US carrier to start nonstop services between Shanghai, Minneapolis-St Paul

Atlanta-based Delta Air Lines plans to launch the first nonstop service between Minneapolis and China in June 2020, a top company official said.

"Revenue from operations between China and the United States rose substantially by 25 percent last year. We expect revenues to have risen by 20 percent in the first quarter of this year also," said Ed Bastian, chief executive officer of Delta Air Lines, adding that the bulk of the demand was from China to the US.

According to Bastian, most of the passengers on the route were initially from the US. But over the last decade, Chinese passengers are taking up the majority, which is a significant dynamic, he said.

"I think Chinese demand will account for 70 percent next year, and 10 years ago it was just the opposite. There continues to be a lot of demand between the two countries," said Bastian.

Delta plans to connect its Minneapolis-St Paul hub and China in June 2020, with a proposed route to Shanghai operated with Airbus A350-900 aircraft. The route is still subject to government approvals from the US and China.

The launch of the route also marks the first-ever nonstop flight between Minneapolis-St Paul and China as Minneapolis does not have direct services to China at the moment.

Bastian said Minneapolis is a significant market for Delta, as it serves as the second-largest hub of Delta and has over 100 points in the US. In addition, a lot of US companies are headquartered in Minneapolis. It is also the home to Northwest Airlines, which Delta acquired 10 years ago.

Delta launched its nonstop daily service between Shanghai Pudong International Airport and Hartsfield-Jackson Atlanta International Airport in July 2018. Currently, Delta is operating six nonstop daily services between China and the US.

The launch of new flights between China and US came even as some carriers have reduced flights between the two nations in recent years.

American Airlines ended its daily nonstop flights from Chicago to Shanghai in October, after the Texas-based airline had previously announced it was stopping nonstop flights between Chicago and Beijing.

Despite the fact that Chicago is a "very profitable hub", there is not enough demand to sustain the China routes. Neither the Chicago-to-Shanghai nor the Chicago-to-Beijing route has been profitable since their launch in 2006 and 2010, respectively, American Airlines spokeswoman Leslie Scott was quoted as saying by the Chicago Tribune.

Previously, United Airlines closed routes between San Francisco and Hangzhou in Zhejiang province and Xi'an in Shaanxi province, according to CAAC Journal.

"Since 2016, there have been mounting profitability issues for flights operating between China and the US. Even Air China, the nation's most profitable carrier with the maximum Sino-US flights, is struggling to strike a balance," said Yuan Ding, an independent industrial analyst.

According to Yuan, the major reason for profitability is the large amount of direct flights between the two nations by Chinese carriers, with their number far higher than their US peers.

Total flights operated by Chinese airlines soared from eight in 2007 to 40 in 2017, while those by US carriers rose from 12 to 31 during the same period, according to data from CAAC news.

But Bastian believed direct services to Shanghai would go very well, as American Airlines has exited the Chicago to China market and Minneapolis would be a good alternative to Chicago.

"China is doing well. We have been growing a lot here ... We are very happy with the performance we have seen in this market and it is still early in its development. We have only been serving this market directly from the US for the last 10 years and so it takes time to build a more profitable franchise," said Bastian.