US and Japan are reportedly set to sign their Open Skies Agreement today (25-Oct-2010) (Bloomberg, 23-Oct-2010). The agreement will end limits on how many carriers can operate between the two countries and what prices they can charge. The US gave preliminary antitrust approval earlier this month, subject to the agreement being signed. Last week, MLITT granted antitrust immunity for JAL and American Airlines and ANA and United Continental Holding to cooperate with codeshare partners on US services.
US and Japan to sign open skies agreement on 25-Oct-2010
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Asia aviation outlook: high demand, low fuel, but overcapacity and uncertainty (Brexit) hurt profits
Asian aviation should be experiencing boom times. So why isn't it? The region is unique for alignment of three key factors: low fuel, high demand and geopolitical stability. Yet financially the market is subdued, largely the result of overcapacity at most airlines. There are some special features too: Cathay Pacific and Singapore Airlines' benefit from low fuel prices has been muted by to hedging, currency swings have hurt the financials of Chinese and Korean airlines.
Strategically most airlines in Asia remain confident of long term opportunities but identify short term challenges, starting with overcapacity. The region's growth is above the IATA average, but financial performance is below. Airlines are watching Europe to see if demand has plateaued or will further weaken due to security concerns. Freight – especially important at Northeast Asian airlines – is facing its usual challenges. New consumer electronics – iPhone 7, for example – may deliver a short-term boost, but will not be as high or profitable as it used to be. The collapse of Hanjin container shipping might deliver some relief, but not on the scale of the 2015 US port closure.
Delta Air Lines closes in on Korean Air JV to boost Asia network, hedge China Eastern partnership
Delta Air Lines is rekindling its partnership with Korean Air. Delta has previously used heavy-handed tactics – cutting off codeshares, nearly eliminating reciprocal frequent flyer benefits otherwise enshrined in their SkyTeam alliances – to bully Korean Air into a JV. The attraction to Delta is a JV partner in Asia, which American and United have long enjoyed.
Korean Air, until recently, has failed to see the benefits of a partnership with Delta, which has a smaller trans-Pacific footprint. Although Korean Air felt the damage from all but losing its North American partner, what Delta needed to give Korean Air was time. It has helped that Delta is no longer pursuing a hub in Tokyo – a rival to Korean Air and Seoul.
A deeper Delta-Korean Air partnership, as hinted at by Delta management in Dec-2016, starts with both feeling competitive trans-Pacific pressure but jointly holding a position of strength, with a JV slightly smaller than United-ANA's, but much larger than American-JAL. Korean Air brings wider coverage to Southeast Asia, as well as North American gateways.