Delta confident in Asian strategy without JAL

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.”

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, Atlanta-based Delta remains a leader in 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 Chief Executive 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. Financially troubled JAL elected to stick with American and oneworld, however.

“I’ve never seen a leadership at Delta this aggressive. It was really gutsy on their part,” Jenkins said. “There is no doubt that it takes somebody like Anderson” to make such a move.

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.

“It takes years to change (alliance) arrangements,” Murphy said. That includes switching computer systems and forming new relationships with customers and frequent flier programs.

“I don’t think anybody is disputing the fact that Delta had a huge amount to offer here, but when you are a carrier struggling financially, time is not your friend,” said Bill Swelbar, an aviation researcher at Massachusetts Institute of Technology.

“American would not have given this up easily.” Jenkins said. For JAL, going with American “was the least risky position to take.... In uncertain times, people become more risk averse.” 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.