Delta CEO looks to Asia, Europe for revenue growth

WASHINGTON – Delta Air Lines CEO Ed Bastian is looking to the horizon – and destinations in Asia and Europe – for future revenue growth.

Delta announced in May it is returning service to India, after resolving a conflict with Middle East rivals. Flights to Seoul will also expand next year through a joint venture with Korean Air. And Delta's goal is to combine two European joint ventures next year – one with Virgin Atlantic and the other with Air France and KLM – for less competition across the Atlantic.

Bastian told a National Press Club luncheon that the carrier gets two-thirds of its revenue in the U.S. today, but that overseas revenue could eventually rival the domestic share.

“Long term at Delta, I think our opportunity is international,” Bastian said.

One reason for his optimism was the resolution of a dispute between U.S. airlines and rivals Emirates, Etihad Airways and Qatar Airways. Because of concerns about government subsidies from United Arab Emirates and Qatar, which those carriers denied, the U.S. government negotiated a commitment with the foreign carriers not to add connecting flights to the U.S.

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After the agreement, Delta announced it would resume flights next year to India at Mumbai from Atlanta and New York’s JFK airport. Delta’s partner Jet Airways will then connect passengers to other cities in India.

“It’s a high-technology field. There’s a tremendous amount of innovation that’s going on in the Indian marketplace,” Bastian said. “I think it’s going to be a tremendous opportunity.”

A long partnership with Korean Air became a joint venture, winning final approval earlier this year and allowing the carriers to share revenue and exchange traffic on an enhanced basis, Bastian said. The arrangement allowed Delta to focus on a different hub rather than Japan’s Narita airport near Tokyo. Delta has long had a significant presence at Narita, though Delta has been trimming that in recent years. 

In Seoul, the joint venture will benefit from the opening of Terminal 2 for the recent Winter Olympics. The terminal has 45 gates that will be shared by Korean, Delta and two other joint-venture partners: Air France and Dutch carrier KLM. The result will offer passengers from Minneapolis or Atlanta or Seattle 80 one-stop destinations in Asia, he said. (More: First look: Seoul Incheon Airport’s new Terminal 2 big on high tech, art)

“As we bring customers to Seoul, Korean can distribute them on a nonstop basis to 80 different destinations, including 30 destinations in China alone with one of the most efficient hubs in the world,” Bastian said.

Delta bought 49 percent of Virgin Atlantic about five years ago just to gain access to London’s Heathrow airport, which otherwise could have cost a prohibitive 50 million British pounds for a single gate, Bastian said. Even then, space at the capacity controlled airport rarely becomes available. Now, with the tie-up, Delta and Virgin fly 35 trans-Atlantic flights daily, he said.

The plan is to combine Delta’s partnership with Virgin Atlantic with its joint venture with Air France and KLM next year.

“Today those joint ventures compete against each other,” Bastian said. “In the future, they are going to operate as one, primarily for the benefit our customers.”

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