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Delta’s future strategy with Skymark

  • 2015-07-22 15:00:00
  • , Asahi
  • Translation

(Asahi: July 22, 2015 – p.11)

 

 In the press interview with Asahi Shimbun and others held on July 21, Delta’s Japanese branch manager Masaru Morimoto discussed the company’s future strategy to have Skymark take Asian routes if creditors decide that Delta will be the supporting airline. Delta has recently announced that it would support the restructuring of Skymark. ANA Holdings, a major Japanese airline company that has been considered a leading candidate, seems bewildered by this turn of events.

 

 “I want Skymark to be a global airline,” said Morimoto, presenting Delta’s strategy in which Skymark will be incorporated into Delta’s international network including flights in Asia in the future, if Delta becomes the supporting airline for Skymark. Currently, Skymark flies only domestically.

 

 Delta recently announced its support of Skymark in cooperation with the proposal by Intrepid, a U.S. aircraft leasing company and the largest creditor. Delta aims to have a Japanese airline as business partner, which has been a long-cherished dream.

 

 Currently, Delta connects U.S. cities such as New York, Atlanta, and Seattle with Asian cities including Shanghai and Bangkok through Narita Airport as the hub. However, while two other major U.S. airlines, American and United, have Japanese business partners, Japan Airlines and ANA, respectively, Delta has none, which makes it difficult for Delta to implement a strategy for attracting passengers from local Japanese cities to Delta’s international flights.

 

 If creditors chose Delta as the supporting airline, Delta plans to provide less than 20% of the financing, as 20% is the ceiling by Japanese regulation. The airline will improve its services by introducing Delta’s mileage system to Skymark and the mutual ticket issuing service. Delta also plans to have Skymark take over Delta’s Asian routes and fly between Narita and Kansai airports.

 

 However, as Skymark’s hub is Haneda, the partnership with Skymark does not much benefit Delta in connections. Morimoto said, “I want to move Delta’s hub to Haneda” by 2020 when the number of slots increases there. Morimoto denied that Delta planned to leverage its support for Skymark as a means to use its slots at Haneda for Delta’s international flights.

 

 Competition between ANA and Delta over support for Skymark

Skymark Proposal

Intrepid Proposal

ANA

Supporting Airline

Delta

Integral (50.1%)

 

Funds of major Japanese banks (33.4%)

 

ANA (16.5%)

Financier

Integral, Delta (percentage for financing is undecided)

Minimum 5%

Payment rate

Minimum 5%

 

(Intrepid’s credit is partially cancelled, which will be used for payment)

· Code-sharing for domestic flights is possible.

 

· ANA will support for aircraft maintenance.

Appealing Points

· Skymark will continue being the independent “third pole.”

 

· Mutual use of Delta’s mileage system

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