Delta is adding two additional short-haul routes to feed its growing international flight portfolio at Seattle/Tacoma airport by introducing a four daily services to Spokane and a second transborder link to Calgary, to be offered twice daily.
Both routes will be served on regional jets to provide the appropriate level of feed to augment Delta’s Asian and European expansion from Seattle, slated to hit its prime this summer once the carrier adds nonstop links from SeaTac to Seoul, South Korea and Hong Kong.
Delta is also retaining its plans to launch service between Dallas and Los Angeles, but in wake of its failure to secure gates at Love Field airport, it will instead launch the operation from Dallas/Ft. Worth International, where it already serves its other hubs in Atlanta, Cincinnati, Detroit, Minneapolis/St. Paul, New York JFK, New York LaGuardia and Salt Lake City. Delta Connection also offers roundtrip services from Dallas/Ft. Worth to Memphis, a former Delta hub, and from Dallas Love Field airport to Atlanta.
All of the aforementioned routes are scheduled to launch in early November, just after the peak demand in travel for summer season sloughs off and the Northern IATA winter period commences.
Delta continues to break Alaska monopoly markets, further alienating relationship
Since March 2013, Delta has added or plans to add 13 new feeder routes into Seattle, from Los Angeles, San Francisco, Palm Springs, San Jose, Anchorage, Las Vegas, Phoenix, Tuscon, San Diego, Portland, Vancouver, Juneau and Fairbanks, all of which are overlapping markets served by Seattle’s top carrier, Alaska Airlines. The future of the relationship between Delta and Alaska, who have long had strong codeshare and frequent flier ties, continues to remain uncertain as conflicts of interest arise.
Schedules in CAPA Innovata show that Alaska maintains control over 100% of the market share between Seattle and Spokane, offering approximately 10,000 weekly seats year-round. Alaska has held this dominance since January 2012, after edging Southwest Airlines out of the market.
Between Seattle and Calgary, Alaska similarly maintains 100% market share control during the winter months starting in late October and lasting through early May, with 1,520 weekly seats on offer. This percentile drops to 62% during the summer months when Air Canada adds a summer-seasonal service between Seattle and Calgary with roughly 930 weekly seats on offer, which lasts from early May through late October. As such, Delta will be picking up the slack when Air Canada exits this winter, using an Embraer 175 aircraft.
Delta’s Asian bank from Seattle departs between the hours of Noon through 1900, accomodating for six nonstop services to Seoul, Hong Kong, Shanghai, Tokyo Narita, Tokyo Haneda and Beijing. Arrivals are a bit more spread throughout the day, with the earliest inbound Asian flight from Beijing at 0530 AM and the latest at 1730 from Tokyo Haneda. For the most part, the timings on the new Seattle to Spokane and Calgary flights will coincide optimally to provide connection opportunities to and from Asia.
Seattle’s European bank is timed with a slightly more consolidated pattern, with the earliest flights to Paris and Amsterdam leaving between the hours of 1300 and 1400, followed by the two later flights to London Heathrow and Amsterdam (the second of two daily services) leaving between 1800 and 1700. All four daily departures return to Seattle between the hours of 1130 and 1600.
The link to Calgary will also be indirectly targeted at siphoning traffic between Western Canada and Asia, which is currently limited to opting over Air Canada’s transpacific network at Vancouver airport. Air Canada’s portfolio of transpacific markets via Vancouver mirrors that of Seattle, with service to Beijing, Hong Kong, Seoul, Shanghai and Tokyo Narita. Air Canada does not offer nonstop service to Tokyo Haneda from Vancouver, but codeshares with Star Alliance partner All Nippon Airways, which does offer a daily roundtrip between the two markets. In addition to the aforementioned Asian cities, Air Canada also offers a daily flight to Sydney from Vancouver, which Delta offers from its LAX hub, but not from Seattle.
Alaska has retaliated with its own salvo of new routes from Delta’s 5th largest hub, Salt Lake City, with seven new links to Portland, Boise, San Francisco, San Jose, Los Angeles, San Diego and Las Vegas. Alaska entered Salt Lake City barely over a year ago in April 2013 with a link to Seattle, and the route matured faster than expecations.
At its largest base back in Seattle, Alaska has also pulled some offensive maneuvers by adding links to Albuquerque, Baltimore, Detroit, New Orleans, Tampa and Cancun.
The relationship has experienced some codeshare unraveling, with Delta removing its code on Alaska flights to several of its overlapping west coast markets from Seattle, as well as Anchorage and Houston.
Meanwhile, in advance of Delta’s new service to Seoul, Alaska has inked a closer relationship with SkyTeam founder Korean Air. As both Delta and Alaska continue to play their game of musical chairs with codeshare partners and alliances, even amongst themselves, the magnitude of the various changes is muted somewhat by each one acting in their best self-interests to optimize revenue opportunities where business needs are the greatest, and play to individual strengths rather than as a shared entity.
Delta adds more fragmentation to Dallas – Los Angeles market as it evolves
The addition of four daily services on Delta Connection to Los Angeles from Dallas/Ft. Worth, operated via Endeavor Air on ERJ-175 jets, will create some shifts in capacity share once it comes online in November.
At present, four carriers compete on Dallas/Ft. Worth to Los Angeles: American, Virgin America, United and Spirit. For the current week, American controls the majority of the market share with 76% of the capacity (measured by seats) followed by Virgin at 10%, United at 5% and Spirit with the remaining 9%.
There will be some major shake-ups in the fall with the elimination of the Wright Amendment restrictions. Southwest disclosed earlier this week that it will launch 3 daily nonstop roundtrips to LAX in October, increasing to four in November. Virgin America will maintain the same capacity from Dallas to LAX, but will shift services from DFW Airport to Love Field after winning the bid for two available gates from American.
With Delta entering the market, the semantics will change somewhat with a spread of 6 carriers offering 3 variegated product types to customers: three network airlines, two “hybrids” and one bottom feeder.
Spirit and American will go largely unaffected by the jump in capacity owing to their dominant leadership positions within the lower and upper tiers of their target market segments. Even as American has slipped roughly 11 percentage points year-over-year (May 2013 to May 2014, according to Innovata) and reduced seats by roughly 2,400 on a weekly basis, it offers the most convenient schedules from Dallas/Ft. Worth to LAX with hourly shuttles. LAX is also a “cornerstone” hub for American, who will become the largest operator at LAX once its merger with US Airways matriculates.
That leaves Delta, United, Southwest and Virgin as the “filler” carriers each vying for market share between North Texas and Los Angeles. United operates 3 daily roundtrips between DFW and LAX, all on CRJ-700s. While United operates a hub at LAX, its value-add for DFW passengers is fairly limited to a select few transpacific and Hawaiian markets unserved from Dallas/Ft. Worth, namely Melbourne, Australia as well as Hilo, Kona and Lihue on the Islands.
Virgin America and Southwest will vie for largely similar traffic types out of Dallas Love airport. While Dallas has a fiercely loyal base of Southwest fliers who have been gearing up for the post-Wright era, Virgin offers a new and innovative product that appeals to the business traveler, including a First Class cabin, on-board entertainment and lounge access.
Delta likely had plans to connect Dallas and Los Angeles regardless of the outcome concerning the two Love Field gates it was bidding for along with Virgin America and Southwest. Although it had to abandon plans to serve its other hubs from Dallas Love, Los Angeles, its 7th largest by seats, was the lowest hanging fruit.
Against the backdrop of increased saturation in the Dallas to Los Angeles market is the existing presence of nonstop services from DFW airport to other LA-area airports: Orange County, Burbank and Ontario. Additionally, Southwest will be adding a single daily roundtrip flight from Dallas Love to Orange county in the fall.
Delta fearlessly enters crowded, popular business routes while United stays passive
Despite its saturation, the Dallas to Los Angeles market was attractive for Delta given that its post-merger, post-bankruptcy size and scale has enabled it to enter into crowded business markets such as Chicago to New York or Dallas to New York and challenge incumbent carriers such as American or United for premium travelers.
As United continues to encounter stumbling blocks in the four-year aftermath of its merger with Continental to improve its unit revenue growth outlook, Delta has consistently uncovered more opportunities to capitalize on its PRASM growth to build network strength in traditionally United-dominated markets. In New York, for example, United claims that it offers the most flights, generates the highest yields and maintains the largest share of corporate revenue among all major competitors. Yet, United consistently trails its peers with marginal yield improvements, quarterly losses (it was the only US carrier, besides Hawaiian, to record a loss in Q1 2014) and large CASM hikes.
The Dallas to Los Angeles market is a small bag of potatoes for the likes of United, but it does provide a compelling case study for how it is losing steam in markets where it cannot afford to trade high-yielding corporate traffic to a competitor like Delta. With an aging CRJ fleet that does not serve hot meals in First Class, nor Wi-Fi equipped throughout the aircraft, United truly offers the least palatable product for corporate travelers on the route.
Such complacency will be problematic if United’s post-merger woes continue into 2014. American found itself with the same mindset beginning in the mid-2000s, which turned out to be a long and painful road to recoup in later years.
With US Airways folding into American, there is room for Delta on the West Coast
If there was ever a time for Delta to beef up its presence on the West Coast, it is now. American’s presence in the region will fortify with the US Airways merger, but it has yet to calculate how to effectively implement all of the merger-related synergies from a network perspective. United will be pre-occupied with its own slew of messes to fix.
Southwest, JetBlue, Alaska and Virgin (to an extent) are tough competitors for legacy carriers in the West on short-haul operations, but are disadvantaged by the lack the help from long-haul international feed, extensive codeshares, joint ventures and partnerships. Frontier and Spirit are too small and target a separate audience altogether.
For all intents and purposes, Delta’s network adjustments are another testament to how well-refined and strategically-oriented its planning team has grown and adapted over time. The carrier has the scale and power to ramp-up services to support international hubs (Seattle) or augment important business markets (LAX) in advance of the rapidly evolving aviation landscape.
In other words, Delta knows what it wants and has the bandwidth to run with it.