DL a potential suitor for Skymark?

[FrugalFlyerv2.0]

Just wondering? If DL extends credit to skymark in bankruptcy then do they become an equity holder? Then if or when skymark to satisfy creditors has to sell or release or rent assets ( hnd slot times) wouldn't a creditor get said assets before they would be returned to the Japanese gov? Just wondering

 
IMHO this would be the best deal for DL to result from the Skymark investment.

 

[eolesen]

There likely wouldn't be any opportunity for DL to get daytime slots at HND. HND's terminal is domestic and "transborder" only during the day, longhual international at night. That makes the opportunities for feed there a bit suspect.

Still, someone thinks it's a good opportunity, and it sounds like it would be incremental or a shifting of their present day flying to start feeding DL's daytime flights at NRT and/or KIX.

 

[jimntx]

The last few posts seem to assume that Japanese bankruptcy laws and Japanese airport landing rights laws are identical (or close to) U.S. bankruptcy and landing rights laws.  Do we know that for sure?  For instance, considering how tightly held and how difficult to get the HND slots are, perhaps in a bankruptcy the slots revert to the government/airport authority, not to creditors or outside bidders.

 

[WorldTraveler]

Yeah, not understanding the "need" for domestic feed. IIRC, isn't DL already serving the largest domestic markets? That's where Skymark already exists.

Maybe DL is considering withdrawing more from Japan outside of TYO than they've let onto?

 
DL does not serve any Japan domestic markets. They will again fly KIX to NRT but that is only to feed the NRT hub and only on an int'l connecting basis. NGO is the only other Japan market besides Tokyo that DL serves to the continental US. Other Japanese cities including KIX have service to Hawaii but not the continental US.

DL could try to eventually get Skymark to do all beyond Tokyo flying including Japan domestic but Skymark did not fly to anywhere close to the int'l network that DL serves from Japan even within Asia.

Skymark at a minimum could obtain enough slots at NRT to help feed DL's NRT hub with domestic Japan connections.

Beyond that, it could fly some of the beach market stuff as well as to Korea, China, and some of the sborter int'l flights.

On the extreme, it could start flying longer haul intra-Asia and even TPAC flying including to Hawaii.

It is harder to see what Skymark could do for DL on a connecting basis at HND but they could have a powerful brand position esp. if the DL logo is prominently part of Skymark's future.

Skymark does have the potential to dramatically revitalize DL's presence in Japan, including a larger presence than it or NW has had before, and also give JL and NH a much larger competitor in DL than they have had and one that has the potential to have lower costs in at least a few key markets.

Just wondering? If DL extends credit to skymark in bankruptcy then do they become an equity holder? Then if or when skymark to satisfy creditors has to sell or release or rent assets ( hnd slot times) wouldn't a creditor get said assets before they would be returned to the Japanese gov? Just wondering

Still waiting

The part of the plan that was made public so far is that DL would have 20% equity which is in line with Japanese laws but could also give DL a presence on their board as DL has with every other airline equity investment.

The slots appear to still be held by Skymark awaiting their reorg. The Japanese gov't has tried to break the JAL and NH duopoly which is why Skymark has so many slots at some of the key airports. They would like to see Skymark revitalized and give Japan a 3rd competitor that can provide price discipline.

Having DL be a major force behind the reorg will concern alot of people in Japan but the only other viable reorg option is from NH which would further concentrate the Japanese industry between NH and JAL.

This whole investment could be a big bluff by DL to negotiate with Japan to allow DL to move its hub to HND or they could really have a viable plan to do so. Remember that Richard Anderson said he wanted enough slots to move its NRT hub to HND.

The whole reason why DL's NRT hub was threatened was because of the opening of HND to longhaul and more intra-Asia flights and DL has been successful at convincing the DOT to not approve any daytime slots for US-HND flights because it would weaken DL's NRT hub.

There are lots of ways a Skymark partnership could play out but DL could use the slots as part to negotiate what it wants in restructuring its Japan business. Given that DL's Japan business generated up to $4 billion in revenue per year or 105 of DL's revenue, even a one billion dollar investment (and it will probably be less than that and probably in line with the $300-400 million it has invested in Gol and VS) is a small price to pay to maintain and grow its presence in Japan

 

There likely wouldn't be any opportunity for DL to get daytime slots at HND. HND's terminal is domestic and "transborder" only during the day, longhual international at night. That makes the opportunities for feed there a bit suspect.

Still, someone thinks it's a good opportunity, and it sounds like it would be incremental or a shifting of their present day flying to start feeding DL's daytime flights at NRT and/or KIX.

All of the slots at HND have now been allocated so it is not likely that Japan could now allocate slots to Skymark for int'l flights it doesn't now serve. Further, Japan has Open Skies with most of the int'l countries that DL/NW serves/served from NRT so the bigger part of moving the hub to HND is slots instead of the legal bilateral rights.

It is probably more likely that Skymark gains slots to feed NRT first from Japan, then from other parts of Asia to complement what DL has which would provide enough feed to increase DL's size at NRT, DL moves at least some of its NRT operation to HND, and heavily increases its brand presence in Skymark which would help DL overall in Japan, and perhaps eventually Skymark could feed DL int'l operations from Japan from several cities.

It could also keep NRT as a low cost hub and convince the government to shift Hawaii/beach flying to NRT in addition to a limited intra-Asia presence at HND or several similar combinations. There is no doubt that DL has or will inject(ed) itself into some key policy discussions regarding aviation in Japan - a country that has had a hard time letting the free market work on its own.

It is also very interesting that all of this with Skymark along with Gol is breaking right after DALPA shot down the TA and these options give DL mgmt alot of options to grow its int'l network. Methinks that DALPA will decide that it is worth their while to come back to the bargaining table and might find that the protections it thought it had from the 2012 contract might not be near strng enough to keep DL from outsourcing a lot of flying if they want to.

 

[FWAAA]

Although it's possible that a DL investment in Skymark would put DL in an advantageous position in case Skymark ultimately liquidates, I don't see how DL could use the Skymark daytime slots at HND. Nor do I see how an operating Skymark helps DL, considering that DL still has just one long-haul flight at HND and no realistic prospects for adding 8-10 more USA-HND flights in the future.

The last few posts seem to assume that Japanese bankruptcy laws and Japanese airport landing rights laws are identical (or close to) U.S. bankruptcy and landing rights laws.  Do we know that for sure?  For instance, considering how tightly held and how difficult to get the HND slots are, perhaps in a bankruptcy the slots revert to the government/airport authority, not to creditors or outside bidders.

Good point.

 

[WorldTraveler]

I doubt very seriously that is trying to come up with a plan to shift slots between DL and Skymark involving HND.

It is far more likely that when Skymark restarts its operation, there will be additional connectivity that will help DL's LAX-HND flight. It is more likely that Skymark will add connecting flights to NRT where there are slots available.

Further, the Japanese might come up with more slots that would allow daytime flights from HND to the US but if that happens, then DL and Skymark would each bid just as JL and AA and NH and UA.

I suspect that is a long ways off but for the time being DL's focus is on obtaining enough feed at NRT and HND to change the economics of DL's current flights.

 

[jcw]

.It is far more likely that when Skymark restarts its operation, there will be additional connectivity that will help DL's LAX-HND flight.

DL now needs help on LAX-HND - interesting turn of analysis

 

[WorldTraveler]

There isn't a carrier on the planet that wouldn't accept connections on either end of a flight if they could get them.

If AA and UA can have JV partners in Japan that help provide connections and still underperform DL on average fares between the US and Japan, then DL can certainly pursue a partner - JV or not - that can help DL with connections from Japan.

and let's also not forget in all of this that KE is the largest int'l airline in Japan and serves nearly every Japanese city and connects an enormous amount of traffic via ICN.

A DL investment in Skymark has significant strategic implications for KE.