Delta Air Lines Inc. is now being hit on both sides of a U.S.-China dispute over the resumption of air service cut off during the coronavirus pandemic.
The U.S. Department of Transportation on Wednesday moved to block Chinese airlines’ passenger flights to U.S., alleging that the Chinese government is violating their bilateral aviation agreement by effectively keeping American airlines from restarting service to China.
China’s Civil Aviation Authority in May issued a notice that U.S. carriers can resume flights to China according to the frequency with which they operated on March 12.
The problem, according to DOT, is that at that point the coronavirus outbreak had been declared a pandemic, and American carriers had suspended service all service to China.
That “arbitrary baseline date … effectively precludes U.S. carriers from reinstating scheduled passenger flights to and from China” while Chinese airlines have been able to maintain their international schedules, including flights to the U.S.
Delta welcomed the move by the Trump administration, which would go into effect June 16.
“We support and appreciate the U.S. government’s actions to enforce our rights and ensure fairness,” the airline said in a statement. Delta had planned to resume service between Detroit and Shanghai in the second half of June, one of few Asian routes to be brought back in an international schedule that is down 90 percent from last year.
But the move also hits one of Delta’s partners, China Eastern, in which Delta has invested $450 million for a 3.55 percent stake that also includes an observer board seat.
In normal times, China Eastern’s domestic network within China feeds Delta’s trans-Pacific routes, and the partners operate out of a combined hub in Shanghai’s Pudong International Airport.
The tie-up is aimed at executing a “shared vision to build a long-term, profitable partnership by creating a world-class, customer-focused offering, and be the most successful franchise in the growing the U.S.–China market,” Delta has said.
A spokeswoman declined to comment on the China Eastern relationship beyond the public statement on the DOT’s notice. Passenger revenues from the Pacific region were down by 33 percent to $385 million in the first quarter, the steepest drop among any of its regions, according to Delta’s first-quarter earnings statement.
Delta, meanwhile, continues to operate cargo flights in and out of China, first charters and now scheduled service bringing personal protective gear and other items to the U.S. via flights between Shanghai and Incheon and then on to cities like Detroit and Atlanta.
In the company’s first-quarter earnings call April 20, CEO Ed Bastian said he was proud of Delta’s contribution to the relief efforts.
“We’ve repatriated over 5,000 people working with the State Department from markets that we don’t even fly to historically or going into India and bringing tons of people back to their families safely, and we continue to do some of those missions going forward,” Mr. Bastian said.
Meanwhile, the U.S. DOT left the door open for resolving the dispute with China, though that could be tough as the relationship continues to sour amid blame shifting over COVID-19, trade tension and Hong Kong.
“Our overriding goal is not the perpetuation of this situation, but rather an improved environment wherein the carriers of both parties will be able to exercise fully their bilateral rights. Should the CAAC adjust its policies to bring about the necessary improved situation for U.S. carriers, the Department is fully prepared to revisit the action it has announced in this order,” the DOT notification reads.