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NW's Long Term Asia Strategy  
User currently offlineTranStar From United States of America, joined Jul 1999, 530 posts, RR: 0
Posted (10 years 4 months 2 weeks 6 days 4 hours ago) and read 3394 times:
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Question:

What is NW's long-term strategy for Asia? Logically and for good reasons, it seems that short-term considerations are driving their fleet and route planning for their Asian operations. However, as many posters have commented there are some decisions being made now that could prove troublesome..

1. Operating A330s to and within Asia is a good decision overall, but with some qualifications. Obviously their DC-10 and 747-200 fleet are more expensive to operate and are less efficient. However, as many have pointed out, the A330 is not as well suited for pacific operations as the 777 or even the A340. Right now, the lingering afteraffects of the SARS epidemic and S-11 on global travel may justify the smaller capacity aircraft. But what about in the longer run.

2. NW has for several years now opted for a hub and spoke through Narita, using its special treaty rights, as the best strategy for its Asia operations. It has no flights to Asia that overfly Japan. My understanding is that this better ensures that its flights are full, plus it takes advantage of its ability to fly Japanese passengers out of Japan. However, there are some long-term economic/socioeconomic realities that will impact this strategy in the longer run:

A. The continued shift of economic growth to China. As more Asia traffic becomes China oriented, how well will Northwest compete if it forces its passengers to change planes in Narita rather than fly direct.

B. The steady decline in Japanese population over the coming decades. Japan is set to experience a fall in population as the decline in birthrate combines with a steadily aging population. I would assume that as Japan's population ages, demand for travel will decline and NW's passenger numbers from Japan will diminish.

That said, it would seem that NW will likely have to opt for more overflight routes over the longer term. However, its fleet choices today (for the A330) would seem to preclude that considering that the likelihood of future 747-400 purchases is virtually nill and the A380 seems a bit of a stretch. Would NW eventually buy second hand 747-400s.

My prediction is that in five-eight years, NW will be scrambling to try to establish longer-range, higher-capacity routes and will have difficulties.

Glad to get everyone's opinions.

TranStar

23 replies: All unread, jump to last
 
User currently offlineDesertJets From United States of America, joined Feb 2000, 7784 posts, RR: 16
Reply 1, posted (10 years 4 months 2 weeks 6 days 3 hours ago) and read 3363 times:

You bring up some valid points. And I think that what you predict will come to fruition, however I think the timetable will be much longer term.

The population shrinkage in Japan will prove to be essentially problematic. But it could also open up some interesting possibilities. One -- Japan could finally open up its domestic market to more foreign investment and products. With a loosening of the protectionist policies there could be more opportunities for foreign companies to do business and increasing the need for business travel. Two -- Japan will likely have to continue and accelerate outsourcing lower level work to Korea, China, and elsewhere in Asia. With a shrinking workforce, Japanese industry is going to have to make some major decisions about what and where they produce stuff. Potentially this could lower costs as well. My whole point here is that Japan will not become less relevant in the global market. The big question is to what degree China will matter.

And without more access to China from the US, it will not matter that Northwest does not have direct flights from Detriot or LA to Beijing or Shanghai.

If anything, more so than many other airlines, Northwest has been able to demonstrate its flexibility in managing its resources on its Asian routes. I also question the notion that NW will be up shit's creek without a paddle should the demand for higher capacity longhaul Asian flights shift upwards significantly. They can still easily shift aircraft around and additional aircraft can be accquired within reasonable timeframes.



Stop drop and roll will not save you in hell. --- seen on a church marque in rural Virginia
User currently offlineCospn From Northern Mariana Islands, joined Oct 2001, 1623 posts, RR: 0
Reply 2, posted (10 years 4 months 2 weeks 6 days 3 hours ago) and read 3324 times:

Before Sars they had DTW PEK..but not this summer

User currently offlineGigneil From United States of America, joined Nov 2002, 16347 posts, RR: 85
Reply 3, posted (10 years 4 months 2 weeks 6 days 3 hours ago) and read 3301 times:

1) As you mentioned, a combination of factors make the 332 a good idea for now. Lower Asian economy, Sars, 9-11, and the Narita hub.

The best part of the 333 order was that they could always switch down to a smaller aircraft without changing families, or switch up to a larger more capable aircraft without changing families. If they need the 340, they'll get it.

2) NW has one metric shitload of route authorities from the United States. They could, conceivably, serve any of their routes that they now hub in Japan nonstop from a variety of US gateways, and have in the past. As you mentioned, however, Tokyo allows them to downgauge to less capable planes and ensure high loads.

A) NW previously served a lot of the Chinese growth markets nonstop from DTW, and will again if they must.

B) I don't buy this argument.

Again, I think NW knows what its doing. There's no routes that they flew with a DC-10 that a 332 can't fly, and 70% can even be flown by the 333 if necessary.

N


User currently offlineJetjack74 From United States of America, joined Jul 2003, 7414 posts, RR: 50
Reply 4, posted (10 years 4 months 2 weeks 5 days 23 hours ago) and read 3175 times:
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TranStar, I feel the same way. NW is running a good operation, not counting the labor cost issues and fuel prices. But we are going to be come vulnerable to attacks from competing carriers especially in the China market. I think NW is going to need more high capacity aircraft and more direct routes to other large cities in in Far East. Incheon would be a good place to start. With us entering the SkyTeam this September, more than a codeshare is going to be needed for us to establish a better foothold in Asia. Richard Anderson is more comfortable with codesharing with other carriers rather than using our own metal. Codesharing is good to a point, but being overly cautious can kill you. Now I don't think we should serve every major city N/S, but we should have 3-4 more cities served N/S from DTW at least. Once NW gets a better footing, I think that HKG, ICN, should be looked at and considered as well as returning to PEK and PVG. And also, SGN should also be flown at least from NRT. But I don't run Northwest Airlines, I just work here. Good topic TranStar.


Made from jets!
User currently offlineDutchjet From Netherlands, joined Oct 2000, 7864 posts, RR: 57
Reply 5, posted (10 years 4 months 2 weeks 5 days 23 hours ago) and read 3141 times:

Yes, this is a very good and interesting topic.

NW has a very conservative strategy at the moment as far as Asia is concerned, and is not taking any chances with opening new routes: Portland-Tokyo is the one new route that will be opened and will be closely watched. I do think, however, that Northwest will get more aggressive in the coming years, provided that the world stays undercontrol and fuel prices normalize. NW will face increased competition from US carriers when 1) UA gets its act together and re-focuses on the Asian markets, 2) AA opens its proposed routes to HongKong and other Chinese cities out of Chicago, and 3) if code-share partner Continental looks to Asia for more expansion which could come if CO goes into SkyTeam and hooks up with Korean. Also, NW must have some strategy to compete with the new-ultra long range flights being introduced by SQ and eventually by other carriers, and as Asian carriers add flights to additional US cities.

I think that we will see the introduction and re-launching of nonstop flights to HongKong, other Chinese cities, and other Asian destinations within the range of the 744 out of Detroit. While the smaller A332s are interesting for the time being on certain routes to Tokyo, I do believe that routes like SFO and SEA to Tokyo will be upgraded to larger aircraft in the future and the A332s will be assigned to open thinner routes, such as the return of SEA-Osaka, SEA-HongKong (if that is in range for the A332, I am not certain) and possibly new routes to the new Nagoya Central Japan Airport. More flights, with more choice, will be required, and that is where the A332 will become a good thing. I do think that most of the expansion will be at Detroit, the NW mega-hub, with additional expansion at SEA which will once again become an Asian gateway for NW. NW most likely will avoid the intense competition that exists at Los Angeles and SanFrancisco on the Asian routes.

To accomplish this expansion, NW will need more aircraft - additional 744s could be the answer for the medium term future as I do not think that NW wants to introduce yet another type to its fleet.


User currently offlineB4real From United States of America, joined Aug 2003, 2646 posts, RR: 5
Reply 6, posted (10 years 4 months 2 weeks 5 days 22 hours ago) and read 3084 times:

TranStar: I have wondered of NW's long term plans for Asia and NRT hub. I am generally inclinded to believe that there is a long term plan for the ops beyond NRT and US-Asia nonstops.

You bring up a point of no B777 for NW. Keep in mind that NW has a very strong cargo op, and if I remember correctly, a NW A330-200 aircraft can carry 23 LD3 containers and I did a couple of looks around and found that a 777 (at least by Alitalia) can hold 14 LD3 containers. Granted, the 777 is not marketed as a cargo aircraft (yet) - as it would be at the expense of the 747-400F IMHO.B4REAL


B4REAL, spelled like it sounds
User currently offlineB4real From United States of America, joined Aug 2003, 2646 posts, RR: 5
Reply 7, posted (10 years 4 months 2 weeks 5 days 22 hours ago) and read 3071 times:

More info from above....

Well, now I see that JAL can offer 44 LD3 containers in the B777-300

[BTW - this was a big reason NW stayed away from the 767 IIRC]

The a.net spec of the 777 says it can carry 32 LD3 containers http://www.airliners.net/info/stats.main?id=106.B4REAL


B4REAL, spelled like it sounds
User currently offlineGREATANSETT From Australia, joined Aug 2003, 508 posts, RR: 3
Reply 8, posted (10 years 4 months 2 weeks 5 days 21 hours ago) and read 3029 times:

I think they want to make as much money as they can.  Big thumbs up


Ron Paul 2012
User currently offlineDtwintlflyer From United States of America, joined Jul 2003, 301 posts, RR: 0
Reply 9, posted (10 years 4 months 2 weeks 5 days 21 hours ago) and read 3025 times:

I think NW has looked at the short term and continues to look toward long term as well.
To try to address the topics....
1) I think the A330 will be beneficial within Asia. Yes if the numbers were to continue to grow back to pre 9-11 or even pre Asian crisis levels, then possibly acquiring more 747-400 would be a solution. By then, the opportunity to utilize another aircraft type would be a possibility.
I think the newer a/c will give NW an advantage for capturing some of the business and leisure traveler more so than the old 747-200 or DC10. I know not everyone really cares what plane they fly, but it can only help.
2) These overfly routes will return when the passenger numbers grow. Pre 9-11 we did DTW - PVG and PEK and they were planning for DTW HKG and DTW ICN non stop. I most definitely think these will return when the need returns. Also, if NW were to codeshare with another Chinese airline, it would possibly bring those flights back quicker. We dropped our codeshare with Air China for a variety of reasons, and at one point management was waiting to see what if any consolidation within China would leave a compatable partner. I certainly think a codeshare with China Southern would be a logical step. China Southern already codeshares with CO and KL. Also, this would open up a codeshare between Guangzhou and NRT. Also, as the technology continues to get better, longer routes will be the norm (ie LAX SIN)
3)
If Japanese passenger numbers were to continue to fall off, NW would logically look again at ICN (we did have more than a few through Kimpo pre - Asia crisis). I don't really see this as a drastic problem any time soon. With most travelers not minding a one stop from other points within Asia, NRT will continue to be our main connection point. Again, the new airport in NGO will also open a lot of opportunities..I think UA and NW will add several flights within the next three years through NGO. We do NGO DTW and AB) (MNL / RPLL), Philippines">MNL right now along with a 757 to SPN. HNL can only be around the corner. Also a NGO LAX would be a possibility.

Asia will always represent an odd situation for NW....Economically, NW can prosper a lot from the flights, but as we saw post 9-11 and SARS, it can really hurt the bottom line. The KIX operations were killing us for a long time. Our domestic ops barely covered the expenses associated with operating KIX - DTW/MSP/SEA/HNL/KUL/KHH/AB) (MNL / RPLL), Philippines">MNL and now we only fly KIX - DTW and TPE.

I think in the future you might see...

MSP KIX (747-400)

SEA KIX (DC 10 or A330-200)
SEA ICN (A330-200)

LAX NGO (747-400)
LAX KIX (DC 10 747)
LAX SGN (747-400)(pipe dream, but I think it could work with the right kind of advertising for the beaches of Vietnam!)

NGO HNL (DC-10)
NGO ICN (DC-10)

DTW ICN (747-400) SkyTeam will drive a route already flown in the past)
DTW HKG (747-400) (NW did pick up an additional daily frequency to HKG in 2002 but it had to be flown from NRT)
DTW PEK (747-400)
DTW PVG (747-400)

PDX HNL (757-300)
PDX MAUI

SFO HNL (Hopefully they will bring it back as a 757-300)

LAS HNL (757-300)
LAS NRT (747-400)

NRT KUL (DC10)
NRT SGN (757, DC10, A330)again a pipe dream maybe, with NW management continuing to hem and haw on this route, but a far greater possibility from NRT)
NRT Phuket - (757-300) seasonal routing
NRT Guangzhou
NRT Madras India (was going to happen pre 9-11 for around the world flight, but no need now) would have gone DTW NRT Madras AMS DTW


Overall, I think business strategy will continue to be focused on expansion within Asia and to the US for NW. Of course the previous flights would be contingent on many things 1)acquiring several -400's (this was the plan prior to 9-11) 2) the economies of Asia and the US continuing to get better 3) several FA and pilot recalls, which have not yet happened 4) and finally a little luck and perserverance.

For those who question NW and their Asian strategy, the ability to modify aircraft (A320, 757, DC10, 747,744) it really worked well. Based on demand, we were able to change the a/c based on demand. This was because of narrow body slots out of NRT and great planning. That at least is something UA couldn't adapt to. Now that traffic has stepped back up, we have upgraded our flying on some routes.


User currently offlinePSU.DTW.SCE From United States of America, joined Jan 2002, 7648 posts, RR: 27
Reply 10, posted (10 years 4 months 2 weeks 5 days 17 hours ago) and read 2910 times:

With the slot control at NRT, that limits the amount of expansion there.

However NW is a position over the next few years where they can swap aircraft with capacity. Getting A320's and 752's in and out of NRT generally hasn't been a problem. With the new A330 deliveries, this frees up 742 and DC-10 aircraft that will either be parked, or if thinks pick up drastically in a short period of time, NW could allocate these aircraft to additional Asia flying.


User currently offlineJetjack74 From United States of America, joined Jul 2003, 7414 posts, RR: 50
Reply 11, posted (10 years 4 months 2 weeks 5 days 15 hours ago) and read 2787 times:
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This is true, I recently spoke to the program manager for the 747-200. I asked him this question. He said that a sizable fleet of the 742 fleet will be parked, but they will be kept in airworthy condition in the event that capacity does warrent a return of some or most of these aircraft. The DC10's won't be as lucky. Most of them are nearing there time-expired life. The former Swissair 10's are on their way to cutters torch.


Made from jets!
User currently offlineStevenUhl777 From , joined Dec 1969, posts, RR:
Reply 12, posted (10 years 4 months 2 weeks 5 days 13 hours ago) and read 2725 times:

Does NW have authority to fly to SGN? I know UAL does, but have only heard rumors on a start date. What about AA?

UA is smart (?) by starting first, not sure who's 2nd in line. Vietnam Airlines is supposed to start a flight to SFO, but don't know if that's n/s or via somewhere else.


User currently offlineORDagent From United States of America, joined Dec 2003, 823 posts, RR: 1
Reply 13, posted (10 years 4 months 2 weeks 5 days 10 hours ago) and read 2615 times:

My UA sales rep said SGN would be a HKG SGN segment. Which city to HKG I can't remember


User currently offlineCospn From Northern Mariana Islands, joined Oct 2001, 1623 posts, RR: 0
Reply 14, posted (10 years 4 months 2 weeks 5 days 4 hours ago) and read 2322 times:

How about NW 75/ 76 our 747-200 NRT SPN ???

User currently offlineNightFlier From United States of America, joined May 2004, 284 posts, RR: 2
Reply 15, posted (10 years 4 months 2 weeks 5 days 3 hours ago) and read 2306 times:

I may be wrong about this so correct me if I am wrong,

NW has one of the largest cargo fleets in the world, and most of the routes are in Asia. We all know cargo generates more revenue then passengers. So from my point of view I think NW long term goal in Asia will be a long one. Big thumbs up



Airplanes are only as good as the people who fly&fix them.
User currently offlineAirmale From Botswana, joined Sep 2004, 378 posts, RR: 1
Reply 16, posted (10 years 4 months 2 weeks 4 days 5 hours ago) and read 2124 times:

I wonder if NWA CARGO have potential flying to Pakistan, because PIA will be using their 742Ms to Los Angeles starting August or some time in the winter, there must be potential from NW to oeperate a weekly freighter from Hong Kong to Karachi or Lahore.


.....up there with the best!
User currently offlineElectraBob From United States of America, joined Sep 2003, 931 posts, RR: 3
Reply 17, posted (10 years 4 months 2 weeks 4 days 3 hours ago) and read 2065 times:

I wonder if anyone can tell me if and when Northwest will operate their Narita to Beijing flight on a daily basis? I have a corporate account who sends people DTW-PEK at least twice a month. There have been times that their preferred arrival date into Beijing or their departure date have had to be changed because this flight did not operate. I actually had to put them on United a couple of times.....they prefer NWA.


Having a smoking section in a restaurant is like having a peeing section in a swimming pool.....
User currently offlineJetjack74 From United States of America, joined Jul 2003, 7414 posts, RR: 50
Reply 18, posted (10 years 4 months 2 weeks 4 days 3 hours ago) and read 2042 times:
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I've often wondered that myself. We've had daily service to HKG almost all the way through the SARS disaster, but PEK and PVG have been only a few times a week. My guess is maybe lower yields. More and more airlines will be offering N/S flights to the US out of PRC. NW better get it act together.


Made from jets!
User currently offlineLeneld From United States of America, joined Jul 2003, 606 posts, RR: 1
Reply 19, posted (10 years 4 months 2 weeks 3 days 15 hours ago) and read 1907 times:

i'm really glad that Northwest has added PDX in it's Asia strategy plan and I hope it will remain apart of it's long range plan also..I'm curious though. With all of the cargo being shipped between Oregon and Japan, how come Northwest hasn't started all cargo service from PDX to Asia?

User currently offlineSeaMeFly From United States of America, joined Jan 2004, 317 posts, RR: 3
Reply 20, posted (10 years 4 months 2 weeks 3 days 15 hours ago) and read 1892 times:

Write your complain to NW's corporation and they will definately will listen to Companies' suggestions. NW really likes those corp. accts and they will do anything to keep you guys happy.

User currently offlineYulguy From Canada, joined Feb 2004, 246 posts, RR: 0
Reply 21, posted (10 years 4 months 2 weeks 3 days 13 hours ago) and read 1834 times:

Back when the economy of Asia was a bit stronger than today (in the 90s) , NW offered direct DTW-Seoul service, Seattle-HKG and DTW-Beijing. I'm sure if the market picked up, NW would offer these routes again. The only real way that NW can expand NW operations is to use smaller aircraft that are capable of taking off on the shorter runway. NRT slots are pretty much all taken up from what I understand. I know a few years back NW was looking at using Osaka's Kansai Airport as a hub with flights going onwards to Kuala Lumpur and Jakarta. I don't know if those plans ever materialized.


"Celui qui diffère de moi, loin de me léser, m'enrichit." - Saint-Exupéry
User currently offlineKEno From Malaysia, joined Feb 2004, 1842 posts, RR: 27
Reply 22, posted (10 years 4 months 2 weeks 3 days 7 hours ago) and read 1762 times:

I know a few years back NW was looking at using Osaka's Kansai Airport as a hub with flights going onwards to Kuala Lumpur and Jakarta.

NW served Kuala Lumpur for a few years but was suspended in 2002. The routing was LGA-DTW-KIX-KUL


User currently offlineJetjack74 From United States of America, joined Jul 2003, 7414 posts, RR: 50
Reply 23, posted (10 years 4 months 2 weeks 3 days 6 hours ago) and read 1728 times:
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That was a different time, different CEO. Richard Anderson is a little more conservative compared to John Dasburg. Anderson is somewhat reluctant to return to former markets that weren't very profitable. Resumption of SEA-KIX was planned, but never implemeted due to war in Iraq


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