Delta Cuts Japan Seats Up to 20%; AMR Says Quake Hurt Sales

Discussion in 'Delta Air Lines | SkyMiles' started by AmericanGirl, Mar 22, 2011.  |  Print Topic

  1. AmericanGirl
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    AmericanGirl Silver Member

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    http://www.businessweek.com/news/20...seats-up-to-20-amr-says-quake-hurt-sales.html

    March 22, 2011, 4:21 PM EDT
    By Mary Schlangenstein and Mary Jane Credeur


    March 22 (Bloomberg) -- Delta Air Lines Inc. will slash seating capacity to Japan as much as 20 percent through May, while American Airlines reported a “modest” revenue decline after the March 11 earthquake and radiation leaks.

    The reductions at Delta will have a net effect of $250 million to $400 million, the carrier said today at a JPMorgan Chase & Co. conference in New York. AMR Corp.’s American is keeping its full schedule and the April 1 start of a trans-Pacific joint venture with Japan Airlines Corp.
    American is “monitoring the situation carefully” and has the ability to shrink capacity if necessary, Treasurer Beverly Goulet said at the conference.
     
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  2. DeltaExpert
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    While with the Haneda service suspended that only adds to this....


    Hopefully it will come back soon and with better time slots!
     
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  3. MSPeconomist
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    I would have assumed that the Haneda suspensions are included in the 20% but I haven't tried to look at schedules and crunch numbers. If DL is simultaneously upgauging other TPAC routes, such as ICN and PVG, the net cut in Asian service could be less than the 20% figure suggests.
     
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  4. ClipperDelta
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    I believe the HND suspensions are included in the 15-20% reduction. Schedule/gauge changes due to these cuts (except for HND) have not been loaded into the system yet. As per the news articles and Delta's SEC filing, the 15-20% reduction is for Japan capacity only, and does not take into account any changes in the other Asia routes.
     
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  5. jbcarioca
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    jbcarioca Gold Member

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    One would imagine that the demand will soon come back strongly during recovery and reconstruction. Is there any insight about that?
     
  6. MSPeconomist
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    I'm not sure.

    First of all, it's unclear to me how much of the recovery and reconstruction activity will involve foreign firms. Japan has historically purchased from Japanese suppliers and there are barriers to foreign businesses operating in Japan without local partners. The extent to which the capacity of Japanese industry is sufficient for reconstruction efforts will, of course, determine whether these barriers are suspended. The nature of Japanese building codes (which could well be the strictest in the world) might also hinder the performance of foreign contractors in rebuilding the affected zones.

    Secondly, based on the news today that Tokyo's water supply has radiation levels considered unsafe for babies, it could be a long time before foreigners are willing, whether rationally or irrationally, to return to Japan unless it is absolutely necessary. Once business needs are met by videoconferencing, etc., the habit could stick for a while, despite Japanese society's reliance on relationships in business dealings.

    Finally, while the reconstruction will stimulate the Japanese economy, their manufacturing sector could face long term disruptions if Japan's electric power supply remains decimated by the loss of the crippled reactor complex. If Tokyo neighborhoods are subject to rolling blackouts, I would imagine that there would also be some restrictions on industrial uses of electric power. Since Japan has virtually no non-nuclear power sources of its own and must import a large fraction of its energy, there are no obvious economical alternatives, even if oil prices were not escalating currently.
     
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  7. jbcarioca
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    jbcarioca Gold Member

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    Thanks for that. After four decades of doing business in Japan I do not feel very knowledgable. My own client seems to be asking much more and demanding increased support during the last week. Of course we have long used video conferences and only meet face to face once a year or so. I suppose 25 years of working together has an effect.

    My impression from here in Brazil is that the demand for travel seems to be rapidly increasing,. That is partly due to the huge number of Japanese-Brazilian dual citizens and the close family and commercial links that ensue, particularly in agriculture. I know the view from here is quite warped and does not represent the larger world.

    For air travel specifically, has there been a clear negative effect on the business of ANA and JAL? One might imagine that they'll be quite busy trying to repair worldwide supply lines and business relationships too.
     

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