Delta Plans to Expand Reach in Asia with Korean Air Partnership
June 23 2017 - 2:01PM
Dow Jones News
By Susan Carey
Delta Air Lines Inc. said it will create a trans-Pacific joint
venture with Korean Air Lines Co., as the U.S. carrier rapidly
builds out its international route network.
The two airlines already code-share on some routes. Both are
founding members of the SkyTeam marketing alliance and received
U.S. Transportation Department antitrust authority to more closely
cooperate in 2002. They didn't act on that regulatory green light
until now.
In anticipation of the expanded partnership, Delta recently
launched nonstop service to Seoul from its big Atlanta hub,
complementing Korean Air's existing flight. "Now is the right time
for this JV," said Korean Air Chairman Y.H. Cho.
Delta and Korean said the enhanced agreement would expand
code-sharing, more closely link frequent-flier awards and bring the
carriers' gates closer together at key airports. They also would
share costs and revenue on flights operated within the joint
venture, which is subject to regulatory approval. No equity will
change hands.
Delta has faced challenges for years with its operations in
Asia. Its hub at Tokyo's Narita Airport has lost business to Haneda
Airport, better situated in the megalopolis. And Japan's overall
importance in the Asian aviation market has waned as air travel in
China has boomed. Delta also lacks a partner in Japan. Delta made a
failed attempt in 2010 to lure Japan Airlines Co. away from its
partnership with American Airlines Group Inc.
Delta, the No. 2 U.S. airline by traffic, owns 49% of
London-based Virgin Atlantic Airways Ltd. and 49% of Grupo
Aeromexico SAB, and has smaller stakes in Brazil's Gol Linhas
Aéreas Inteligentes SA and Shanghai-based China Eastern Airlines
Corp.
Korean, which carried 27 million passengers last year, flies to
a dozen U.S. cities nonstop from its hub at Incheon International
Airport near Seoul and serves many Asian destinations including
more than two dozen in China.
Write to Susan Carey at susan.carey@wsj.com
(END) Dow Jones Newswires
June 23, 2017 14:46 ET (18:46 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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