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Jilted Delta confident in Asian strategy without JAL
This is an archived article that was published on sltrib.com in 2010, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

After losing its bid for a partnership with Japan Airlines, Delta Air Lines contends that its own enlarged route network still will allow it to compete strongly in Asia.

Delta executives are likely "licking their wounds" after losing the fight to lure JAL away from American Airlines' oneworld alliance, airline consultant Darryl Jenkins said.

"I'm sure they are disappointed, but they are still well-positioned in Japan," added fellow industry consultant Patrick Murphy. "That would have been a very powerful alliance in the Pacific."

Financially troubled Japan Airlines, wooed for months by Delta with promises of cash and global reach, dealt the world's biggest carrier a blow with its decision. The Japanese carrier said Tuesday it will strengthen its partnership with American. The two airlines will jointly seek government approval to work closer together to coordinate schedules on prized trans-Pacific routes, share revenue and carry each other's premium passengers -- all moves that can boost profits.

Delta said in a written statement that it remains the No. 1 carrier between the United States and Asia. With the Tokyo hub Delta acquired through its 2008 merger with Northwest Airlines, Delta still offers the most access to Japan among U.S. carriers, along with United Airlines. Delta flies to Japan from 10 U.S. cities.

Delta's bid for a financial and marketing partnership with JAL was one of the bolder moves Delta has taken under CEO Richard Anderson, who arrived in 2007. Industry observers say it was unusual for one airline alliance to raid another's.

Delta had planned to bring JAL into its SkyTeam alliance and form a joint venture with the Japanese carrier as a new U.S.-Japan aviation treaty opens up the market between the two countries. Delta has a joint venture with Air France-KLM across the Atlantic. It wanted to complement that with a similar venture with Japan Airlines across the Pacific.

There were plenty of forces working against Delta. By sticking to its partnership with American, JAL can avoid the cost and complication of switching to SkyTeam. It also avoids the uncertainty of trying to gain antitrust immunity for a partnership with Delta, a status that enables partners to more fully cooperate.

American and JAL plan to submit their application for antitrust immunity in coming days to establish a joint venture, but it is seen as more likely to get approval than a pairing with Delta.

The fight between Delta and American for JAL was closely watched on both sides of the world because it involved the Japanese government intertwined with its largest airline after a series of bailouts; two U.S. airline behemoths competing head-to-head for a larger presence in a promising region of the world; and the U.S. government's diplomatic relations to open up a key market in a global industry.

Airlines » Consultant: They're probably "licking their wounds."
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