DL plans MCO-GRU service

[WorldTraveler]

more accurately, it is about an industry that obviously a lot of us are very passionate about and which some of us actually have a track record of predicting where the industry would go.

I've only been saying for years that DL would take advantage of the increased competition between Latin America to make inroads into key AA markets.

AA carries over 240 passengers per day just from MCO to Brazil (or vice versa). the market is there.

DL intends to grow its network and move its MCO passengers onto nonstops which is a more efficient use of its network.

Understanding and accurately speaking about the industry is not child's play.

 

[topDawg]

more accurately, it is about an industry that obviously a lot of us are very passionate about and which some of us actually have a track record of predicting where the industry would go.

I've only been saying for years that DL would take advantage of the increased competition between Latin America to make inroads into key AA markets.

AA carries over 240 passengers per day just from MCO to Brazil (or vice versa). the market is there.

DL intends to grow its network and move its MCO passengers onto nonstops which is a more efficient use of its network.

Understanding and accurately speaking about the industry is not child's play.

you have been saying Delta would start routes from Miami 
now you are changing your story. 
 
 
second "Understanding and accurately speaking about the industry is not child's play."
it would be great if you could....you know...actually do such a thing.  

 

[Kev3188]

*Chuckle

 

[WorldTraveler]

go ahead and chuckle. I like it when people are happy.

I like even more when they can engage in discussion and do so without taking personal potshots when someone else is right and their position is wrong.

I have indeed said that DL would start MIA-Latin America service and there is nothing I have said here that changes that.

DL is
1. highly aware of the growth that will come long-term to the Latin America market as low cost carriers expand and as the economic power shift between AA as the dominant carrier to Latin based carriers takes place.

2. DL has never been afraid of competing against low cost carriers and is also very successful in doing so. LCCs in int'l markets will break the pricing dominance of legacy carriers in their strength market. The very first reason why legacies have a dominance in their strength markets is because other legacies cannot compete without undercutting pricing which opens up other carriers to doing the same in the "attacking" carrier's strength markets.

3. DL has demonstrated its ability to be competitive with low cost carriers and maintain customer preference in spite of a low cost presence which is what they have done in ATL and SLC. But DL also uses low cost carrier growth as a platform to use to grow into other legacy carrier strength markets. That is EXACTLY what DL did in NYC against B6 and they did it while AA's costs were high - and it is why AA cannot ever recover its position in NYC even with low costs now - because DL has lower costs and has established it will grow to the share it needs in NYC regardless of who is in the marketplace.

4. Latin America has long been a high fare market that has been dominated by AA and much of their strength comes from its dominance of S. Florida, the economic capital of Latin America. NK provided insight into how much S. Florida to Latin America markets could be stimulated but B6 and soon WN will dump tons of capacity into S. Florida and it will cut significantly into AA's position of Latin America.

5. Based on the latest DOT data, AA carries over 100 passengers per day just from GRU to MCO and more than twice that amount from all of Brazil. MCO is AA's largest destination from Latin America that doesn't have nonstop flights to the region. 2/3 of AA's S. America to MCO traffic is from Brazil. By starting MCO-GRU, DL is hitting AA in the largest market it carries without competing directly against AA.

6. Kev has rightfully said that Hauenstein is a very smart man and he is. He isn't afraid of competition but he also doesn't bite off more than DL can chew. In both N. Texas and Latin America, DL is happy to let the LCCs go after AA's dominance but DL also wants to make sure they can get a piece of the action where it makes sense and also protect DL's interests in the region.

7. You and Kevin should have read since it is available to you that DL intends to be a major carrier in Latin America. There isn't a week that goes by without DL's Latin America team having a story on Deltanet and they always use the same tag line. Did you think they were talking about just running a reliable operation and all of the stuff that DL does across its system or do you think that DL really intends to grow? Just as with the Atlantic before Pan Am and Asia before NW, DL knows it cannot be a major, credible player in Latin America without serving MIA to Latin America.

8. I have repeatedly said that DL would systematically work thru its strategic to-do list. NYC is practically built out and DL is the dominant airline in NYC based on total local passengers. DL will make tweaks to its schedule and move a few markets here and there but there isn't a whole lot more that they need to do. From SEA, DL has done two major schedule buildouts and will add an int'l flight or two per year but its schedule there is reaching a lower growth mode and the same thing is true for LAX where DL has demonstrated that it will serve the largest and most significant domestic and int'l markets.
Thus, Latin America is now the focus of DL's growth and I have repeatedly said that is the order that DL would use to work on its strategic checklist.

the only thing you should really chuckle about is that you get a front row seat to an ongoing discussion with someone who can interpret what is and will go on with DL and its network despite the fact that I have been gone for years. that might sound arrogant and perhaps it is ... but when topics are being discussed that can either be validated as right or wrong, it doesn't take too long on these boards to figure out who knows what they are talking about and who doesn't. While I absolutely do make transcription errors in quoting data, I have a very strong track record of accurately discussing key strategic issues in the industry.

Likewise both are you clearly very smart and able to converse on the subjects that you know well and I respect both of you. A lot.

DL's strategies are rational and successful, they haven't really changed, and I know the way the game is played.

I am happy that DL continues to grow and that you, not me, gets to enjoy the profit sharing that comes from DL's from DL's growth. (although your profit sharing will be partially monetized into higher base salaries in the next year).

I don't chuckle at what DL is accomplishing. It is a full fledged laugh of celebration and applause not just for DL but for you whether you understand what it is or not and whether you can separate what I have said about my accuracy on issues which are more personal to you from these types of network/strategic issues.

 

[eolesen]

Oh c'mon. He's been saying MIA to LatAm for two years. Didn't you know he just meant Florida?......

This is all about backing up Gol against Azul. AA already has presence via oneworld partner JJ so why waste the metal?

It's also all about finding a place for the 763's being displaced by the ten 330's coming online.

 

[Kev3188]

Oh, E...

This isn't about boring things like asset allocation(s), or strategic moves in the marketplace at all!

 

[WorldTraveler]

Oh c'mon. He's been saying MIA to LatAm for two years. Didn't you know he just meant Florida?......

This is all about backing up Gol against Azul. AA already has presence via oneworld partner JJ so why waste the metal?

It's also all about finding a place for the 763's being displaced by the ten 330's coming online.

^^^this from the person who, among other things, told us ad nauseum how WN would decimate DL in ATL.

History now confirms what I said as a minority opinion, that the opposite would occur.

With the number of cities and flights operated by WN less than FL/WN have had in a decade, it is clear who was wrong.

and, you also clearly missed the part ON THIS PAGE where I said that DL still recognizes the need to serve the MIA-Latin America market but they are starting with MCO, a market that AA doesn't fly to Latin America even though it is AA's top market w/o nonstop service and also a growing market for LCCs with whom DL has a very strong traffic record of competing with in the US.

and the new 333s are displacing 744s, not 767s. The newest order 339s (330neo) will displace about half of the 767s by fleet number but they are a much larger aircraft so cannot be a viable aircraft for new service that can be operated on 767s.

The discussion is indeed about strategic planning and asset allocation. That's what the folks on the 5th floor do and that's where the decision to start this route came from.

 

[jcw]

it will... the US and Brazil goes to Open Skies later this year. but they have to file because it is not Open Skies now.It should be obvious but this is a shot across the bow of a certain airline with a large Florida hub.

Interesting when DL adds a flight it's a shot across the bow - if another airline adds a route it's called dumping capacity - double standard on full display

 

[WorldTraveler]

it's only a double standard if you fail to understand that there is a market for MCO-GRU service on US carriers; adding capacity beyond what the market can support and depressing fares is precisely the definition of capacity dumping.

If you would like to provide us with data that DL's route additions have depressed yields, I'd love to see it and discuss it.

 

[commavia]

"DL is the dominant airline in NYC based on total local passengers" and AA doesn't account for income taxes. The delusion and detachment from reality remain strong.
 
Back here in reality, I suppose that for the above (the former, not the laughably, categorically-false latter) to be taken seriously, we will be asked to suspend reality and pretend, as Delta's marketing seems to do, that "New York City" proper and EWR are not one common air market, therefore allowing for the typical comedy about Delta "dominating" anything in the NYC air market - O&D or otherwise.
 
But on the larger point, it's notable and ironic that we must be treated - yet again - to the diatribes and recitations about all the "strategic moves" Delta has been required to make in the last few years.  It's ironic for several reasons.  First, because when AA makes similar "strategic moves" into important growth markets where it needs to build a presence, even if its initially margin-dilutive, we have to listen to the usual hysterics implying that AA's managers don't know what they're doing (and a self-appointed expert who already got kicked off of one industry forum) knows better, and that AA's employees should be picketing if not burning down headquarters because "their" hard-earned dollars are paying for Doug Parker's stupid "bets."  And secondly, it's absolutely stunning that we have to hear all about the brilliant strategic moves Delta has made in the last decade, delivered without even the slightest hint of irony given that the laundry list essentially proves the point - Delta has been making lots of moves, specifically into AA's and United's markets, because Delta had to given its historically lower-revenue-generating network.
 
So as said repeatedly - congratulations to Delta for smartly taking advantage of the temporary, transitory weakness of their chief rivals to consolidate some gains from their merger and grow their network when they had the chance.  But now they clearly have several major competitors who are more than capable of pushing back - as multiple recent moves show.
 
And back to the actual point of this thread - given Brazil's macroeconomic conditions, the prevailing yields in these markets, and the ever-intensifying competition on these routes, once again good luck to Delta fighting for MCO-Brazil traffic.

 

[WorldTraveler]

EWR and LGA and JFK are indeed all part of the NYC; the problem is that you don't know the definition of the local market. DL carries far less passengers THRU NYC than UA and thus carries more LOCAL NYC passengers to/from NYC. If you want to divide it out, DL is the largest DOMESTIC local NYC carrier while UA still is the largest int'l carrier.

When you tell someone else that they are wrong because you either don't know the facts behind the statements that have been made or worse yet you don't even understand the concept of the local market, then it is you that is hurt.

further, I have noted the irony that AA's Pacific operations were profitable in the 4th quarter but those profits don't begin to come close to making up for the $1 billion losses that AA posted flying to Latin America in just the 4th quarter.

so, yes, perhaps AA is turning the corner in Asia in terms of profitability and by growing their revenue.

But the challenge they are facing in Latin America is far larger than even I expected and it isn't going to get any better.

The Latin America market was protected and highly profitable for AA. In the past. But not any more.

Yes, competitors capitalize on opportunities to grow relative to competitors. that's what competitors - not utilities - do.

and as much as AA is growing in Asia, their size in Asia relative to DL and UA is still far less than DL and UA are relative to AA in Latin America - where DL and UA are growing while AA is shrinking.

as for MCO-GRU, I was surprised at the timing but I wouldn't be surprised if DL moves fairly quickly to a JV with G3 since the US and Brazil will have true Open Skies and Gol will then dump their own flights to MCO - if not the US as a whole - in return for putting passengers on DL's flights. Further, you still don't want to admit that DL can fill its entire new capacity to MCO with the traffic that AA carries to GRU and the larger Brazil market. and AA will still have traffic left over.

Plus, DL already carries traffic from Brazil to MCO on its own flights which will just result in traffic shifting from ATL connections to MCO.

the real question is how soon DL will be willing to further its expansion elsewhere from Latin America to Florida and eventually take on AA from MIA to Latin America.

It is not a question of if but when.

 

[WorldTraveler]

DL has added an MCO-MIA flight that connects well in one direction with the MCO-GRU service which is now for sale.

DL is also adding LAX-TUS

http://airlineroute.net/2015/06/07/dl-mco-dec15/

http://airlineroute.net/2015/06/07/dl-laxtus-dec15/

 

[FWAAA]

I have to assume that the schedule will be adjusted so that the flights connect in both directions. With the minimal O&D between MIA and MCO, it's all about connections.

 

[WorldTraveler]

MCO is a larger station than MIA so DL could create some other connections but a 150 seat M80 has the capability to connect a lot of traffic from MIA to DL's MCO-GRU flight

I expect that at the minimum, DL can pick up a big chunk of the traffic that Gol is carrying on its 1 stop 737 flights to MCO and MIA.

With a seat on G3's board, DL probably has access to more information as an equity holder than with a JV.

and DL could also support AR's MIAEZE flight as well.

 

[topDawg]

MCO is a larger station than MIA so DL could create some other connections but a 150 seat M80 has the capability to connect a lot of traffic from MIA to DL's MCO-GRU flight

I expect that at the minimum, DL can pick up a big chunk of the traffic that Gol is carrying on its 1 stop 737 flights to MCO and MIA.

With a seat on G3's board, DL probably has access to more information as an equity holder than with a JV.

and DL could also support AR's MIAEZE flight as well.

I'm not sure how that works but with open skies coming I don't think it will matter soon. I expect G3/DL will have a JV ASAP. 
 
but I also imagine the one MCO-MIA flight will be tweaked to better connect to both MCO-GRU legs.