough flights to depress yields over the Pacific and in Japan as long as it takes to finish Japan Airlines off once and for all.... and in the meantime, DL will be pulling traffic left and right off of JL and AA.

UA is tight on airplanes but they still will do whatever they can to bury AA as well... the UA/AA game has been on and off at times and you can bet it is on in a big way now. UA not only has full multi-carrier ATI across the Atlantic but it will get it over the Pacific. UA quite simply will do everything possible to make sure AA's massive investment in JAL goes down the drain as quickly as humanly possible.

AA and JAL can gloat for a few minutes but as soon as the reality sets in of what the competitive environment is that those two companies think they can win over, there will be some major knee-knocking going on pretty quickly.

And of course, there will be more than a few visits from Japanese gov't officials made to JAL telling them that there will be no more help for them. Again.

And despite all the desires that some people here have for such fantasy routes as MIA-NRT, neither AA or JAL have the equipment or the finances to develop such things... and they will be looking up the tailpipes of DL and UA who will be taking every opportunity as quickly as possible to make sure there is NOTHING left for AA/JAL. And AA STILL doesn't have the labor agreements in place to make half of the stuff on the wishlists above to happen. Do you honestly think APA is going to agree to fly an AA 767 over 12 hrs?

IF - and that's a big IF- this decision is in fact real, AA, CO, DL NH, and UA are all laughing their heads off at how incredibly naive JAL and AA are to think they can compete in a pond that is as crowded w/ players who will make absolutely certainly their interests are enhanced at the expense of AA and JAL.

Mark my words - this story will not have a happy ending.
 

 

[700UW]

WorldTraveler

From United States of America, joined Aug 2003, 7701 posts, RR: 23
Reply 128, posted Sun Feb 7 2010 2253 your local time (4 years 4 months 2 weeks 6 days 3 hours ago) and read 20135 times:  

I appreciate you making an effort to at least try to put forth an objective argument and answer the very real objections which I raised why AA/JAL cannot work.

Quoting LDVAviation (Reply 76):
The immunity referenced here is Northwest's right since 1952 to operate intra-Asian services as a single airline via Narita. They've had no other inherent advantage at NRT over JAL and ANA other than that.
 

and that doesn't go away. DL still has the right to operate near unlimited beyond NRT flights.

People here assume that (again if this is true) that DL would have been in such a weak position if they didn't win JL that they would have to fold up NRT.
DL's plan for JL was just the first step to restructure its Pacific ops. It is not the last one. DL still has a number of options available to it to make its Japanese operation viable for the long term.
First, DL can and will downgrade some of the 744 intra-Asia flying which will cut costs. The 757 is the ideal plane for flying intra-Asia routes but it was too expensive for NW to use because they deadheaded crews from the US to fly it. DL is already flying 763s into NRT with the ability to cross utilize crews between TPAC and intra-Asia flying.
Second, DL will start new Japan overflight markets but that doesn't change the commitment they will have to Japan. In fact, dismantling the cargo operation frees up even more slots for use on intra-Asia flying and to turn TPAC widebodies around. There is still a viable intra-Asia market from Japan and DL will compete in it. What DL will pull of its intra-Asia flying is the lower yielding beyond NRT leisure traffic to SE Asia that will be served on new nonstops from the US... but DL will still compete for the intra-Asia market and be able to do so at far lower costs than JAL even after it is restructured.
Third, those that argue NRT is a dying hub are right. The traffic base IS shrinking and DL will accelerate that w/ new nonstops from the US to other points in Asia. Further, ICN is a stronger hub than NRT - and DL and UA will both have alliance hub operations there. I fully expect that you will see TPAC ATI expanded to include ICN and NRT hubs. AA/JL will be competing against larger combined alliances at BOTH NRT and ICN... UA will have the advantage in having both hubs... but DL and KE are still the largest foreign carriers in Japan - DL at NRT and KE in Japan overall - and that dynamic won't change.

Quoting LDVAviation (Reply 76):
The new bilateral takes that away. So, if you are JAL and you look at the choice between AA and Delta objectively, which choice would allow you to keep most of your intra-Asia network intact but still offer you immunized access to the North American market.
 

The bilateral changes very little. Others here argued for months that there wouldn't be near enough slots at NRT or HND for new competition... that doesn't change. Even if JL turned every one of the slots it is giving up to AA and AA began flying its own services, AA doesn't have the aircraft mass vis-a vis the 744 that DL, NH, and UA all have..... and AA is STILL the highest cost operator among the US carriers.

Quoting LDVAviation (Reply 76):
AA's domestic network is focused on the top business centers in the US
 

Other than ORD, AA offers no structural network advantages over DL... and every place that DL can't offer network strength, UA can. You can argue all you want that AA can compete in the domestic market, but there will be 3 US carrriers - not just DL- that AA has to battle - and AA is smaller than DL and CO/UA on a combined basis - which is how they will compete to Japan.

Quoting LDVAviation (Reply 76):
That's why AA commands a revenue premium over Delta on US/Japan flights
 

that is aboslutely false. AA is the smallest of the 3 US carriers in LAX-NRT both in terms of share of the market, total revenue on their flights, and average fare obtained in the local market. In JFK-NRT, DL passed AA in the first year in all three categories and is bested by CO at EWR. And that is just the two most key Tokyo markets.
In market after market, AA simply doesn't have the network strength to compete not only against DL but also against CO and UA. AA's average fare on DFW-NRT both in the local and total onboard is far lower than CO's on IAH-NRT.

AA simply doesn't have what it takes to be an effective partner for JL in the hugely competitive US-Japan market and it will only get even more competitive.

Quoting LDVAviation (Reply 76):
While we are faulting management teams, let me also say that it was JAL's previous management that got them into trouble by thinking that big was better. It's that thinking that led them to entertain the Delta offer for as long as they did. If this report is confirmed in the coming days, it seems the new management team is already off to quite a brilliant start.
 

But JAL still has to live with the decisions of that mgmt team and it also doesn't change the fact that JL needs to compete with far larger alliances and a combined DL and CO/UA/NH... to think that AA can move from a very distant number 3 in Japan - #4 if you consider allof Asia since CO is larger than AA to Asia - and JL is shrinking because of costs.

Quoting LDVAviation (Reply 76):
At the end of this line of reasoning, one finally comes to the whole issue of ATI. One thing working in Delta's favor from the beginning was that JAL's previous management and the government did not understand the anti-trust implications of a Delta/JAL alliance.
 

YOu could argue the same thing about AA/BA which several here have brought up... and it is possible that DL/JL would have had ATI problems... but it doesn't change the fact that JL has chosen a partner that doesn't come close to offering the network scope necessary to compete w/ DL and CO/UA/NH.
And, unlike AA/BA which is now finally beginning to recognize that there might be a need for concessions 10years after the deal was proposed, DL was willing to offer concessions - which would have been driven partly by reducing the size of the DL NRT hub.
But, there is no need for DL to reduce the size of the NRT hub now and DL will use all of its assets to compete. And CO/UA/NH combined will be so much larger than AA/JL that they will be marginalized.
Further, AA has carried the same low value beyond traffic that NW did... an ATI isn't going to create new traffic, esp. in the face of even more nonstop Japan overflight options. The reason AA's average fare on its US-NRT flights is so much lower than the competition is because DL has had the US-Japan market locked up for years and gets its revenue premiums on TPAC flying. They aren't walking awy from that and AA/JL simply won't have the mass to compete w/ DL plus CO/NH/UA.

Quoting MaverickM11 (Reply 78):
You *seriously* think a Japanese government would shut down an airline, ending tens of thousands of jobs and flights to white-elephant airports in officials' districts that they couldn't possibly *pay* anyone else to serve? Not going to happen, no matter the transgression
 

they don't have to shut JL down... the market will do it for them in the face of intense competition.

Quoting commavia (Reply 102):
4. New CEO Inamori stepped up into the plate
.. the same CEO that was called by people on here as an old guy who could not do what it takes... and apparently we see again that JL mgmt can't do what is necessary to break the status quo.

Quoting MAH4546 (Reply 106):
There is no cash involved here. JAL rejected the cash offers. Nobody is investing in JAL.

which makes it an even more foolish move on JAL's part... if at least JAL had picked up a bunch of AA's money, they could have at least paid off some debt.
The argument about switching computer systems is just plain lame... CO had to do it in a big way in switching alliances but not only has done it but did it in months, not years.

Once again, when we see the grand outworking of a AA-JL alliance, I can stand to be impressed. But given that AA and JL have been codeshare partners and both are in the position they are in now, I doubt very seriously that AA is going to turn it around. AA/JVs are great things but they can't change the fundamentals of the network - and AA/JL are still signficantly disadvantaged in that regard.
 

 

[700UW]

WorldTraveler

From United States of America, joined Aug 2003, 7701 posts, RR: 23
Reply 130, posted Sun Feb 7 2010 22:51:24 your local time (4 years 4 months 2 weeks 6 days 3 hours ago) and read 19889 times:

 

Quoting MAH4546 (Reply 130):
''There will be new city-pairs being created that can't be flown today, Miami-Narita being a perfect example that is too far to fly today,'' he said. ''That's one where an aircraft may support it tomorrow.''

Quoting MAH4546 (Reply 130):
Of course, a possible AA-JAL ATI entirely changes route prospects and makes things even more viable.
so which is it? either the a/c is NOT AVAILABLE and AA won't fly the route if they don't have the right a/c or they will move forward with a new market regardless ofwhether they have the right a/c or not? you can't have it both ways....

You can't argue that NRT is a dying hub - or is for DL - and then somehow expect that AA can gain a valuable position in Asia when it hasn't been able to do it how many years partnering with JAL.

You can't argue that market dominance presents huge obstacles to an ATI/JV for DL-JL and then argue that AA/BA should be aprpoved because "everyone else has one".

The simple fact is that AA/JL is at best a last ditch effort by JL to try one more time to turn around an airline that has been slowly dying for decades... that fact doesn't change. DL/JL was a viable alternative because DL and JL would have shared revenue even if meant operating a lot more of it on DL metal. AA is NOT going to come in the market and grow where it or JL couldn't make it work before. Japan is still a shrinking economy, NRT Is still a shrinking hub that is becoming less relevant, and AA is the smallest possible choice JL could have made... but they did it anyway. JAL is still a very sick airline that has no choice but to significantly cut costs. To somehow think that JAL will stay what it is today and AA will just ride its coattails is just foolish.

You may remember that BA invested in and had a partnership with US for several years... the lights finally went on in London and they realized they could not compete with the UAs and DLs of the world with US so they went w/ AA... JL is doing the same thing with AA that BA tried to do w/ US - and then were smart enough to realize wouldn't work.

The fundamentals of the market haven't change - you and others can't argue how badly the market was for DL and then somehow believe it is going to be a great salvation for AA - while forgetting that DL will still aggressively compete against JL/AA plus NH/CO... problem is that AA/JL is the weakest link in the Japanese-US market in terms of sheer finances.... highest cost.

There is no case in airline history where 2 high cost operators who were already smaller than their competitors combined to become a viable competitor themselves... and there won't be with AA/JL.

The situation at JAL is still very fluid, but AA/JL will still be a failure for the same reasons that Japanese gov't officials pushed for DL as a JAL partner.
 

 

[700UW]

WorldTraveler

From United States of America, joined Aug 2003, 7701 posts, RR: 23
Reply 140, posted Mon Feb 8 2010 00:57:59 your local time (4 years 4 months 2 weeks 6 days 1 hour ago) and read 18887 times:

 

Quoting MAH4546 (Reply 136):
Under a JAL-AA scenario, the numbers change dramatically that might make starting the route sooner viable, especially to gain a stake in LatAm-Asia.



Mark,
give it up.. a half dozen people are trying to tell you that as much as it might be fascinating to you, it makes no sense from an overall network scope or from the availabiity of equipment. And you still can't overcome the reality that a half dozen other hubs - including on AA - can serve the same purpose of connecting traffic from Japan to Latin America and are possible w/ existing aircraft - not the 789 which AA hasn't even confirmed orders for or the 77L which AA doesn't fly.

Quoting panamair (Reply 137):

Bottom line, having 45-60% of the Japan-USA market will help both JAL (and DAL), rather than each having 30-33% of the market. It's simply COMMON BUSINESS SENSE.
Precisely....
and alot of people here - and perhaps JAL mgmt - seem to think that DL will just fold up its tent and walk away from the Japanese market.... but it ain't going to happen.

In fact, despite closing, FRA 15 years ago, DL is still the largest US airline in Germany outside of FRA - and only LH partner UA is larger in FRA. And DL hasn't even chosen to exercise its beyond FRA rights but wil from NRT.

JAL/AA will have to figure out how to become a player in a market as a distant #2 or 3 (depending on how much JAL shrinks and how much DL grows in Japan) behind NH/UA/CO. Further, DL has the financial depth to be a spoiler to significantly disrupt JL's ability to restructure. And with the right network moves such as adding more nonstop US-Asia flights -which I think DL will make anyway- DL will pull even more revenue off of NRT connections which will harm JL/AA. What DL has left will focus increasingly on the Japan-Asia local market using smaller aircraft as well as connections from cities like PDX, SLC, and MSP which have transpac service but which also have very few other transpac options so a DL connection via NRT will be more favorable (given DL' position in those markets) to a connection on another carrier.

 

[700UW]

WorldTraveler

From United States of America, joined Aug 2003, 7701 posts, RR: 23
Reply 151, posted Mon Feb 8 2010 04:41:20 your local time (4 years 4 months 2 weeks 5 days 21 hours ago) and read 16512 times:

 

Quoting LAXdude1023 (Reply 148):
HOWEVER DFW-NRT HAS A HIGHER AVERAGE FARE THAN ATL-NRT (per data posted by Jetlanta)!
And that, once again, is the LOCAL market. IAH, ATL, or DFW could not begin to support a flight to NRT on its own merits.... all are far too small of markets.

The flight doesn't consist of a few local passengers... it is all the revenue onboard the flight.

What CO and DL both beat AA at is the total onboard revenue. Despite your assertions that DL carries a bunch of junk revenue to Japan, in fact, DL/NW have very strong revenues to/from Japan. WHere AA and DL both struggle is the beyond markets... AA's beyond revenue to SE Asia is no better than DL's.... but AA doesn't get the revenue premiums to/from Japan that AA does. You can also cite DFW but it is the only market in the US where AA has no competition.... in every competitive NRT market, AA is far behind DL/NW, UA and CO in average revenue performance.

AA doesn't now and won't generate the revenue premiums that are necessary to /from Japan.

 

Quoting LAXdude1023 (Reply 148):
DFW still serves the primary markets to Latin America. Theres only a few more that have decent O&D to NRT (like LIM and GIG).
and yet someone here wants to argue that MIA-NRT makes sense because of all the revenue that can flow from Japan to Latin America.
which is it?

 

[700UW]

WorldTraveler

From United States of America, joined Aug 2003, 7701 posts, RR: 23
Reply 186, posted Mon Feb 8 2010 0919 your local time (4 years 4 months 2 weeks 5 days 16 hours ago) and read 12930 times:

 

Quoting CODC10 (Reply 157):
WorldTraveler (Reply 140):
how much DL grows in Japan

It is unlikely that DL grows at all in Japan



DL will likely grow in other cities in Japan even it downgauges at NRT. DL, not AA and not JL, is adding new service to KIX this summer.... there will be more....

Quoting CODC10 (Reply 157):
much better to concentrate on overflying NRT and connecting traffic through ICN.



DL is not going to give its revenue to KE until there is a broad transpac ATI/JV in place..and that is unlikely given that the Asia-Pacific market is controlled by multiple countries. There is no value in DL giving its revenue to another carrier if it can profitably serve it on its own.
Further, you seem to miss that DL is starting its own nonstop services which command higher revenue than connections on KE or via NRT.

Quoting CODC10 (Reply 157):
... PDX, SLC, and MSP are large enough markets to support NRT service in their own right,



with connecting traffic on both ends yes. But only MSP generates enough local traffic that it could come close to support a flight to Tokyo on its own. There are precious few cities in the US that could support nonstop service to an int'l destination w/o being a hub. MSP is by far the largest hub of the cities you mention and thus can generate the connecting traffic that is needed.

Quoting LAXdude1023 (Reply 163):
Youre not hearing us. If JL decides to go with AA, AA wont spend a dime. This is a non-cash deal.



but you and others have yet to tell us why AA will be getting more revenue that it can get now... and if AA does happen to get revenue by virtue of a JV (piggybacking on JAL), how does JAL benefit in all of this?
I have yet to hear that AA has the real potential to add more traffic to NRT that they don't carry now...

Quoting MaverickM11 (Reply 166):
AA's beyond NRT costs are next to nothing, however

Quoting MaverickM11 (Reply 166):
Still waiting on an example where the third largest carrier at a foreign hub has managed to survive long....



since there is precisely one US carrier foreign flag hub, it's kinda hard to come up w/ an example....
and there is no examples of a large foreign flag hub anywhere in the world... your point being?

Quoting AirNZ (Reply 173):
Quoting WorldTraveler (Reply 129):
the same CEO that was called by people on here as an old guy who could not do what it takes

But there is no-one on here, including yourself, who is a definitive authority on airline management so it is irrelevant what is claimed here.



I didn't say I was... but the same people who called JL's new CEO an old guy who couldn't run the company and was just a figurehead are now hailing him as a genius.... either he was a figurehead then and still is - and doesn't change the status quo - or he doesn't know what he's doing.

Quoting AirNZ (Reply 173):
Quoting WorldTraveler (Reply 129):
and apparently we see again that JL mgmt can't do what is necessary to break the status quo.

We see nothing "apparently" of the sort, and such is soley your own opinion. On the contrary, all I see in your comment is the evident bitterness that JAL, for whatever reason, does not agree with your opinion on the matter



see above.. there is no bitterness... but there also is no evidence that JL can succeed in the shark tank that will be the Japanese market and no one has yet to be able to say why AA is the right choice using valid economic arguments.

AA itself couldn't come up w/ them so I doubt if anyone else can either... the best they could do was "you won't get ATI/JV approved w/ THEM"...

Quoting commavia (Reply 183):
Again - why are you (and WorldTraveler) referring to JL-AA as "distant" behind Star and independent Delta? Again - JL-AA is larger than Delta from Japan to the U.S. I'm confused as to why some continue ignoring this point.
we have no idea how much JAL will shrink but they will... or they will cease to exist... they cannot continue to bleed money at the rate they have been. Saying that AA plus JL will be a powerhouse when JL is set to shrink is kind of like holding onto the side of the Titanic helping you'll be rescued.

 

[700UW]

WorldTraveler

From United States of America, joined Aug 2003, 7701 posts, RR: 23
Reply 203, posted Mon Feb 8 2010 12:15:36 your local time (4 years 4 months 2 weeks 5 days 13 hours ago) and read 11679 times:

 

Quoting MaverickM11 (Reply 198):


...lost on you, as usual. Now tell me about any carrier that is a strong #3 at any hub around the world.



apparently you didn't read this thread which shows that DL is not a distant third....

Quoting panamair (Reply 188):
Total Japan-USA:

AA/JL; 32.0%
DL: 31.4%
Star: 30.5%
SQ: 2.5%
CI: 1.9%
KE: 1.7%

Total NRT - USA:

Star: 33.5%
AA/JL: 30.1%
DL: 29.3%
SQ: 3.0%
CI: 2.2%
KE: 2.0%

Total Japan - Hawaii only:

AA/JL: 54.8%
DL: 26.8%
Star: 12.1%
CI: 6.3%

Total Japan - USA Mainland (not including Hawaii):

Star: 38.5%
DL: 33.4%
AA/JL: 21.9%
SQ: 3.7%
KE: 2.4%



insightful for sure... but it still is largely JL's capacity that is tilting these numbers. And it also sort of throws the argument about how much capacity AA/JL will serve to the key business markets.
Hawaii is NOT a business market and yet when those numbers are excluded, AA/JL drops significantly.

Quoting panamair (Reply 188):
A great deal depends on what equipment JL uses; for example, if JL were to use its next-largest 744s (412 pax instead of 447), both DL and AA/JL would be the exact same size in the NRT-USA market, also, DL would slightly eclipse AA/JL (31.8% vs 31.2%) in the total Japan-USA market, etc.
remember, again, that JAL is a shrinking airline... the numbers for JAL in 2 years will undoubtedly look smaller....

but again, if NRT is a shrinking hub, why is AA so anxious to hitch its star to JAL?

It is rather clear that DL would have benefitted by reducing competition at NRT while still developing its own Pacific network outside of Japan but if NRT is as bad as all these people wanted to say it was when it was DL and JL, what has changed now... I'm also still waiting for a reasonable explanation as to what AA and JL can do under ATI/JV that they haven't done so far.

 

[700UW]

WorldTraveler

From United States of America, joined Aug 2003, 7701 posts, RR: 23
Reply 255, posted Tue Feb 9 2010 00:35:36 your local time (4 years 4 months 2 weeks 5 days 1 hour ago) and read 8820 times:

 

This topic has been one of the longest running a.net soap operas.... board volume will die down substantially after a couple weeks.... the industry better come up w/ some new big idea to discuss.

 

Quoting Centrair (Reply 240):
Let's take a look at that big picture
Since joint ventures on the Pacific do not exist as they do on the Atlantic, comparing what alliances have is not terribly meaningful. Some markets do not even allow full US carrier codesharing. When JVs exist for multiple carriers - and the largest ones at that, size comparisons will be more meaningful. WIthout JVs, there is not much more than frequent flyer credit that holds passengers to a specific alliance - and on int'l itineraries where price and schedule are more significant, there is a whole lot of mixing and matching of airline itineraries.


Now that this is settled, someone can give us an update on where the Star ATI/JV process is going.

Here is an excerpt from DL's press release
Delta is well positioned as the No. 1 carrier between the U.S. and Asia. Customers can continue to count on Delta for unmatched access to Japan, with nonstop service between 10 U.S. destinations and Tokyo

Apparently, DL thinks the largest airline between the US and Asia - as I have said the data shows. Those of you who feel they are not should probably contact the DOT and start a case against DL for false advertising.

The simple fact is that DL pursued JL because it was the fastest way to further concentrate their power in Asia; if JL agreed, they would have done what was necessary to gain approval. It is clear from the AA/BA example what ten years of not listening to the crtiics will do for getting an alliance approved.

DL is still the largest airline across the Pacific - ATI for AA/JL won't happen overnight but DL can and will aggressively grow its Pacific presence in 2010 and 2011 - because it makes good business sense for it to do so.

And while AA/JL will be spending 2-3 years focused on implementing this, DL as well as UA and CO will be focused on adding new flights - to the extent partiicularly that CO and UA can add service. DL still has the 77L in its fleet which is the only aircraft that can fly from all of the US mainland to SE Asia. DL has alot of capacity avaialble including 767s and 330s which are equipped to fly 12+ hr missions - and which their pilots have agreed to do. AA has to get approval to add a long-haul flight on the 777 while DL has considerable abilities both w/ aircraft and crews to fly the Pacific.

For China specifically where ATI and JVs are not presently allowed by the US w/o conditions,
UA is still the dominant carrier with - I believe 5 flights/day.
DL will have 4 flights/day plus rights to a 5th as of this summer.
CO has 2 flying now.
AA is starting its second.

HKG and other destinations are similar. AA has no presence outside of Japan and China while DL and UA have significant operations and they will grow. AA is simply holding onto the smallest posiition in the least robust markets while 3 other carriers are growing in other markets.

The AA fanclub still has yet to explain why this is such a great deal if Japan is a dying market = as they asserted for years regarding DL/NW's NRT hub.

DL is still the largest foreign airline in Japan - and that will not change. DL still has the most slots of a foreign airline at NRT - and that will not change. DL still has far lower costs than AA or JL - and that will provide a significant advantage.

IN reality, DL isn't going anywhere but up on the Pacific. AA received a reprieve from being relegated to nothingness on the Pacific - but with its own equipment, AA will still be #4 on the Pacific behind CO, DL, and UA.

While AA needed this deal in order to ride JL's coat tails even if they are getting shorter, all of the other carriers - including DL - have the current size and growth capability to be major players across all of Asia.

The euphoria will wear off soon and the reality will settle in - AA simply was saved from relegation but it is still the bottom tier among Pacific carriers.

 

[700UW]

WorldTraveler

From United States of America, joined Aug 2003, 7701 posts, RR: 23
Reply 261, posted Tue Feb 9 2010 02:32:01 your local time (4 years 4 months 2 weeks 4 days 23 hours ago) and read 8514 times:

 

Quoting cws818 (Reply 256):
not terribly meaningful.

It is not meaningless, however.



not terribly meaningful doesn't = meaningless.... there is a scale involved.... the Pacific is still a very fractured market; obviously these moves will help to consolidate it among multiple players.

Quoting commavia (Reply 257):
Again - nobody every said that.



YOU might not have but there are plenty of people who argued that exact point... and I could name names.. but they and many of us know who they are.

The fact is that Japan is still one of the largest travel markets in the world. It is not growing and the Japanese economy faces real challenges but it is still a very large market.

Quoting AAL0616 (Reply 259):
three somewhat competitively positioned entities in the Japan-USA market.



which for compettitors is a very good thing... and will ensure lots of choices.... but it also means that what is good for the consumer is not necessarily good for airlines. The US legacy airlines were battered by competition from lower cost rivals for decades; it was only with the series of BKs in this decade that most of the US industry became healthy enough to compete against anything. We have yet to see the full outcome of JAL's restructuring but they will only be able to compete if they get their costs down substantially; their costs right now are well above any of the US competitors or NH.

Quoting AAL0616 (Reply 259):
This feels more like a moment to be relieved than to celebrate, but it certainly feels better to for oneworld to retain JAL than otherwise.
That is a very appropriate statement because it does highlight that AA has only avoided being relegated and hasn't really developed a position of strength. The fact that no equity was involved means that AA really has no control over what JAL does. Once again, JAL is still going to be either a 1. shrinking airline or 2. one that has yet to reach a point of stability. Given that the option for AA was to be relegated to aposition of non-significance in the Pacific, JL was the better option... but AA still need to fix all those other things that have been troubling it like labor issues, maintenance problems, and a lack of growth in order to seriously compete against other carriers that will continue to be aggressively competing in the Japanese market both from the US side and from within Asia. Let's also remember that the low fare carrier segment of the market is quite small in Asia, esp. Japan, but will grow - and that will hurt JAL if it doesn't complete a full restructuring.

Objectivity requires seeing this as a moment for relief but also a moment to recognize that AA is still riding the coat tails of one of Asia's weakest airlines from a financial perspective. Other carriers are both larger and more nimble

 

[700UW]

WorldTraveler

From United States of America, joined Aug 2003, 7701 posts, RR: 23
Reply 264, posted Tue Feb 9 2010 02:43:43 your local time (4 years 4 months 2 weeks 4 days 23 hours ago) and read 8489 times:

 

Quoting avek00 (Reply 260):
This has not yet been borne out in reality, as most of Delta's TPAC expansion attempts in the past few years have failed (in particular, the idea that Atlanta can work the same way for TPAC flying that it does for TATL - by generating so much connecting feed it make most anything viable - has been proved utterly baseless), and the airline is currently downgauging much of the former NWA TPAC operation.
once again, complete denial of reality.

AA is hovering w/ moving into 3rd place on the Atlantic - more than 50% smaller than DL even before the NW merger added NW's traffic to DL's. CO is quickly nipping on AA's heels over the Atlantic and will likely pass AA up this year.

DL has unquestionably grown over the Atlantic - as well as the Pacific.... and DL is still the best positioned financially for 2010.

The simple fact is that DL has indeed accomplished a whole lot and is the world's largest airline for very good reasons... it did its homework and has executed one thing after another beautifully....

If you and AA want to be so confident about what AA has accomplished with this JAL alliance "win", I suggest we look back in a couple years. I fully expect that we will see that AA is still the smallest US airline of the big 4 over the Paciifc (who knows if/when US will start transpac service) and AA's position over the Atlantic will continue to shrink.

Would you like to provide the stats to show DL's transpac capacity YOY for this summer to support your argument? Of course you can't because it's patently incorrect. You argue that DL is downgrading ATL w/o mentioning that DTW is gaining more transpac capacity than ATL is losing. You also fail to forget that DL is increasing gauge and frequency to NRT from JFK and LAX. You also fail to note that DL is adding two new routes from SEA.
Now tell me again the basis for your statement

 

[700UW]

WorldTraveler

From United States of America, joined Aug 2003, 7701 posts, RR: 23
Reply 312, posted Tue Feb 9 2010 09:37:44 your local time (4 years 4 months 2 weeks 4 days 16 hours ago) and read 6536 times:

 

Quoting MaverickM11 (Reply 270):
That's incorrect. UA is 20% bigger by revenue as recently as 2009 Q4.



please file a complaint w/ the DOT against DL for false advertising..... like yesterday!

Quoting LDVAviation (Reply 289):
So, here's how I see the future:



problem is that your assessment is based on a static world for AA to grow; the reality is that every other competitor will be growing too. And they aren't going to do anything to help AA/JL.
In fact, it is quite likely that some of the non-oneworld codeshares will be unwound.
You might even see DL flying FCO-NRT with those NRT slots they STILL have!

Quoting United1 (Reply 306):
So who wants to bet that within a few days we hear an announcement from DL/KE regarding a JV including both the ICN and NRT hubs.



nearly guaranteed!

Quoting MAH4546 (Reply 307):
ATI involves sharing of trade secrets and intellectual property. The unwinding of ATI would be extremely difficult and painful
Changes in ownership almost always include provisions for reworking alliance relationships.
The bottom line is that it is pretty clear that JAL chose the conservative path in staying w/ AA and oneworld but not the one that will deliver the best results for the company.

The question is how long it will take before JAL reaches the next financial crisis and when they are forced to develop relationships that are in their long-term best interest.

JAL remains a very unhealthy and at risk company.

The bridge loans being extended to Japan Airlines Corp (9205.T) by the Development Bank of Japan and the Enterprise Turnaround Initiative Corp of Japan (ETIC) may eventually reach a higher-than-expected 655 billion yen ($7.31 billion), the Nikkei newspaper reported on Wednesday.


The Development Bank of Japan may be stuck with a higher lending balance to JAL than originally planned, if private financial institutions do not provide loans later this year, resulting in a bigger burden on taxpayers, the newspaper said. ($1=89.64 Yen) (Reporting by Koustav Samanta in Bangalore; Editing by Unnikrishnan Nair)

 

[FrugalFlyerv2.0]

SYKM!!!!
Amongst the WT diatribes above, I think I found a great new favorite DL qualifier:  "DL is the largest US airline in Germany outside of FRA"

 

[700UW]

I couldnt resist.