Asian Brand in Chaos: Japan Airlines files for bankruptcy, what’s in store for Delta and Skyteam? As shared Live on CNBC

Efficiency and productivity will hopefully be a result. I travel Domestic flights on ANA and JAL every month. At a gate for a wide-body domestic departure, it is not unusual to see 4-5 agents working the flight. In the USA you would usually see 2 agents. I also recently watched as I tried to purchase last minute Business Class tickets Honolulu-Tokyo on JAL. The ticketing process was so disjointed. It took 3 people and 2 different computer systems to generate the ticket and boarding pass. JAL has some serious inefficiencies in their business and need this kick in the pants to redesign their business processes.

Well done Shashank!
Skyteam now gets a majority share on US-Japan traffic flows and Delta has vast xp in Japan thanks to former Northwest staff based in Tokyo. Next step: ATI and a JV!

I'm sorry, Shashank, but I have to disagree with much of what you said.

JAL doesn't need Delta and SkyTeam or American and oneworld to rescue it here. That's simply a matter for them of looking at what the best partnership is once they've restructured so they can be successful as an ongoing entity.

You say that JAL is getting rid of its long haul fleet by retiring its 747s but that's not the case. They have orders for 7 777s and 35 787s, so they are simply downsizing the long haul fleet. That was their plan anyway - this likely just speeds it up. Yes they will pull out of some routes, but that's hardly getting rid of the long haul fleet.

You then say that you think Delta is interested in JAL's newer aircraft and slots at Narita. Delta has plenty of slots at Narita, as you note later, and they don't want JAL's aircraft. For Delta, it's an opportunity for them to improve feed into their own Tokyo operation and potentially kill off some of the worse-performing routes to let JAL handle them instead. (I bet we'd see the 757 fleet based in Japan go away.) That improves how things look on their remaining flights and it lets them expand coverage in North Asia where they already have a strong presence.

I don't think that the CEO being an ex-monk in any way assures Delta. This new CEO has absolutely no airline experience, and that has to be a big concern. While that doesn't mean he won't do a good job, I don't think anyone should be assured by this.

Also, you say that American is concerned because they'd be losing the Japan to South America routes. I hardly think that's their biggest concern. American will continue to fly to Japan's largest cities on its own, and it will be able to feed its own South America operation from those cities. The bigger concern should be going beyond those smaller cities to other North Asian points. They lose a lot of feed on that end from JAL.

Korean Air (not Korean Airways) is an interesting wildcard here, but I'm confused by your claim that they are a large domestic carrier. While they do have plenty of flights between Korea and Japan, they don't fly within Japan. They also can't sell connections over Incheon for flights within Japan. You think they stand to gain a great deal here, but I think they must be extremely concerned. If JAL joins SkyTeam, then that relegates Korean to a secondary carrier in North Asia for the alliance. It wouldn't surprise me to see them leave for oneworld at some point.

Brett, great points. Have always respected you for your in-depth
knowledge of the industry, and it shows.

A couple of points on which I beg to differ:

1) Though ultimately, there will be 787s in JALs fleet, I don't think
they're coming in anytime soon. At the same time, the 747s will be put
out of service very soon. This means that in the short term at least,
JAL will be focusing more on the regions, than long haul.

2) Isn't switching alliances part of the restructuring plan, rather
than an afterthought? My impression is that the switching will act as
a catalyst for the restructuring.

3) The fact that the CEO is a monk was used as a pun. Moreover,
though he doesn't have experience as an aviation industry insider,
he's a proven turn-around specialist who used to head Kyocera,
another Japanese giant. And as we've seen many times in the industry,
the best innovations come from outsiders. Hence, I wouldn't count
him out just yet.

4) I stand by my statement that Korean Air continues to be the
largest "domestic" carrier in Japan, It's a fact that you can get to
more Japanese cities non-stop from Seoul, than from Narita. So even
though they don't do domestic flights within Japan, they carry a
significant amount of intra-Japan traffic and also connect secondary
Japanese cities to the world.

JAL joining Skyteam will allow Korean, Delta and JAL to restructure
their routes in such a manner that they all benefit. For example, JAL
can concentrate on providing feed to Korean Air and Delta, rather
than compete head-on and bleed

So glad to be having an interesting academic discussion here.

Thanks for responding, Shashank. Now I'll respond as well.

1) When are the 747s being retired? I haven't heard a date and I would be surprised to see them disappear tomorrow. While the 787s are further off, they do have 9 767s and 7 777s on order as well. They are hardly getting rid of their long haul fleet.

2) Switching alliances, as far as I know, is unlikely to be necessary for a financial restructuring. They don't seem interested in money. It will certainly impact their long term plans, but that wasn't how I understood "restructuring."

3) I never said I counted the monk out. I simply said that he is hardly going to be assuring to the US carriers that are looking to deal with them.

4) The definition of domestic is flying between two points within a country. Korean Air does not do that in Japan, and I don't believe they are permitted to carry intra-Japan traffic even over their hub in Incheon.

approved

I agree One World will suffer for the loss of JAL to Sky Team, and One World may have to look at a Chinese Carrier to fill the gap. From a JAL point of view I am not sure how moving from one alliance to the other will help its recovery, in all cases it will lose international long range flights. It will consolidate Delta's grip on Narita, which may be a political and cultural minefield. One winner is definitely ANA and Star alliance.