Any "Latest & Greatest" about Delta?
01-17-2010, 06:40 AM
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The party's over in the frozen north.
Favre is going down.
Favre is going down.
01-17-2010, 07:02 AM
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I think the Vikings should have invited Jessica Simpson to sing the national anthem today in ensure a Romo EPIC FAIL.
01-17-2010, 07:02 AM
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01-17-2010, 07:09 AM
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01-17-2010, 07:09 AM
No longer cares
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I think the first change will be an upgauge in aircraft to Narita. The Japanese government would be foolish to cut off all of JAL's feed and give it to ANA. My guess would be that Delta would add some other cities to feed NRT, perhaps by converting some of the A-330-200's to be able to go more than 12 hours. They could also convert some more 767's with a rest module and the winglets.
My thoughts are this will not cause the flood gates to open on wide body flying, but there will be a noticeable increase, especially in 2011. (assuming the press reports are true)
My thoughts are this will not cause the flood gates to open on wide body flying, but there will be a noticeable increase, especially in 2011. (assuming the press reports are true)
01-17-2010, 07:10 AM
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01-17-2010, 07:11 AM
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Agreed.
DAL needs to gauge the reaction of ANA, CAL/UAUA and other on this. If they all rush to market to make up for the lost lift, there is no benefit for DAL to add anything. read no gain in yield. The opposite is true to.
I cannot see the Japanese government giving all the international lift to ANA, but then again, there is not much open about Open-Skies.
I see some more big jet lift for the pacific rim. I also see us up-gauging some of our feed to our flights. (I think that places like DFW,LAX,ORD,SFO,JFK etc stand to lose 400-1000 seats a day to NRT alone in JAL truly cuts that many routes.
The first domino has been pushed.....
DAL needs to gauge the reaction of ANA, CAL/UAUA and other on this. If they all rush to market to make up for the lost lift, there is no benefit for DAL to add anything. read no gain in yield. The opposite is true to.
I cannot see the Japanese government giving all the international lift to ANA, but then again, there is not much open about Open-Skies.
I see some more big jet lift for the pacific rim. I also see us up-gauging some of our feed to our flights. (I think that places like DFW,LAX,ORD,SFO,JFK etc stand to lose 400-1000 seats a day to NRT alone in JAL truly cuts that many routes.
The first domino has been pushed.....
01-17-2010, 07:20 AM
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JAL in Skyteam...
Although there is a dedicated thread I thought I'd post anyway:
http://seekingalpha.com/article/1829...s?source=yahoo
It's interesting to note that the Enterprise Turnaround Inititive Corp of Japan (ETIC) is estimating the annual benefits of joining Delta (DAL) and Skyteam to be 17.2 billion yen, or $189 million U.S. I initially roughed out a $300 million opportunity-cost for JAL (JALSF.PK) if they did not join DAL and included the analysis in a research note to clients in late October last year. Delta's later estimate, if I recall, was in the $400 million range.
The lower number estimated by ETIC takes into account that the airline will be 30% smaller by 2012 and after the restructuring. Interestingly, our initial "first cut" estimate of $210 million, when size adjusted [$300 X .70], is fairly close to the ETIC’s $189 million.
Delta's $280 ($400 x .70) appears to be on the high side but I suspect that the ETIC number underestimates the value of the fully developed alliance benefits. We estimated a 2% net benefit as a percent of revenue, while the ETIC is estimating a 1.3% benefit.
The numbers are based on a top-down estimate based on the different sizes of the alliance networks and can be reasonably supported - qualitatively and quantitatively - when presented to JAL stakeholders. The initial estimates were close enough to make the business case that JAL would likely switch to Delta and Skyteam. Interestingly, very few believed that JAL would leave AMR (AMR) and the OneWorld alliance.
The open-ended question is whether or not the DOT (with DOJ input) will grant anti-trust immunity (ATI) to a joint venture between JAL/DAL/AF. We assume that the DOT will grant ATI for the UAL/CAL/ANA joint venture.
The JAL/AMR/BA joint venture ATI is easier granted because it retains a higher level of competition between the three alliances in the Japanese and U.S. markets. However, I don't buy the AMR argument that JAL will not get anti-trust immunity (ATI) for a joint venture because Skyteam ends up with nearly 60% of the market between the U.S. and Japan.
AMR's core argument is that the DOT will not grant ATI for a JAL/DAL/AF joint venture and that the JAL risks losing a $2 billion package from AMR and OneWorld members. The threat of losing $2 billion in economic benefits is not that important, and may not be required, given a proper restructuring and adequate capital from the ETIC.
The risk to the U.S. and Japanese consumer is that the Japanese government will not agree to Open Skies if the U.S. government does not grant ATI to JAL/DAL/AF.
Clearly having three roughly equal alliances competing in the U.S., the Japanese markets is preferable to two large ones and a small one. However, if the choice is between not having an Open Skies agreement and a lop-sided competitive market, where Star and SkyTeam dominate a much smaller OneWorld, I suspect that the U.S. government will go with the choice that provides the greatest consumer benefit. In other words, an Open Skies agreement is a more important objective than maintaining an optimal balance of competition between three competing alliances that are roughly equal.
Given the importance of Open Skies with Japan, I'm of the opinion that the U.S. will eventually grant ATI immunity to a JAL/DAL/AF joint venture, even if the final result is not an optimal balance of competition between the three alliances in the Pacific.
The DOT is, in theory at least, a non-political entity that focuses exclusively on competitive issues and what's best for the consumer. However, DOT Secretary LaHood works for Obama; therefore, politics is always part of the equation to some degree or another. I suspect this is more so the case with the current Congress and White House.
The bottom line: The U.S. will not want to lose an opportunity to open up one of the most restrictive and largest markets in the world.
The approval process may be contentious and drawn out, but if the Japanese government insists that U.S. ATI approval for a joint venture between JAL/DAL/AF is a condition of Open Skies, the U.S. clearly will be forced to choose which option works best for the consumer. AMR is clearly the loser in this scenario and will end up with only a 6-8% market share in the Japan-U.S. market.
If the DOT/DOJ refuses to grant ATI to JAL/DAL/AF, Delta and JAL still win because important gates and slots in Japan will remain closed to competition. The incumbents are better off without enhanced competition that results in a more open, competitive market between the two countries.
The following is from the Joint Application of All Nippon Airways, Continental Airlines and United Airlines that was filed before the DOT on December 2009:
Open Skies, which is linked to the granting of antitrust immunity to the Joint Applicants will bring substantial benefits to U.S. - Japan air travelers and shippers, includes:In recent antitrust-immunity cases, the DOT has approved applications where joint applicants held a larger share of service in the affected regions than ANA / Continental (CAL) / United's (UAUA) combined share of U.S.-Asia service.
Disclosure: No postions held in any of the airlines metioned in the article
http://seekingalpha.com/article/1829...s?source=yahoo
It's interesting to note that the Enterprise Turnaround Inititive Corp of Japan (ETIC) is estimating the annual benefits of joining Delta (DAL) and Skyteam to be 17.2 billion yen, or $189 million U.S. I initially roughed out a $300 million opportunity-cost for JAL (JALSF.PK) if they did not join DAL and included the analysis in a research note to clients in late October last year. Delta's later estimate, if I recall, was in the $400 million range.
The lower number estimated by ETIC takes into account that the airline will be 30% smaller by 2012 and after the restructuring. Interestingly, our initial "first cut" estimate of $210 million, when size adjusted [$300 X .70], is fairly close to the ETIC’s $189 million.
Delta's $280 ($400 x .70) appears to be on the high side but I suspect that the ETIC number underestimates the value of the fully developed alliance benefits. We estimated a 2% net benefit as a percent of revenue, while the ETIC is estimating a 1.3% benefit.
The numbers are based on a top-down estimate based on the different sizes of the alliance networks and can be reasonably supported - qualitatively and quantitatively - when presented to JAL stakeholders. The initial estimates were close enough to make the business case that JAL would likely switch to Delta and Skyteam. Interestingly, very few believed that JAL would leave AMR (AMR) and the OneWorld alliance.
The open-ended question is whether or not the DOT (with DOJ input) will grant anti-trust immunity (ATI) to a joint venture between JAL/DAL/AF. We assume that the DOT will grant ATI for the UAL/CAL/ANA joint venture.
The JAL/AMR/BA joint venture ATI is easier granted because it retains a higher level of competition between the three alliances in the Japanese and U.S. markets. However, I don't buy the AMR argument that JAL will not get anti-trust immunity (ATI) for a joint venture because Skyteam ends up with nearly 60% of the market between the U.S. and Japan.
AMR's core argument is that the DOT will not grant ATI for a JAL/DAL/AF joint venture and that the JAL risks losing a $2 billion package from AMR and OneWorld members. The threat of losing $2 billion in economic benefits is not that important, and may not be required, given a proper restructuring and adequate capital from the ETIC.
The risk to the U.S. and Japanese consumer is that the Japanese government will not agree to Open Skies if the U.S. government does not grant ATI to JAL/DAL/AF.
Clearly having three roughly equal alliances competing in the U.S., the Japanese markets is preferable to two large ones and a small one. However, if the choice is between not having an Open Skies agreement and a lop-sided competitive market, where Star and SkyTeam dominate a much smaller OneWorld, I suspect that the U.S. government will go with the choice that provides the greatest consumer benefit. In other words, an Open Skies agreement is a more important objective than maintaining an optimal balance of competition between three competing alliances that are roughly equal.
Given the importance of Open Skies with Japan, I'm of the opinion that the U.S. will eventually grant ATI immunity to a JAL/DAL/AF joint venture, even if the final result is not an optimal balance of competition between the three alliances in the Pacific.
The DOT is, in theory at least, a non-political entity that focuses exclusively on competitive issues and what's best for the consumer. However, DOT Secretary LaHood works for Obama; therefore, politics is always part of the equation to some degree or another. I suspect this is more so the case with the current Congress and White House.
The bottom line: The U.S. will not want to lose an opportunity to open up one of the most restrictive and largest markets in the world.
The approval process may be contentious and drawn out, but if the Japanese government insists that U.S. ATI approval for a joint venture between JAL/DAL/AF is a condition of Open Skies, the U.S. clearly will be forced to choose which option works best for the consumer. AMR is clearly the loser in this scenario and will end up with only a 6-8% market share in the Japan-U.S. market.
If the DOT/DOJ refuses to grant ATI to JAL/DAL/AF, Delta and JAL still win because important gates and slots in Japan will remain closed to competition. The incumbents are better off without enhanced competition that results in a more open, competitive market between the two countries.
The following is from the Joint Application of All Nippon Airways, Continental Airlines and United Airlines that was filed before the DOT on December 2009:
Open Skies, which is linked to the granting of antitrust immunity to the Joint Applicants will bring substantial benefits to U.S. - Japan air travelers and shippers, includes:
Disclosure: No postions held in any of the airlines metioned in the article
Last edited by sinca3; 01-17-2010 at 07:21 AM. Reason: Add link
01-17-2010, 07:20 AM
No longer cares
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Position: 767er Captain
Posts: 12,109
I said this very thing about 10,000 posts ago. All you NWA 757 guys enjoy what are now "the good ole days" You are about to have to start working for a living..
01-17-2010, 07:24 AM
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Joined APC: Jun 2009
Posts: 5,113
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