Delta Plans to Expand Reach in Asia with Korean Air Partnership

By Susan Carey 

Delta Air Lines Inc. said it will create a trans-Pacific joint venture with Korean Air Lines Co., as the U.S. carrier rapidly builds out its international route network.

The two airlines already code-share on some routes. Both are founding members of the SkyTeam marketing alliance and received U.S. Transportation Department antitrust authority to more closely cooperate in 2002. They didn't act on that regulatory green light until now.

In anticipation of the expanded partnership, Delta recently launched nonstop service to Seoul from its big Atlanta hub, complementing Korean Air's existing flight. "Now is the right time for this JV," said Korean Air Chairman Y.H. Cho.

Delta and Korean said the enhanced agreement would expand code-sharing, more closely link frequent-flier awards and bring the carriers' gates closer together at key airports. They also would share costs and revenue on flights operated within the joint venture, which is subject to regulatory approval. No equity will change hands.

Delta has faced challenges for years with its operations in Asia. Its hub at Tokyo's Narita Airport has lost business to Haneda Airport, better situated in the megalopolis. And Japan's overall importance in the Asian aviation market has waned as air travel in China has boomed. Delta also lacks a partner in Japan. Delta made a failed attempt in 2010 to lure Japan Airlines Co. away from its partnership with American Airlines Group Inc.

Delta, the No. 2 U.S. airline by traffic, owns 49% of London-based Virgin Atlantic Airways Ltd. and 49% of Grupo Aeromexico SAB, and has smaller stakes in Brazil's Gol Linhas Aéreas Inteligentes SA and Shanghai-based China Eastern Airlines Corp.

Korean, which carried 27 million passengers last year, flies to a dozen U.S. cities nonstop from its hub at Incheon International Airport near Seoul and serves many Asian destinations including more than two dozen in China.

Write to Susan Carey at [e-mail]

(END) Dow Jones Newswires

June 23, 2017 14:46 ET (18:46 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.