A proposed codeshare by Delta Air Lines and Trans World Airlines on US-Japan routes is sparking speculation of the start of a stronger relationship between the two.

Earlier in February, Delta's plans for a merger with Continental Airlines were thwarted when Continental opted instead for an alliance with Northwest Airlines (see News Analysis pp24-25).

Under the proposed codeshare, TWA passengers would join Delta services from Portland to Nagoya and from Los Angeles to Tokyo/Narita. The airlines are also seeking approval for TWA to codeshare via Delta's proposed services from Portland to Osaka and Fukuoka. The applications are being made in the wake of the liberalised US-Japan aviation agreement signed at the end of January (see Dateline p82) and which allows same-country codeshares on US-Japan routes. Delta says it expects to begin the proposed flights from autumn 1998, and that they will enable TWA to offer immediately an online service from its St Louis hub to Japan.

No details of the planned arrangement have been disclosed and neither airline is commenting on whether this codeshare could become something larger. But many analysts are anticipating more industry consolidation in the US following the Continental-Northwest deal. Having lost out to Northwest, some say, Delta is probably looking for another USpartner. US Airways is thought unlikely because the airlines overlap on the east coast, leaving TWA as a clear possibility.

TWA announced its fourth quarter and year-end results in the same week that the codeshare plan was announced. While the airline is still in the red, the losses have been reduced substantially. The airline reported an operating profit of $0.5 million and a net fourth quarter loss of $31 million, an improvement of $227 million over 1996. Its full year net loss was $110 million, a $174 million improvement over the previous year. TWA's chairman and chief executive officer Gerald Gitner says he will not forecast when the airline might return to profitability, but he expects the underlying trend of significant improvement to continue, especially in early 1998.

On potential consolidation, Gitner says TWA's first priority is its restructuring programme, but he adds: 'We are obviously cognisant of what's happened in this industry and are monitoring it. We don't intend to be left behind.' On whether it is considering a larger domestic codeshare, TWA says it would consider everything.

Joseph Burman, senior analyst at Avmark, believes the codeshare with Delta is a 'good and cautious' move on TWA's part to explore the Japan market and this relationship. An alliance, while not as good as the Delta-Continental option, 'might be a possibility'.

Karen Walker

Source: Airline Business