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| Korea Air President Walter Cho |
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| Asiana Airlines CEO Kim Soo-cheon |
The growing trans-Pacific partnership between Korean Air and Delta Air Lines is expected to deal a blow to Asiana Airlines as the two Sky Team members will jointly offer more convenient flight schedules and cheaper tickets, industry analysts said Monday.
In June, Korean Air and Delta signed an agreement to set up a "joint venture" to manage their flights between Asia and North America, in a bid to increase operational efficiency and reduce costs. It is a business model which has become popular among large carriers to compete with rapidly-growing budget carriers.
Under this partnership, a stronger business tie-up than the conventional code share arrangement, the two air carriers will share costs and revenue from operating their trans-Pacific flights.
The joint venture will also enable the two to rearrange and share their services at the soon-to-be-open terminal 2 at Incheon International Airport, which will house Korea Air, Delta Air Lines and other Sky Team member airlines.
Currently, Korean Air accounts for nearly 50 percent of all flights heading to the United States and Canada from Incheon International Airport, with about 7.4 percent of the passengers bound for North America flying with Delta.
Analysts project the two airlines will further increase their market shares as they offer more convenient flight schedules and better service, adding Asiana and other carriers flying to and from North America will suffer because of the Korean Air-Delta alliance.
"There is no doubt that the joint venture will bolster business for both Korean Air and Delta Air Lines because the two can offer seats in a more flexible and cost-efficient manner," an airline industry analyst said. "I think Asiana Airlines will be hit the hardest because this will make it more difficult for the carrier to expand its long-distance flight service to North America. So it needs to form a strong partnership with a leading U.S. carrier if it wants to compete with its larger local rival and become a premium global carrier," the analyst said.
Last Friday, Korean Air said the U.S. Department of Transportation approved its joint venture arrangement with Delta, clearing the biggest hurdle for the two to jointly operate trans-Pacific flights.
It expects the Ministry of Land, Infrastructure and Transport will follow suit soon.
In July, they filed applications with transport authorities in both countries for approval.
"Following the approval from the U.S. government, momentum is gathering for our joint venture with Delta," a Korean Air official said. "As soon as we get approval from the Korean government, we will take the necessary steps to begin our joint operation."
In response, Asiana Airlines said it has no plans as yet to set up a joint venture with a leading foreign carrier to counter its rival's move, but stressed it will mobilize all resources to offer convenient flights at low costs.
"Nothing has yet materialized as to whether we set up a joint venture with a leading global carrier. But we will continue to explore opportunities," an Asiana official said. "In the meantime, we will continue to improve our customer service, modernize our fleet and introduce more routes to destinations in North America and Europe."
