Asiana Airlines Cuts Chicago, Other Unprofitable Routes

Filed Under: Asiana

It’s an interesting time for global aviation. You have some airlines doing really well, and at the same time we’re seeing more airlines liquidate than we’ve seen in a really long time.

Even within regions we’re seeing huge variance in terms of airline performance. While British Airways is reporting record profits, Virgin Atlantic continues to lose money. In Asia, Cathay Pacific has returned to profitability, while Asiana and Korean Air are struggling to stay alive.

At the moment Asiana Airlines is in a bind. The carrier’s parent company, Kumho Asiana Group, is seeking financial support from its biggest creditor, following an accounting fiasco that caused their credit rating to be downgraded.

Asiana’s co-CEO resigned a few weeks ago, and the airline is now trying to cut routes and is even considering getting rid of some planes.

As Asiana’s CEO describes it:

“I am desperate to create a stable management environment. We need to restore trust through bold innovation.”

We’ve known for a while that Asiana plans to cut routes, and one of those long haul cuts has just been revealed (with more to follow, I’m sure).

Asiana Airlines will be discontinuing their flight between Seoul Incheon and Chicago as of October 27, 2019. The airline has removed all inventory from their system for the route as of that date.

The airline currently operates the route 5x weekly using a Boeing 777-200, with the following schedule:

OZ236 Incheon to Chicago departing 7:10PM arriving 6:25PM
OZ235 Chicago to Incheon departing 11:55PM arriving 4:00AM (+2 days)

At 6,538 miles and about 14 hours in each direction, this is one of Asiana’s longest routes. The carrier’s other US destinations include Los Angeles, New York, San Francisco, and Seattle.

I guess Chicago being a Star Alliance hub (thanks to United’s presence there) wasn’t enough to make this route profitable.

Rumor has it that Asiana is either looking to get rid of some of the planes that they’re leasing, or is looking to sell some of the planes that they own. So I’m not sure if this route cut specifically is because they’re looking to get rid of some 777s, or if this is purely because the route is performing especially poorly.

Given the dire financial situation that Asiana is in, I’m a bit surprised that they’re not cutting the route sooner. I guess maybe the route does pretty well seasonally, so it makes sense just to cancel it ahead of the winter season.

Are you surprised to see Asiana cutting their Incheon to Chicago route?

(Tip of the hat to @hb_sson)

Comments
  1. What is about Chicago and routes to Asia? First AA pulling out completely and now Asiana and no airline is adding capacity…

  2. Asiana isn’t the problem, it is Kumho’s mergers and acquisitions that are sinking the ship. The KDB approved a 1.6 trillion won (1.4b usd) loan (3x what Asiana requested) to the airline through a combination of credit and liquidity to speed up a sale of the airline and total divestiture from Kumho. The government recognizes the airline can be saved relatively easily, its just got to get Kumho’s hands off it first.

    As the A380 leases expire, they will be removed from the fleet. The airline is already retiring its 767s as they age out, and I wouldn’t be surprised to see them phase out their 772’s as the a350s come in. Mismanagement got them to where they are, but with sale to a competent firm, and smart route cuts and asset management, they can be successful again in short order.

  3. I’m hoping they won’t make too drastic changes to Asiana Club. It’s one of the easier programs to get *A Gold out there.

  4. Chicago to Asia seems to be a really, really tough market to make money. And this was a hub-to-hub route that is ending with 2 carriers with anti trust immunity.

  5. @marshall – United and Asiana might have antitrust immunity but they dont use it. They do not have a joint venture and they do not cooperate on pricing/ revenue sharing/ schedule optimization at all. This was mainly a route used to take Americans to Southeast Asia – Bangkok/Vietnam/ Philippines. All cheap trash traffic. Not really high yield. I’m surprised it lasted as long as it did.

  6. Chicago is a city that has been on the decline for years with population declining by about .5% every year (around 25,000 people) — and those leaving are people disproportionately more likely to be air travelers (and high bracket tax payers) than those who are staying put. ORD air services have to eventually catch up to this reality.

  7. “What is about Chicago and routes to Asia? First AA pulling out completely and now Asiana and no airline is adding capacity…” Hainan, China Eastern. NH added a second daily route

    AA is a pussy that doesn’t want to compete

  8. I wonder if non-daily flights cause some problems. Apparently CX is really struggling with IAD-HKG at this point. It’s only 4x/week. I think the non-daily aspects of routes like this make it more difficult for travelers since if you’re searching for particular dates and there’s no flight or you see some sort or odd connection it’s less likely you’ll book with them.

  9. Replying to GuruJanitor

    Their A380s are not leased, and they said elsewhere that they will keep them on long haul route.

  10. Mak – Its a metro that is barely growing but the people moving out of Chicago are just moving to neighboring states like Indiana and Wisconsin. Also the new residents that Chicago is getting are Foreign born so they would be most likely to take a plane

  11. @ Marshall – perhaps you forgot the long standing ORD-HKG and ORD-NRT ? Not to mention ORD-PEK and ORD-PVG, these are all UA routes and UA doesnt have problems filling the seats. The problem is ORD is suitable for day time flights only not night time unlike LAX or SFO. KE had been flying ORD-ICN way before OZ does, and KE depart day time as well, OZ and BR are the only two depart close to midnight, and they arrive ORD at night so there are zero connectivity onward from ORD.

  12. Two years ago in January when JFK got hit with the big storm and shut down. My JFK bound Asiana flight got diverted to Chicago. Asiana got everyone hotel rooms in a Hilton in the middle of no where. The funny part was that wife of the Asiana manager for Chicago was driving people to the CVS nearby in her full of kid toys Minivan. 😉 Guess they will be relocating.

  13. @Mak – hate to let facts get in the way of your narrative, but while Chicago is experiencing moderate population decline, it is disproportionately bleeding low income residents – while adding high income residents. As of last summer, Chicago had more tower cranes in action than any other city in the US other than Seattle as the luxury high rise boom downtown continues. There are certainly challenges to be faced as the city changes, by the sky is certainly not falling.

    From the Chicago Metropolitan Agency for Planning: https://bit.ly/2KUeSAB

    “Prior CMAP analysis indicates that low- and moderate-income residents across all demographic groups have left the Chicago region over the last decade, potentially in search of greater economic opportunity elsewhere…While the region appears to be gaining high- income residents, this increase is not offsetting losses due to stagnant immigration and domestic outmigration of low and moderate-income residents.”

  14. It’s interesting that so many airlines are struggling when the world economy is doing quite well and jet fuel is relatively low. The next recession will outright purge weak airlines. I guess airlines like Asiana are just trying to stay ahead of the curve.

    Excluding New York, LA, and SF, are there many cities in the US that can support both Korean Air and Asiana flights?

  15. I’m wondering whether an EWR flight might make more sense for Asiana rather than their current JFK flight. Northern Jersey has one of the largest ethnic Korean populations in the U.S. and EWR is a United hub while still having access to the lucrative NYC market. It could be a way for them to distinguish themselves from KE while targeting the Korean community in cities like Fort lee.

  16. @Mark

    If anything, Chicago as a whole is becoming more elitist. The city’s construction boom has been going nonstop for years.

    https://www.chicagobusiness.com/article/20180530/BLOGS02/180539986/chicago-attracting-more-young-well-off-residents-census-data-show

    Between 2010 and 2016, the city of Chicago gained more households in a key category—total income of more than $100,000 with the head of household under age 45—than any city in the country except for far larger New York, according to newly analyzed U.S. Census Bureau data.

  17. For premium passengers, Asiana keeps its cabins too hot and has failed to innovate while BR and other Asian carriers (NH, JL) present far superior products. The connection times at ICN are too long — routinely over 3-5h — and Asiana’s lounges used to suck compared to BR/CX/NH/JL (I haven’t been to the new lounges). Too few showers and also kept at overly hot temps. It is no wonder that we moved our business over to those other carriers.

  18. @Mak – As others have more or less pointed out, your information about Chicago is out of date. Population loss has been much slower, as higher income individuals moving in nearly offset lower income people moving out.

    @MikeJones – False.

  19. @Justin

    Would make more sense to have Asiana out of EWR and not JFK where they have minimal codeshare partners. However, I think they like utilizing the A380 to NYC and the A380 can’t be used at EWR.

    On the same note, I don’t understand why Turkish (also *A) flies out of JFK and not EWR) and they don’t even need to worry about the A380 restriction since they don’t have any of them.

  20. One can speculate, but I truly believe it is the Asiana leadership and management team is responsible for their unprofitability. They have been, for years, keeping unprofitable routes, and leasing an expensive fleet of airplanes which are running less than full capacity. Also, they had to liquidate some of their assets, such as commercial buildings, to satisfy their creditors. I don’t know how this will play out, but I sure hope that they can become profitable again.

  21. Asiana is in trouble for sure. But why do you say Korean Air is struggling to stay alive? It is not in financial trouble like Asiana.

  22. @Micah

    Asiana uses the their new A350 on the JFK-ICN route. The A380 has been pulled off that route for some time.

  23. @DB – not true, as has been the case for a while now, they run the A350 in winter (used to be the 772) and a380 in the summer.

  24. @micah Turkish will be adding a flight to EWR which was mentioned on this blog
    @DB Asiana flies the A380 I see it come over my house on the reg

  25. Having just flown Asiana on its nonstop from SFO to Incheon, connecting to a flight to Hanoi, I will not be surprised when the airline stops flying many routes. Their business-class hard product and service were, without a doubt, the worst I’ve experienced in flying Asian-based airlines in years. Seats were uncomfortable, with almost no storage space for personal items. The aircraft interior was worn and showed scuffs on the “everything is beige” decor. The service was lackluster, and the food was mediocre. Unless I have to fly to Seoul, I’ll never travel on Asiana again.

  26. Delta’s MSP-ICN flight started this month (772 for now, 359 soon), could the additional Midwest-ICN capacity have been part of the Asiana decision?

  27. I think I read somewhere that Korean Air is in financial trouble. Have a Lifemiles award Fbooking out of JFK so somewhat nervous about future cuts

  28. Asiana is in financial trouble, because of the mother group Kumho. They are cutting the Seoul-Chicago route, not because the occupancy rate is too low to make profit, since it has average of 80% of occupancy, but because their occupancy rate for SFO and LAX is average of 90%, so Chicago route is not so profitable compare to LAX and SFO route. Another reason is there is severe competition with Korean Air for Chicago route. So they want to cut it after summer high season, when so many Korean students return to US schools.

  29. Chicago is expanding network to Asia… HU is to start CTU-ORD this year, though typical 2 weekly subsidy-based routing.

  30. @Justin

    That’s a rather insightful comment about the local community. For connectivity reasons, however, I’d see little incentive for passengers to connect at EWR to whatever’s left of major northeastern US destinations that when doing so at other Asiana North America destinations.

  31. Oh, no. Bad news for me as an Asiana Diamond member based in the midwest. It always seemed to me like Asiana was sort of a partner of last resort for United though. Anytime I ever search for tickets to Asia, flights on other Star Alliance partners like ANA or Air China and even non-alliance partners like Cathay Pacific and Hong Kong Airlines always come up before flights operated by Asiana do.

  32. i hope everything works out for Asiana. they are such an amazing airline and one of the few that keep the sanity and standards in the industry. hope both Asiana and Korean Air make it out alive but i do have to stress that even though i am their number one fan, if they don’t innovate and improve, they will die

  33. I’ve taken the ORD-ICN flight on Asiana. In most cases, arriving at 4 am is a major problem. After flying 14 hours, most people cannot do business on the day of arrival. And 4 am is much too early to check in to a hotel, unless you pay for the prior night. Asiana is also a junior UA partner that does not provide full Premier qualifying and mileage benefits, which is another reason to take another airline, even with a connection.

  34. I am surprised Asiana is not cutting Seattle. Every time I fly from SEA to SE Asia, Asiana has some of the lowest business class fares and I have not flown it yet (SFO crash, recent food fiasco, friends reports of poor English skills of OZ cabin crew and lack reasons to earn UA miles in SEA are among top reasons I avoid OZ).

    I assume they have a good following of customers from Korea who prefer Asiana / local airline, but I am not sure it’s enough to sustain SEA route.

    With DL upgrading SEA-ICN from 767 to A330neo in addition to KE regular 777 seevice, I think SEA will be gone before end of the year.

  35. @Garrett – what are you talking about. The economy here isn’t even good. Its just a Trump talk point. Millions of uncounted unemployed. Where is the growth? Much less globally.

  36. FYI, Asiana hasn’t let LifeMiles know about the cancellation so LifeMiles will not let me change my ORD-ICN ticket without paying the change fee.

  37. My husband and I are booked in business class flight from Seoul to Chicago on January 5 booked through ANA miles! I have contacted ANA and and they are looking for potential solutions and asked that I give them a week or so for resolution (or refund!) I booked the flight January knowing that this was going to be peak season and I am unlikely to find a warm travel availability at this time if they cancel completely. Does anybody have a similar experience?

  38. @Steve – what are you talking about. If the economy is not good, why is Obama trying to claim credit for it?

    From the Washington Times, December 2017:
    Former President Barack Obama is taking credit for the robust economic growth that is taking place under President Trump.

  39. I’m sorry to see this route go. It’s super convenient for those with connections in both Korea and the American Midwest.

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