South Korea’s Asiana plans to use A380 to boost capacity to Los Angeles and New York


Asiana aims to significantly expand capacity on US routes after it becomes the sixth Asian and second South Korean carrier to operate the A380 in 2014. Asiana has six A380s on order and plans to initially deploy the super jumbo on long-haul routes to Los Angeles and New York as well as on some dense regional routes within north Asia such as Hong Kong, Shanghai Pudong and Tokyo Narita.

Frankfurt is the most likely destination for Asiana’s last batch of A380s, which will not be delivered until 2017. While the carrier does not plan to open any new routes with its A380s, the new type will free up Boeing 777-200ERs to launch new destinations in Europe and North America. Asiana’s long-haul network is currently limited to only six destinations in North America and three in western Europe, making it a much smaller long-haul carrier than local rival Korean Air (KAL). Asiana also has 30 A350s on order for delivery from 2017 but these aircraft are intended for regional routes within Asia-Pacific.

Asiana CEO Young-Doo Yoon told CAPA at the Association of Asia Pacific Airlines (AAPA) Assembly of Presidents in Kuala Lumpur in Nov-2012 that the carrier plans to use its first batch of two A380s to operate one of its two daily Seoul-Los Angeles flights. Confirmation that Seoul-Los Angeles will be the carrier’s first long-haul A380 route is not surprising as the route is Asiana’s biggest in terms of ASKs and is the carrier’s only long-haul route served with more than one daily frequency.

Asiana top 10 international routes by capacity (ASKs): 19-Nov-2012 to 25-Nov-2012

Asiana to become second A380 operator on Los Angeles-Seoul route

Seoul-Los Angeles is also a route already served with Korean Air A380s. KAL currently serves Los Angeles with 17 weekly flights, including seven A380 frequencies, seven Boeing 747-400 frequencies and three Boeing 777-300ER frequencies, according to Innovata data. One of Asiana’s two daily frequencies to Los Angeles is served with Boeing 747-400s and the other with Boeing 777-200ERs.

Thai Airways also serves Seoul-Los Angeles with three weekly flights, having introduced the route earlier this year after dropping its non-stop Bangkok-Los Angeles service. Thai Airways now accounts for about 11% of total capacity on the route compared to 37% for Star Alliance partner Asiana and 52% for SkyTeam member KAL, according to Innovata data. No US carriers currently serve Seoul-Los Angeles on a non-stop basis.

Asiana will look to close the gap with KAL in the Los Angeles market when it places into service its first batch of two A380s in 2Q2014. But KAL could pre-empt Asiana and ensure it maintains its current share of the market by upgrading the daily frequency it now serves with a 747-400 to the A380. Mr Yoon says Asiana has no intentions to upgrade both of its Los Angeles flights to the A380.

Korean Air to add capacity to Los Angeles in 2013 as it launches Lima

KAL will also likely add some capacity in the Los Angeles market in 2013, when it aims to launch service to Lima in Peru via Los Angeles. KAL already operates three weekly 777-300ER flights to Sao Paulo in Brazil via Los Angeles. KAL has been looking for some time at launching Lima, which would be the carrier’s second destination in South America. KAL COO Chang-Hoon Chi told CAPA at the AAPA conference that the carrier aims to launch service to Lima in May-2013. He said the flight will be operated via Los Angeles as it is not feasible to serve Lima non-stop from Seoul.

Asiana will be the fourth Asian carrier to operate A380s into Los Angeles. KAL and Singapore Airlines began operating the A380 into Los Angeles in 2011 while China Southern began operating the A380 into Los Angeles in Oct-2012.

See related article: China Southern to finally launch A380 long-haul services, but operation still faces challenges

Asiana plans to deploy the A380 to New York from 2015

Mr Yoon told CAPA that Asiana plans to make New York JFK its second A380 long-haul route in 2Q2015. New York is a somewhat surprising selection as Asiana only upgraded its Seoul-New York service to daily as recently as 2009. But Mr Yoon says that Asiana’s New York flight has performed well since it was re-timed in 2010.

Asiana’s New York flight previously arrived late at night and departed after midnight. The current schedule of a late morning arrival in New York and early afternoon departure is more conducive to domestic connections. Mr Yoon says Asiana is now seeking to forge a partnership with JFK-based carrier JetBlue Airways, which would provide connections to domestic destinations throughout the eastern US. This feed is important as New York is Asiana’s only destination in the eastern US and Star Alliance carriers United and US Airways have small operations at JFK.

New York and Los Angeles are Korean’s only North American destinations currently served by KAL with A380s. KAL has 14 destinations in North America compared to just the six for Asiana, according to Innovata data.

KAL has two daily flights to New York, one with an A380 and one with a 777-300ER, giving it a commanding 70% share of capacity on the route. Asiana and KAL are the only carriers currently operating non-stop flights between Seoul and New York. Asiana is obviously keen to catch up with its rival although KAL, as in the case of Los Angeles, could pre-empt Asiana’s move to increase capacity in New York by upgrading its second daily frequency to the A380.

Seoul to New York capacity by carrier (one-way seats per week): 19-Sep-2011 to 05-May-2013

Asiana's New York service feeds sixth freedom flows into Asia

Asiana’s New York flight also now connects on the other end to destinations throughout Southeast Asia. Asiana has been particularly aggressive recently at promoting its one-stop services from New York to the Philippines and Vietnam. Asiana now serves three destinations in the Philippines (Manila, Clark and Cebu) and three in Vietnam (Ho Chi Minh, Hanoi and Danang) with connections available in all cases to and from its New York flight.

Other Southeast Asian destinations for Asiana include Singapore, Phnom Penh and Siem Reap in Cambodia and Phuket and Bangkok in Thailand. Service to Laos and Myanmar could be launched in future.

Asiana also is a large player in the one-stop US-China market, serving about 20 cities on the mainland. Asiana, KAL as well as Japan Airlines and All Nippon Airways have benefitted in recent years from surging demand for travel between China’s fast-growing secondary cities and the US.

Only China’s three major cities are currently served non-stop from the US. Connections at Seoul and Tokyo to destinations throughout mainland China are convenient and particularly attractive to business passengers.

Asiana also has a large network in Japan and offers connections from several secondary cities to its long-haul network via its Seoul Incheon hub. But Mr Yoon says the local Korea-Japan market has suffered the last 20 months since the Mar-2011 tsunami. He adds the Korea-Japan market is still 10% to 20% below pre-tsunami levels, although Asiana is confident the market will eventually return to normal levels.

Asiana is not alone in adding capacity in Korea-US market

In addition by adding capacity to Los Angeles and New York through A380 deployments, Asiana will likely launch new destinations in the US over the medium to long-term, partially using the aircraft freed up by the A380. Potential destinations in Canada are also expected to be evaluated.

Korea-US is a fast-growing market that is also starting to attract increased interest from US carriers, which now account for only 10% of non-stop seat capacity between the two countries. American Airlines recently unveiled plans to launch service from Dallas to Seoul in 2013, becoming the fourth US carrier in the Korean market after Delta Air Lines, United and Hawaiian.

See related article: American looks to new Asian and German connections through new international markets

South Korea-US capacity by carrier: 19-Nov-2012 to 25-Nov-2012

Carrier one-way seats per week   Capacity share
Korean Air 27,222 56%
Asiana 13,072 27%
Singapore Airlines 1,946 4%
Hawaiian Airlines 1,848 4%
Delta Air Lines 1,614 3%
United Airlines 1,496 3%
Thai Airways 1,308 3%

Visitor arrivals from Korea to the US increased by 83% between 2004 and 2011. The market is expected to continue to grow as both US and Korean carriers add non-stop capacity.

Visitor arrivals to the US from South Korea: 2004-2011

Asiana decides to take its A380s at a slow pace

Asiana initially ordered its six A380s in early 2011. Asiana stated during a press conference at last year’s AAPA Assembly of Presidents, which it hosted in Nov-2011, that all six of its A380s would be delivered by the end of 2014. But Mr Yoon now says the first two A380s are slated for delivery in 2Q2014, followed by an additional two in 2Q2015. He adds the last batch of two A380s are now slated to be delivered in 2017.

The delivery dates for Asiana’s A380s are now relatively spread out compared to other Asian carriers which operate the type. For example, Malaysia Airlines and Thai Airways also both ordered six A380s but are taking all six aircraft within one year. Both carriers took their first A380 in recent months. China Southern also introduced A380 services earlier this year and has already taken four of the five aircraft it has ordered.

See related article: Thai Airways and Malaysia Airlines focus on Europe rather than Australia with A380s

A380 launch customer Singapore Airlines already has 19 A380s in service and recently ordered another five aircraft but will not take these aircraft until 2017. Korean Air placed into service its first batch of five A380s in 2011 and has another five aircraft on order.

Asiana plans to use A380 on some routes within north Asia

As is the case with most other Asian A380 operators, Asiana plans to use its A380s on dense regional routes to maximise utilisation of the aircraft. Approximately one and a half aircraft are usually required to operate a long-haul route, giving carriers the flexibility to also operate at least one short-haul route with each batch of two aircraft. Mr Yoon expects Asiana will deploy the A380 regionally to Tokyo Narita, Shanghai and Hong Kong.

While Tokyo Haneda is a more popular destination than Narita for business travellers, he says Haneda is not an option for the A380. Shanghai Hongqiao, another popular airport for business passengers, is also not seen as an option. Demand for Narita and Pudong from Seoul Incheon is seen as sufficient as they remain extremely popular routes for leisure passengers.

Haneda and Hongqiao are served from Seoul’s primarily domestic airport Gimpo, which would pose another complication for A380 operations. Asiana will need to base its A380s at Incheon, where all long-haul routes operate. Repositioning the aircraft to Gimpo, where there are high demand regional international routes to Tokyo Haneda and Shanghai Hongqiao, would not be an economical option, even if Gimpo and these other primarily domestic airports in north Asia could accommodate the A380.

Asiana eyes Frankfurt for final batch of A380s

Mr Yoon says Asiana could use its last batch of two A380s to serve Frankfurt. But the carrier still has a lot of time to select a third long-haul route for the A380 as the aircraft is now not due for delivery until 2017.

Frankfurt could be more appealing than London Heathrow, where SIA and MAS now operate A380s, as it offers more connection opportunities for the rest of Europe. Frankfurt is a hub for Star partner Lufthansa while London has limited Star connections and requires backtracking for Asian passengers heading to continental Europe.

Asiana will likely add capacity to Frankfurt prior to 2017 by upgrading its current 777 service to daily. Asiana currently only serves Frankfurt with four weekly 777-200ER flights. Korean Air serves the route daily with 777-300ERs and Lufthansa daily with A340-600s.

Asiana’s other two European destinations, Paris and Istanbul, are also still served less than daily. These are unlikely to see the A380, although frequency expansion to daily is possible.

Asiana’s A380s are an important component of the carrier’s medium to long-term strategy as the carrier looks to grow its long-haul network. As CAPA reported a year ago, the A380s will usher in a new era of growth and potentially help the carrier meet its aim of breaking into the top 10 global airline rankings:

Asiana plans to focus over the medium term on expanding its relatively small long-haul network as opportunities for short-haul expansion become more limited due to bilateral constraints and increasing competition from LCCs. The additional widebodies, including six A380s, are designed to give Asiana an opportunity to build up its long-haul network and close the gap with its Asian peers, which have much bigger operations in North America and Europe. Asiana has expanded rapidly since being established as Korea’s second network carrier in 1988. But until now the Star Alliance carrier has primarily focussed on short- and medium-haul expansion within Asia.

Asiana has been unable to pursue significant expansion of its long-haul network due to a shortage of widebody aircraft. The decision was, therefore, made last year to start focussing on long-haul expansion with the A380 selected as the ideal tool to accelerate long-haul growth. Focus on long-haul network comes as LCC competition increases in short-haul market The new strategy is designed to give Asiana’s short-haul operation a larger mix of passengers that connect onto long-haul flights. Relying more on this type of passenger is key as Asiana will face increased competition in the short-haul point-to-point markets as LCC penetration rates in north Asia, which until now have been very low, start to increase.

See related article: Asiana to focus over medium-term on expansion of long-haul network and fleet

Mr Yoon says Asiana does not plan to grow capacity significantly in 2013 but the A380 will allow the carrier over the medium-term “to focus on growth”. He adds that “it will be a new era for Asiana with the A350 and A380 aircraft”.

He says the A350s will be used to replace the carrier’s current medium-haul fleet and for growth on routes within Asia-Pacific. He says the first A350 is now slated for delivery in 2017.

Asiana, perhaps too modestly, seeks to become a world force

Asiana is a relatively small and until now has been a less ambitious carrier than most of its Asian peers. While the carrier has only ordered six A380s, the new type will raise Asiana’s profile as it joins a select group of operators and give the carrier the flexibility to boost capacity on existing routes. Asiana also plans to pursue opportunities to open new routes to North America and Europe with the 777s freed up as the A380s come online.

But the carrier’s planned long-haul expansion, while representing a significant step beyond its relatively conservative approach of recent years, still remains rather modest. With its A350s planned for short and medium-haul routes, Asiana does not yet intend to join several of its peers in using new generation small twin-engine aircraft to open new thin long-haul routes. Asiana should perhaps re-think this portion of its strategy if it is serious in its ambition of becoming a leading global airline.

Asiana only needs to look nearby at Japan where international carriers All Nippon Airways and Japan Airlines are shunning large aircraft and instead opting for medium-sized twins to gain relevance by opening a plethora of new long-haul routes.

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