Delta relaunches Atlanta-Shanghai route, key link to China

Yet the new route is also launching at an awkward time for relations between the United States and China, with new tariffs escalating trade conflicts.

“It’s hard to know what the impact [of tariffs] will be” on the route, Bastian said.

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He acknowledged that “you can’t get away from the newspapers, reading about all the trade rhetoric and trade wars that are going on.”

By adding the route, “we’re stepping into that and we’re doing the opposite,” Bastian said. “We’re creating a unifying force to bring our two cultures and our two great countries together through this flight.”

At an event at the Delta Flight Museum this week celebrating the restart of the route, Gov. Nathan Deal called it “further confirmation of the relationship between the state of Georgia and the nation of China.”

“We are intentional about being a global transportation hub,” said Atlanta Mayor Keisha Lance Bottoms.

Craig Lesser, managing partner at consulting firm The Pendleton Group, said the route sends a message to business leaders in China that there are “huge opportunities to develop relationships in the Southeast.”

“You still have many business people that think the west coast of the United States, and Chicago, New York and Washington are the areas to think about,” said Lesser, who was the commissioner of the Georgia Department of Economic Development when Delta first considered the route.

‘It’s going to work’

This is not the first time Atlanta-based Delta has attempted to fly the Atlanta-Shanghai route.

“This will be the third inaugural,” Bastian said. “But this time, it’s going to work. Third time’s the charm.”

In the past, the flights never managed to attract the number of passengers needed to merit the costs of providing regular service, and the last attempts to fly the route in 2008 and in 2010 sputtered out.

Early attempts to launch a route from Atlanta to Beijing never came to fruition. There are now no more available route authorities to add a second Atlanta route to China, Bastian said.

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But for the Shanghai route, Delta has a close partner in a Chinese carrier with a hub in Shanghai that can connect passengers to other cities in China. Delta has a marketing partnership with China Eastern to sell joint itineraries, and in 2015 Delta invested $450 million to acquire a 3.55 percent share of China Eastern.

The partnership, Delta officials hope, will greatly expand the market to attract passengers flying to and from dozens of cities in China, and make the route more viable.

Delta also qualifies for incentives from Hartsfield-Jackson International for the Atlanta-Shanghai route, giving it $50,000 for marketing and a two-year waiver on landing fees.

Bastian said he hopes to make Delta a more international carrier, with a goal of growing international revenue from 35 percent to 50 percent of its total revenue.

For travelers, the Shanghai route carries significant weight because Atlanta has only two other passenger routes to Asia: Tokyo and Seoul.

Delta has routes to Shanghai connecting through hubs in Detroit, Seattle and Los Angeles, “but the faster we can get there, the easier it is,” said Scott Ellyson, CEO of East-West Manufacturing, an Atlanta-based design and manufacturing company that owns a motor factory outside Shanghai. “Typically it takes 20 hours to get over there, so if you’ve got a direct flight, it takes maybe 16 hours or so, door-to-door.”

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While large Atlanta-based multi-national companies like Coca-Cola and Home Depot are expected to be big users of the route, other small and medium-sized businesses could also expand with more global access.

China is also a “huge market” for Georgia businesses, including its agriculture industry, Ellyson said.

“Making it easy for people to do business is really important,” said Ellyson.

Ellyson said his company is considering doing more business at its other locations in Vietnam and India to minimize the impacts of a trade war. “A lot of the things that are affected [by tariffs], there aren’t options for producing in the U.S.,” he said.

Lesser called the tariffs controversy “a bit troublesome.”

“Nonetheless, it’s an acknowledgment from our end, for trade, that you can’t ignore billions of people [in China] that could potentially buy your product,” Lesser said.

Delta’s Atlanta-Shanghai route

The Shanghai route is significant because Atlanta has only two other passenger routes to Asia: Tokyo and Seoul.

Source: Delta Air Lines