Delta & Korean Air Announce Transpacific Joint Venture

A bit over a month ago, Korean Air’s president hinted that a joint venture would be coming shortly between Delta and Korean Air. Well, that has now been confirmed.

Delta-Korean-Air

Delta and Korean have signed a memorandum of understanding to implement a transpacific joint venture agreement. Here’s what the highlights of the agreement are, according to the airlines:

  • The intent to create a fully integrated trans-Pacific joint venture arrangement, with both airlines sharing the costs and revenues on flights and coordinating schedules for seamless, convenient connections.
  • A combined network, serving more than 290 destinations in the Americas and more than 80 in Asia, providing customers of both airlines with more travel choices than ever before.
  • Enhanced frequent flyer benefits, providing customers of both airlines the ability to earn and redeem miles on Delta’s Sky Miles and Korean Air’s SKYPASS programs.

Delta-Korean-Air

Here’s what executives from both airlines had to say about the agreement:

“This agreement deepens our longstanding partnership with Korean Air and will provide the global access and seamless service our customers demand,” said Delta CEO Ed Bastian. “We look forward to providing customers of both carriers with industry-leading service between the U.S. and Asia.”

“This Joint Venture will benefit our customers by providing more convenient connection schedules and widen their opportunities in earning mileages,” said Korean Air’s Chairman and CEO, Yang Ho Cho. “With this agreement, we will reinforce Incheon airport’s position as a major international hub in North East Asia and support the growth of Korea’s aviation industry.”

Delta will launch a flight between Atlanta and Seoul Incheon as of June 2017, which complements Korean Air’s flight in the market. Furthermore, Korean Air will look at continuing to expand their US routes — they already serve more US destinations than any other Asian airline.

Korean-Air-A380

So we’ll see Delta and Korean Air align their schedules and fares in the transpacific market, which is almost the same as a competitor being eliminated, since the two airlines will be acting as one.

This joint venture should be good news for Delta SkyMiles members. Presently Korean Air is a “Group 4” SkyMiles airline partner, meaning that as of now you don’t earn Medallion Qualifying Miles or Medallion Qualifying Dollars when flying Korean Air marketed flights. While it hasn’t been updated yet, I imagine this will change very shortly. It will once again make sense for Delta SkyMiles members to take Korean Air flights.

Delta-Korean-Air

Bottom line

While Delta owns an equity stake in China Eastern, it makes sense for them to have another strong partner in Asia. China Eastern covers their needs for mainland China, though for much of the rest of Asia, Incheon Airport is a more convenient hub. So as much as the two airlines have intentionally been competitive and haven’t played nice for a while, I think they see the mutual benefit in working together, which might explain why they’ve been warming up to one another lately, and why this joint venture is happening.

Do you view the Delta & Korean Air joint venture as good or bad for consumers?

Comments

  1. To me, eliminating a competitor is almost always never a good thing for customers in terms of pricing.

  2. @Lucky: Does this mean that more Korean Air business class award seats will be made available for booking with SkyMiles? As I understand, Korean only releases 1 Business class seat per flight for SkyMiles members.

  3. I can guarantee that photo was taken in Korea. Koreans do love their banners. Birthday? Banners. Festival? Banners. Opening of 16th coffee shop on one street? Banners!

  4. in terms of route developement, I see this :

    – They’ll *try* to keep NRT-SIN and MNL by downgauging to the smallest equipment possible and keep it on life-support, then cancel within 24 months

    – NRT-PVG is an instant gonner, moving the authority to backfill the lost LAX-PEK, which will become a 3-way bloodbath

    – KE to launch ICN-PDX while DL adds ICN-MSP

    – DL will attempt to keep PDX-NRT for a while, but either NH or JL (lean NH on this one) will smell blood in the water and launch it with a 787 to see who blinks first

    – and just like AA, DL will continue having zero flights from JFK out to Oriental Asia, relying 100% on JV partners to do the work

    – a tiny off-chance that once ICN-MSP comes online, DL might attempt to move its MSP-HND authority elsewhere, and receiving staunch opposition from AA in the process.

  5. This is terrible for price-conscious consumers. For those who are not price sensitive, it’s probably good news.

  6. @Lucky
    Do you think this means that more than one seat will be bookabls in Korean Business class with Skymiles? For the past two years or so a single measly seat has been shown.

  7. @ Henry — In theory that’s possible, though I wouldn’t count on it. Many SkyTeam carriers like to restrict award space to partners. For example, AF doesn’t make all award space available to DL, despite their joint venture.

  8. @Henry @Lucky : DL is the worst offender of that front. By designating nearly all award space to be Level 2 or higher, DL, for all practical purposes, has shut out redemptions by members of other partners

    It should be tit-for-tat : if DL loves their Level 2+ practice, don’t cry foul when other partners return the same favor to Skymiles members.

  9. It seems probable DL is playing with the idea to turn ICN as the hub and moving away from the expensive NRT.

  10. I’m assuming we may soon be able to redeem Skypass miles on codeshares flying DL metal on KE’s award chart. I see sweet spots opening.

  11. @Lucky

    How do you estimate the chances that we’ll be able to redeem Skypass miles for an itinerary that includes both DL and KE flights? It would be great to be able to redeem transpacific routes on KE without having to pay for a positioning flight separately.

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