NWA pushing hard to win China routeby Martin Moylan, Minnesota Public Radio
Eagan-based Northwest Airlines is one of four U.S. carriers seeking the right to fly a new route to China. For the winner, the route holds the promise of full planes, high fares, and fat profits. But Northwest's bid faces a stiff headwind.
St. Paul, Minn. — Northwest already provides 72 flights to China from seven U.S. markets, including the Twin Cities. But to get to China on Northwest, you have to stop in Tokyo.
Northwest hopes the U.S. Department of Transportation will grant the airline permission to start daily non-stop service between Detroit and Shanghai. But three other airlines are making competing bids.
Continental wants to fly between Newark, New Jersey and Shanghai. American is looking to fly from Dallas to Beijing -- via Chicago. And United hopes to connect Washington, D.C. and Beijing.
But Northwest says its proposal would provide the greatest benefit to travelers living east of the Mississippi.
Northwest will reach China by flying a roughly 7,000-mile long, 14-hour Artic route, jetting over Canada and Russia.
Northwest executive Andrea Fischer Newman says the airline will get more people to China faster than rival airlines can.
"You don't think of going to Washington, D.C. if you're in Indianapolis and then flying to China," says Newman. "You think of going north, going west, And you think about getting there quickly. And the quickest way for someone in Indianapolis, Cleveland or Akron or West Virginia to get to China is through Detroit."
Northwest figures it would carry about 214,000 passengers a year on the Detroit-Shanghai route. And it forecasts that it'll fill about 90 percent of the seats on its China flights leaving Detroit.
Asia has been a focus of Northwest for decades. In 1947, Northwest started service to Tokyo, Seoul, Shanghai and Manila. In the past, the airline even highlighted its commitment to Asia in the company name: Northwest Orient Airlines.
Northwest dropped "Orient" from its name a few decades ago. But Pacific flights provided Northwest with $2 billion in passenger revenue in 2005. Newman says Northwest's commitment to China, Japan and the rest of Asia is unwavering.
"The Orient has always been a major focus for us," she says. "We want to continue to be a major player in that part of the world. We believe we offer the best alternative, the best proposal, the most public benefits, and should be awarded the route."
U.S. airlines covet the booming China market. And most of them don't want to risk losing China to competitors.
Last year, 1.3 million Americans traveled to China. That was up about 20 percent from 2004. And passenger traffic is expected to rise at a robust rate. China continues to grow as a trading partner, and the 2008 Olympics should boost the tourist trade.
But flights between China and the United States are limited by agreements negotiated by the two nations' governments. As it now stands, U.S. carriers have just 63 non-stop passenger flights to China per week, departing either from the U.S. or Japan. Airline industry consultant Darryl Jenkins helped American with its bid. He says the limited supply of seats means solid profits for carriers serving China.
"It's such a great route," says Jenkins. "There will be very little competition on this route for years to come."
Northwest won't say how much revenue it could get from the Detroit-Shanghai route. But it looks like the total could easily pass $100 million a year.
Jenkins says ticket prices on China routes are great -- at least for the airlines. They don't have to worry about low-fare competitors.
"You can get very good fares going into and out of China," says Jenkins. "A first-class ticket roundtrip will be around $12,000, and $7,000 [or] $8,000 for a business class ticket. That's very good revenue on those routes."
The U.S. Transportation Department says its goal in awarding the new China route is to maximize public benefits.
Who'll win the China route this time?
Aviation consultant John Pincavage says it's a toss-up.
"I can't tell which city-pair, or carrier city-pair is going to be the best combination for this," he says. "It's going to be good for everyone, no matter where they go from."
But some observers see a clear front-runner.
"The odds right now favor United, doing the capital to capital," says Jon Ash, president of InterVistas-GA2, a Washington-based consulting firm. "There's no non-stop service to compete with it."
Ash says Northwest's bankruptcy and service reputation could count against it. And he notes both American and United already serve the upper Midwest with non-stop flights to China from Chicago. The transportation department may figure the Midwest already has enough non-stop service to China.
Consultant Darryl Jenkins suspects Washington's political power will be a decisive factor. He says American probably took itself out of the running by adding the stop in Chicago.
"With American out, United is probably the front-runner now," says Jenkins. "We have about every local official in town getting out and supporting this."
But Andrea Fischer Newman of Northwest suspects there could be more than one victor in this contest. She says Northwest, Continental and United have signaled they could be happy sharing the added service to China. One carrier could operate three flights a week. Another could operate four.
"This is a hotly contested route," Newman says. "We all want it. And that is something the DOT should consider in making the award."
A decision is expected within weeks.
- Morning Edition, 12/18/2006, 7:20 a.m.