Delta Air Lines intends to serve Shanghai from its hub at Minneapolis-St. Paul, growing the connecting opportunities between the USA and China. The carrier applied for the necessary route authorities this morning, seeking to launch daily service in June 2020 on the A350-900. The new route would bring to three the number of Asia destinations served from MSP. Delta currently flies to Tokyo’s Haneda Airport from the Twin Cities. Seoul will be added to the route map in April 2019, in conjunction with the carrier’s joint venture with Korean Air Lines.
“We are honored to be proposing the first-ever nonstop flight between Minneapolis-St. Paul and China as we continue to expand across the Pacific,” said Ed Bastian, Delta’s Chief Executive Officer. “In addition to our Twin Cities customers, this new route will benefit travelers across the U.S. with more competition and options for service to Shanghai thanks to our connecting hub at Minneapolis-St. Paul International Airport.”
The Minneapolis-St Paul airport has proven to be a solid connecting traffic performer for Delta, especially with the service to Haneda. Combining that with the cuts American Airlines recently announced from Chicago to China and there is significant potential to capture both local and regional traffic headed into Asia. The service also connects to the China Eastern hub at Shanghai, an operation where Delta is coordinating passenger flows.
Service between the US and China’s largest cities (Shanghai, Beijing, Guangzhou) remains restricted based on the bilateral Air Transport Agreement between the two countries. Securing those route authorities is a tricky game based on market demand and airlines’ willingness to invest in growing the markets. United Airlines pushed heavily into tertiary cities where the slots are not restricted and ultimately backed off on some of those routes. Even the primary airports present challenges for airlines today.
Fortunately for Delta seven frequencies are now available, owing to Hawaiian Airlines dropping its thrice-weekly Beijing service and United Airlines dropping its Guam-Shanghai flights. Delta will not need to seek the reallocation of American’s suspended route authorities to make the new flights work. It is worth noting the timeline between application and service launch leaves sufficient time to negotiate access to gates and landing slots in Shanghai; those are notoriously difficult to secure. Delta could struggle on that front even after DoT approval is granted.
Making the bet today also means predicting the future of US-China trade relations, a challenge in the best of times and politically these are not the best of times. Fortunately for Delta any potential tariff battle does not yet affect traffic between the countries. This is especially noted in the more lucrative premium cabin. Delta President Glen Hauenstein reported earlier this month that the spat does not yet show “any meaningful impact. We’re watching it as everyone is. Our Pacific based revenues and China specifically have done quite well in the quarter especially given some of the added capacity that we had put into the market with our recent launch of Atlanta-Shanghai doing well within our range of expectation. So we haven’t seen it.”
This position is similar to that of United Airlines. Chief Commercial Officer Andrew Nocella echoed that view in that carrier’s quarterly earnings call last week, “We continue to watch demand levels in business class for China flights and have yet to see any reduction in demand for future periods resulting from trade disruptions.
“Shanghai is the largest Asian market without direct service from Minneapolis-St. Paul International Airport,” said Brian Ryks, Executive Eirector and CEO of the Metropolitan Airports Commission. “Direct service to China would be a tremendous benefit to the Minnesota business and hospitality communities. By seeking federal approval to fly the route, Delta is once again reaffirming its ongoing commitment to the Twin Cities and creating opportunities for people and businesses throughout the region.”