Vinay Dube
Reversing a decision from last September, the U.S. Department of Transportation this week tentatively approved antitrust immunity for Delta Air Lines and Australia's Virgin Blue Group, which includes V Australia, Virgin Australia (recently rebranded from Virgin Blue) and Pacific Blue Airlines. Delta senior vice president of Asia Pacific Vinay Dube told The Transnationalsenior editor Jay Boehmer that a joint venture with Virgin would be up and running within 12 months of final approval. "We're both very motivated," he said. Dube and Boehmer this week during Delta's global sales meeting here discussed transpacific partnerships and recovering corporate demand in Japan. An edited transcript follows.
How quickly can you enact the joint venture with Virgin Blue once final approval comes?
The run-up work is ongoing. The foundation to any joint venture is the fundamental alliance stuff like code sharing, corporate lounge access and reciprocity of frequent flyer programs. That's the kind of stuff that we're already working on. Beyond that, the JVs typically include some sort of financial sharing mechanism and take cooperation to the next level--looking at schedules and fares together. That sort of stuff we just can't do until we get actual approval. What we're doing is getting people to meet each other, so they can put a face to the name and get to know their counterparts. Then, once we get approval we can hit the ground running with those other aspects.
Will this JV take the same approach to joint corporate sales and contracting that we've seen between Delta and Air France-KLM on the Atlantic?
I don't think there's a one-size-fits-all, because the size and shape of the transatlantic business is very different from what we've got between the U.S. and Australia and the South Pacific. You can expect some differences, but by and large for the corporate traffic, it will be very similar.
Is corporate demand returning to Japan?
We saw a pretty sharp decline in corporate traffic. We think we've seen the bottom of that curve. Booking across all sectors to and from Japan is very much on the upswing. In terms of corporate demand, the downturn was primarily on traffic to and from Tokyo. We think Nagoya and Osaka held up pretty well. As word starts getting out to corporate America that the level of risk--as we've been advised by the U.S. government and atomic agencies around the world--is very, very low, we think we'll see traffic rebound even more sharply. We're on the upswing today because most people understand and are able to feel safe. Clearly, all of our flights from the U.S. to Korea, China and Hong Kong continued to hold up and continued to see an uptick in travel demand. The trends we saw in 2010 continued into 2011.
Like your competitors, Delta made some capacity cuts between the U.S. and Japan. Are those coming back?
As you can imagine, if you have a fairly sharp decline over a six-to-eight week period, then when bookings come back, it takes a little while for load factors to come back. We'll have some of those temporary pull-downs in place for a little while. Some of those will come back more quickly. For example, Haneda service [from Detroit and Los Angeles] will come back in June. Some things will not come back as quickly. For example, we decided to defer Guangzhou [service from Tokyo Narita] and we'll come back to that in 2012.
Delta has antitrust immunity with Korean Air. Do you envision a joint venture with that partner?
Ultimately, we very much expect a joint venture to be part of that. We're two very strong franchises across the Pacific. We're already working with them very closely today and trying to extract some of the benefits we have with antirust immunity. That's allowed us to expand our services into Korea, so we're already providing some of the benefits that come with an antitrust-immunized relationship. I see a joint venture with Korean on the horizon. I can't give you a timeframe. The article originally was published in Business Travel News.