I must say, I’m a bit surprised that Delta didn’t compel Korean Air not to go in this direction, given competitive dynamics…
In this post:
Alaska & Korean Air want to restore codeshare flights
Alaska Airlines and Korean Air have just filed with the Department of Transportation (DOT), requesting permission to launch a codeshare agreement (thanks to Steve for flagging this). Alaska flies from Seattle (SEA) to Seoul Incheon (ICN), and the idea is that Alaska wants to codeshare on Korean Air’s flights from its Incheon hub to Bangkok (BKK), Busan (PUS), Delhi (DEL), Hanoi (HAN), Ho Chi Minh City (SGN), and Singapore (SIN).
With a codeshare agreement, Alaska will be able to place its “code” on Korean Air flights between those cities. When it comes to airline partnerships, a codeshare agreement is more than an interline agreement, and less than a joint venture.
On the surface, this is a totally logical level of cooperation, and it’s a win-win. Alaska flies to Incheon, and presumably the routes on which it is requesting to codeshare are those with the highest passenger demand. So this will allow both airlines to fill seats on their respective flights.
Fair enough, right, so what’s the problem? Well…
I can’t imagine that Delta is too happy about this
Delta and Korean Air have a transpacific joint venture, which is the closest level of cooperation you can have between airlines. Delta’s transpacific network is based so heavily around funneling passengers through the Incheon hub (though Delta is finally adding flights to other destinations in Asia).
Delta even owns a stake in Korean Air, and if we’re being honest, Delta is a very controlling airline partner. That’s understandable, because the airline has the clout to request that from its partners.
Alaska and Korean Air had a close partnership for many years, including a codeshare agreement, reciprocal points opportunities, etc. However, over the years, that was progressively scaled back. One would logically assume that Delta had a part in that, and pressured Korean Air to cut ties with Alaska, since Alaska will partner with just about anyone, as long as it’s a win-win.
Keep in mind that Delta has a special dislike for Alaska, given that it has been trying to grow in Seattle and go head-to-head against Alaska, but Alaska has stayed dominant. Delta is so used to going into markets and being number one, while the story has been a bit different in Seattle.
Delta wants to do everything it can to hurt Alaska, so I’m a bit surprised this happened. Admittedly Korean Air can of course still make some independent decisions, but there is close cooperation between joint venture partners. I can’t help but wonder if Delta executives were at all made aware of these plans, or if they’re just learning about it with the regulatory filing.
For what it’s worth, Alaska is in oneworld, and hopes to join the transpacific joint venture with American and Japan Airlines. However, that doesn’t preclude a codeshare agreement, especially out of a hub without much oneworld service.
What’s surprising here is that Seattle to Seoul is a market where Alaska competes directly with both Delta and Korean Air. So you’d think they’d try to drive Alaska out of the market, and the codeshare doesn’t help with that, since it helps Alaska fill seats.
Bottom line
Alaska and Korean Air have requested permission to launch a codeshare agreement, which really represents the restoration of such a partnership. The idea is that Alaska could place its code on Korean Air’s flights between Incheon and select destinations in Asia.
On the surface, this is a logical commercial agreement. The reason it’s a bit surprising is because this kind of an arrangement was cut some time back, and I have to imagine that Delta played a part in that. So I’m not exactly sure what’s going on here.
What do you make of Alaska and Korean Air trying to once again strengthen ties?
relax, Ben.
It actually benefits DL to show that DL/KE do not dominate the market to the exclusion of AS which is rowing uphill trying to survive on SEA-ICN.
???? elaborate
the DL/JV is already far larger than any of the JVs involving Tokyo.
It is in DL and KE's best interest to demonstrate that it is not using its power to block competitors.
sometimes that involves helping AS w/ beyond ICN flights or KE w/ beyond SEA domestic flights.
The latter actually helps DL because DL and KE have a JV.
Beyond ICN flights don't help DL but it eliminates the perception that DL...
the DL/JV is already far larger than any of the JVs involving Tokyo.
It is in DL and KE's best interest to demonstrate that it is not using its power to block competitors.
sometimes that involves helping AS w/ beyond ICN flights or KE w/ beyond SEA domestic flights.
The latter actually helps DL because DL and KE have a JV.
Beyond ICN flights don't help DL but it eliminates the perception that DL is using its market power to eliminate competition.
Remember that KE is in the process of shutting down OZ which KE acquired.
A codeshare agreement is hardly a "partnership." These deals are so very common and really don't mean much at all.
Any link to SkyPesos and how DL has massively devalued its program ?
Any chance this is a required concession as part of the Asiana/KAL merger? I believe there were requirements that KAL had to continue codeshares with Asiana partners...
I also thought their existing codeshare agreement was required in order for the DL/KE JV to be approved. So this seems blown out of proportion.
Transferring between T1 and T2 is too much hassle. If KE invites AS into T2 and share the lounge, then it will be a big middle finger to DL, but until then, I wouldn't read too much. Maybe as a JV partner, DL would benefit if KE's intra-Asia sells well too.
T2 will be better for connection, but as a Korean myself, I'd like AS to stay in T1. ICN T2 now is a mess since Asiana and its subsidiaries all moved there. Overcrowded, ridiculously long waiting lines for everything including lounges..
On the contrary, ICN T1 can't be better now. It's like a breeze since the largest airline at T1 moved to T2 for the merger.
Korean Air did consider joining Oneworld before joining Skyteam as a founding member. They've been very close with JL for decades(almost from their birth), and KAL currently have codeshares with some Oneworld carriers such as JL, AA, AS, MH.
and yet KE is a founding member of SkyTeam.
again, codeshares outside of alliances are fairly normal in the industry.
Yeah, there's zero possibility that KE will leave Skyteam, and it's common to have codeshares outside of alliances. It's just not surprising.
I'm afraid this is just another example of the strategic alliances slowly falling apart. Sure, for DL Skyteam never was very important. But you see the same with GOL in Brazil, partnering with AF/KL (Skyteam) and Aviance (Star) to compete against DL (Skyteam) and Latam (ex Oneworld, still strategic partner for BA/IB). The world is a mess ... also in airline industry.
It's Joe Biden's fault.
Delta is losing it. They have lost their premium status. The Koreans have had enough. When will Delta wake up? Three big losses in a few weeks - a subpar internet provider, a messed up first class seat program, and now getting punched by Alaska.
The big winners are Southwest and United. Delta better get used to their prize medal.
I'd be so thrilled if this would be a prelude to ICN-PDX where AS connectivity could help Portland regain transpac service.
Although this wouldn't be consistent with DL's normal line of thinking, there's an argument to be made for lose the battle to win the war - i.e. this can then be held up as evidence that DL doesn't *really* control its partners, that they aren't stifling competition, etc etc etc.