NWA's Pacific Strategy

JetClipper

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May 2, 2004
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Before beginning, I want to let everyone know that I do not work for, nor have a financial interest in (other than the tickets for going home for Christmas), any airline.

That out of the way, I'd like to take a break from the Labor-Management bashing of the past few months and pose a question about Northwest's long-term future (let's please leave out any comments about if NWA has a future; for the purpose of this discussion, we'll assume that they do).

Northwest's Pacific routes (particularly the NRT hub) have historically been one of their most important assets. However, I see several dark clouds on the horizon.

* More U.S. cities gaining non-stop service to points beyond Japan, particularly China (e.g. the recent route awards to AA & CO).

* The opening of Haneda's fourth runway in 2009, and subsequent initiation of non-stop services to regional destinations in Asia (NWA currently carries approximately 10% of Japan-origin travelers)

IMO, both of these developments have the potential to dramatically lessen the importance of the NRT hub. U.S.-origin passengers will choose to take non-stop flights to Asia (avoiding connections in one of Northwest's U.S. hubs and NRT), and Japanese travelers will relish the opportunity to avoid the 90-minute drive to Narita. In addition, the departure times required to feed NRT-outbound flights (particularly departures to the U.S.) make them less-than-desirable for Asian travelers. Who wants to get up at 2:30am to catch NWA's 6:00am SIN-NRT flight?

If this is indeed the case, Northwest faces some tough decisions about both route structure and fleet in the years ahead. The 787 will certainly allow non-stop services from DTW to most Asian cities (I think DTW-SIN is even possible), but the rest of the fleet is almost entirely geared toward the NRT hub.

Will these developments seriously affect the viability of the NRT hub? If so, how should NWA proceed?
 
I know this board doesn't get much business discussion so I'll play along, Clipper.

Yes, NW has badly mismanaged its fleet planning and its valuable Pacific franchise. The 787s are way too little way too late. Although NW has a very decent Asian franchise, they will have a harder and harder time attracting traffic from the eastern half of the US to points beyond Japan just because more and more alternate routes will appear. In fact, I think all of the anticipation about AA buying NW is a bit overblown because AA has the aircraft and ability to add service to many cities in Asia now. CO is clearly also taking a swing as are the foreign flags that are deploying A340-500s nonstop from at least a couple cities in the US to every major city served by UA and NW in Asia. Eventually, there will be little NEED to funnel traffic through NRT.

However, Japan is still a very big market and NW can make money in Asia even if it carried no passengers through NRT but relied strictly on local traffic over the Pacific and within Asia.

Ultimately, NW has to rebuild its Pacific franchise which means investing in alot more planes than the relatively few 787s they have on order. They also have to move out of their regional approach to serving Asia; AA, CO, and UA all have much bigger local markets and still have the ability to pick off the best markets. It's alot harder to continue to grow an international network when there is little, if any local traffic.
 
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Speaking of large markets, I would think a quick start in the right direction would be the resuming of JFK-NRT (yes, I know it's a crowded market, but still....).
 
I believe it may have been in Aviation Daily...freighter may be future tense. Are you saying this is not correct? For NW's sake, I am hoping it is not true.
 
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Update: I was looking through the flight schedules today, and didn't see any freighter traffic for JFK after the first of the year. NW doesn't always publish them that far out, but January's should at least be loaded.

So,again, I hope WT is wrong, but I fear they're right.. :unsure: :unsure:
 
Looks like the last JFK-ANC freighter was on Dec 15. I'm told they'll still do on-demand charter in/out of JFK, but scheduled freighters are now history.


If HND continues to be (re)opened to international traffic, then I'd expect more and more traffic to return there due to NRT's high costs, which means NWA's franchise becomes less and less valuable.