Depreciation of Japanese yen takes toll on US carriers
Both American and Delta have announced capacity reductions within the last week on two of their US – Japan routes. Last week, American announced a seasonal reduction on its Chicago O’Hare – Tokyo route from daily to 5 weekly effective September 30, lasting until March 29, 2014. Yesterday, Delta announced that it was pulling the plug on its Seattle to Osaka service effective November 4th.
With the depreciation of the Japanese yen creating higher travel costs for Japanese visitors to the U.S., demand has softened and created an impact on yields.
The Chicago to Tokyo flight on American competes against United and All Nippon Airways, which have each recently announced significant capacity increases on the ORD-NRT route within the past few months. As Matt posted last week, United plans to bring the 747 back to Chicago and will once again deploy the jumbo-jet on the O’Hare to Narita route in lieu of the 777. United had formerly operated the 747-400 on several routes from Chicago to Asia before moving all 747 ops to SFO earlier this year to improve operational reliability on these birds.
Additionally, All Nippon Airways, which currently operates a daily 777-300ER service on the Chicago to Tokyo route, will be adding an ADDITIONAL daily 77W service on the same route starting on September 1. Both United and All Nippon Airways enjoy anti-trust immunity on transpacific routes and split revenue and costs evenly.
However, American and fellow OneWorld carrier Japan Airlines also have a metal-neutral agreement on transpacific routes, and JAL also currently operates a daily 777-300 to Chicago as well. As such, OneWorld will still retain a sizeable chunk of the market share on Chicago to Tokyo, but with the UA upgauge and the extra ANA flight on the way, without question, the seat share dominance will tilt heavily towards Star in the near future.
The Seattle to Osaka route casualty is interesting given that Delta hinted a few weeks ago that much of its transpacific growth will come out of its Seattle gateway hub. However, the flight cancellation likely has less to do with the viability of Seattle and more on the difficulty for carriers to operate flights to Osaka. Only three carriers operate flights from KIX to the mainland US: United to SFO (daily, soon to be operated on a 787), Thai to LAX (thrice weekly, 77W) and China Airlines to New York JFK (thrice weekly, 747-400). Osaka has not been able to support nonstop service to stronger domestic US hubs in the past such as Dallas/Ft. Worth nor Detroit, indicating it is likely a weaker non-core Asia city that is better suited for thinner aircraft, such as the 787, which Delta does not have in its fleet flex at the moment.
Additionally, Delta has boosted Japan capacity out of Seattle recently, adding in a second daily service to Tokyo from SEA (to Haneda airport) and upgauging its Seattle to Narita flight onto a 747-400.
Spirit adds four new seasonal services from Minneapolis/St. Paul
Yesterday, Spirit Airlines announced four new seasonal routes out of MSP effective November 7 through April 30, targeting the snowbird crowd seeking respite in year-round sun destinations in Florida, California and Arizona.
Minneapolis – Los Angeles
NK323 MSP1615 – 1815LAX 319 D
NK424 LAX0805 – 1345MSP 319 D
Minneapolis – Orlando
NK135 MSP0750 – 1205MCO 319 D
NK250 MCO1255 – 1525MSP 319 D
Minneapolis – Phoenix
NK345 MSP0925 – 1150PHX 319 D
NK342 PHX1510 – 1915MSP 319 D
Minneapolis – Tampa
NK472 MSP1500 – 1910TPA 319 D
NK428 TPA1955 – 2220MSP 319 D
These markets will join Spirit’s existing services out of Minneapolis to Chicago, Dallas/Ft. Worth, Las Vegas, Denver and Fort Lauderdale (seasonal).