LGA Expansion

[WorldTraveler]

I get the concept of small talk. I just choose to doggedly focus on the topic at hand.

DL has engaged in the largest expansion of service at LGA in decades and now has a larger share of service at that airport by one carrier in decades, if ever.

Hub dynamics elsewhere clearly show that the carrier with the largest share at an airport gets a disproportionate share of the local business at that airport and usually gets a fare premium to its competitors as well. That is the basis on which CO grew to be the largest carrier in the NYC market at EWR.

That is also the basis of DL's expansion at LGA. Compound that with LGA's position as the preferred airport for short-haul air traffic from NYC and DL clearly has expectations of shifting business not only from EWR and JFK but from other carriers at LGA. Based on data which DL has released - and could easily be corroborated or challenged by other parties if it were not true - DL is shifting business and revenue to DL's expanded LGA operation.

It will take time to find the best way to use 250 or so flights per day, esp. given that DL's plan had to be implemented fairly quickly using 50 seat RJs which were available on short notice but which are not necessarily the best aircraft for the market on a longterm basis.

Add in that operational problems have impacted both the largest carrier at EWR and now the 2nd largest carrier at LGA, and DL's expansion plan may be getting an extra boost from its competitors.

The data showing how successful DL is in its efforts at LGA, and NYC overall, will be available to the public later this year and into early 2013.

 

[BoeingBoy]

Hub dynamics elsewhere clearly show that the carrier with the largest share at an airport gets a disproportionate share of the local business at that airport and usually gets a fare premium to its competitors as well.

Hub dynamich "elsewhere" can't be reliably used to predict the NYC market.

- Most true hubs (ex-ORD) are in single airport cities so whoever has the disproportionate share of flights - the hub carrier - also has the disproportionate share of gates and non-stop destinations which gives it the disproportionate share of business traffic and the fare premium that non-stop flights can produce.

- CO grew EWR in the period when it wasn't affected by quasi slot controls and perimeter restrictions like LGA. With those restrictions in place there's a limit on how big a hub LGA can be - and certainly no possibility that even mighty DL can achieve at LGA what CO did at EWR. So there is a governor on how big a "hub" DL can build at LGA compared to "hub dynamics elsewhere."

- JFK is the big international airport for NYC and has traffic rrestrictions, so DL will be effectively trying to build two mini-hubs - international at JFK and eastern half of the U.S. at EWR - both of which will need some feed from the same spoke cities to be successful hubs. Splitting the feed between two airports leaves two weaker hubs than a single hub for international and domestic would be. This can be partially offset by the amount of O&D NYC provides, but there will obviously be other carriers fighting for that O&D traffic.

Jim

 

[WorldTraveler]

Hub dynamich "elsewhere" can't be reliably used to predict the NYC market.

- Most true hubs (ex-ORD) are in single airport cities so whoever has the disproportionate share of flights - the hub carrier - also has the disproportionate share of gates and non-stop destinations which gives it the disproportionate share of business traffic and the fare premium that non-stop flights can produce.

I could call this a lie using your tactic but I don’t do that so I will simply note that you somehow manage to forget that Dallas and Houston have two airports. MIA is the same distance from FLL as EWR is from JFK – so does that mean MIA is not a hub? SFO/OAK/SJO, Jim – SFO isn’t a hub? Need I go on?
There are two or more commercial airports in other hub cities including Phoenix, Detroit, and others.

Hub dynamich "elsewhere" can't be reliably used to predict the NYC market.

- CO grew EWR in the period when it wasn't affected by quasi slot controls and perimeter restrictions like LGA. With those restrictions in place there's a limit on how big a hub LGA can be - and certainly no possibility that even mighty DL can achieve at LGA what CO did at EWR. So there is a governor on how big a "hub" DL can build at LGA compared to "hub dynamics elsewhere."

LGA has had perimeter restrictions during the entire time that CO has operated a hub at EWR.

Every airport has physical limits of capacity. All of life does, actually.

- JFK is the big international airport for NYC and has traffic rrestrictions, so DL will be effectively trying to build two mini-hubs - international at JFK and eastern half of the U.S. at EWR - both of which will need some feed from the same spoke cities to be successful hubs. Splitting the feed between two airports leaves two weaker hubs than a single hub for international and domestic would be. This can be partially offset by the amount of O&D NYC provides, but there will obviously be other carriers fighting for that O&D traffic.

Jim

That would be the theory if NYC wasn’t the largest local market on the planet… and the amount of connecting traffic that DL has to push thru those two airports to give it an advantage on the flow segments is a whole lot smaller.
You cannot deny – at least w/ facts - that LGA is the preferred NYC airport for short-haul traffic and JFK is the preferred airport for long-haul traffic from NYC. Whatever advantage CO/UA had/has at EWR isn’t as strong when there are viable hubs at LGA and JFK.
And the simple fact is that CO grew EWR as much as it did because AA and DL had no focus on NYC other than DL's interest in Florida traffic and B6 hadn't come into existence.
CO's growth at EWR happened primarily because no one bothered to try to compete with them.
Is it any surprise that CO decided to sell out to a much bigger airline when it became apparent they would be forced to compete in NYC- their largest market - with a megacarrier that had its own designs on NYC?
If you knew the data for the NYC market, you would know that DL’s revenue at JFK has grown dramatically in markets where it competes w/ CO/UA because DL beefed up its service from JFK and created a larger hub.
The same hub dynamics that apply in other hubs most certainly do apply to the NYC market and the data is there to back it up.

 

[WorldTraveler]

It's also worth noting that DL now has the most domestic seats in NYC than any other airline while UA has the size advantage in international markets. So, DL has already used its LGA hub to give it an advantage in the domestic market. Other than the transcons, which UA operates from both JFK and EWR, DL duplicates most of what UA has at EWR thru DL's operation at LGA.

I honestly do not expect that DL will grow to be the size of UA on an int'l basis in NYC - but at the same time, it is very unlikely that UA will maintain its 2 int'l operations at IAD and EWR at the same size as they are now. They have alot of internal competition in their own system that drives up costs.

 

[BoeingBoy]

I could call this a lie using your tactic but I don’t do that so I will simply note that you somehow manage to forget that Dallas and Houston have two airports.

And again you'd be wrong...

As does Chicago, Los Angeles, etc. But I separated WN hubs out since to at least some degree they appeal to a different section of the public. I also ignored smaller carriers like Spirit and Allegient - they're not big enough to use for making a case.

MIA is the same distance from FLL as EWR is from JFK – so does that mean MIA is not a hub? SFO/OAK/SJO, Jim – SFO isn’t a hub? Need I go on?
There are two or more commercial airports in other hub cities including Phoenix, Detroit, and others..

MIA and FLL are also serving different cities - Miami and Ft Lauderdale - that happen to have become part of the S. Florida Metroplex. But even considering them both as hubs, only one is a true hub (MIA) while the other is largely domestic (FLL). Phoenix and Detroit (as well as others like PHL) do have 2nd "commercial airports" but they're not hubs in the true sense of the word. Recall I was speaking of true hubs - not an airport with some commercial service. Then there are the cities on primarily the west coast with multiple airports but those largely don't have one carrier disportionately serving the market. Between the multiplicity of airport and carriers there are few true hubs in those cities.

LGA has had perimeter restrictions during the entire time that CO has operated a hub at EWR.

Yes indeed and that's why claiming that DL will achieve at LGA what CO achieved at EWR (without those pesky restrictions) is most likely wrong. A point that I made, in fact.

Every airport has physical limits of capacity.

At least short term (months/years and not decades). But most true hub airports have or can get the space to expand facilities if needed. Care to try that at LGA???

Congratulations, you succeeded in reinforcing my points (another mistake on your part???)...LGA isn't the typical major hub airport so comparisons with other hub airports are of limited validity...

Jim

 

[WorldTraveler]

As does Chicago, Los Angeles, etc. But I separated WN hubs out since to at least some degree they appeal to a different section of the public. I also ignored smaller carriers like Spirit and Allegient - they're not big enough to use for making a case.

…you separate out WN hubs because a carrier that has 25% of the domestic market isn’t worthy to be lumped in with the rest of the industry?

You do realize that WN has 9 cities on its network that have 100 or more mainline flights per day which is more than any other carrier? They may not call them hubs but they have more concentrated operations than their legacy peers do.

Or is perhaps you exclude WN because your narrative of where you want to say there is multiple hub competition only would only be in – NYC – between UA and AA and DL, since NYC is the only city with multiple airports that support multiple network/legacy carrier hubs at different airports in the same city. So it is apparently ok to distort facts and data if it serves your purpose?

MIA and FLL are also serving different cities - Miami and Ft Lauderdale - that happen to have become part of the S. Florida Metroplex. But even considering them both as hubs, only one is a true hub (MIA) while the other is largely domestic (FLL). Phoenix and Detroit (as well as others like PHL) do have 2nd "commercial airports" but they're not hubs in the true sense of the word. Recall I was speaking of true hubs - not an airport with some commercial service. Then there are the cities on primarily the west coast with multiple airports but those largely don't have one carrier disportionately serving the market. Between the multiplicity of airport and carriers there are few true hubs in those cities.

Uh, Jim, you are aware that EWR is not in New York state? MIA and FLL are at least in the same state and yes they serve as much of the same market as the three airports do in NYC (although EWR is really not NYC)

And what of Washington DC which has hubs by two different legacy airlines at two different airports – although not in the same state?

Yes indeed and that's why claiming that DL will achieve at LGA what CO achieved at EWR (without those pesky restrictions) is most likely wrong. A point that I made, in fact.

Time out.
Who said that DL will achieve at LGA what CO achieved at EWR? Given that EWR is a much larger airport and has no perimeter restrictions, how would anyone think that DL would expect to achieve at LGA what CO achieved at EWR.

Hint: they won’t and they didn’t say they would. Neither did I.

DL does have a dual hub strategy at two NYC airports.

The LGA deal, Jim, was intended to give DL the advantage in the domestic market since that is the segment LGA serves – and then only a piece of that market.

DL’s intention is to strengthen its overall NYC position via a larger LGA operation and a complementary operation at JFK that focuses on those markets that cannot be served from LGA.


You do realize that even before the slot deal, DL carried 98% of the domestic passengers from the three “NYC” airports (if we can call EWR a NYC airport) that UA carried from the same three airports….
And DL carried 93% of the domestic revenue.
So adding more than 100 more flights should most definitely allow DL to surpass UA in the domestic NYC market…. We haven’t seen more int’l announcements based on their NYC strategy but a birdy tells me they are coming too.

At least short term (months/years and not decades). But most true hub airports have or can get the space to expand facilities if needed. Care to try that at LGA???

Congratulations, you succeeded in reinforcing my points (another mistake on your part???)...LGA isn't the typical major hub airport so comparisons with other hub airports are of limited validity...

Jim

Unless you can show me plans to expand the facilities at other hub airports that are in process while showing that none will ever exist at LGA, your point is incorrect.

Once again, Jim, DL isn’t trying to make LGA and JFK into the same type of hub airport as any other.

DL is focusing on the fact that NYC is the largest air travel market in the US – if not the world – and as such they have enormous local traffic potential they can tap. The flow revenue they need is much smaller than at other hubs. Since LGA and JFK are the preferred airports for short and longhaul traffic compared to EWR in the NYC region, then DL has a built-in advantage of using the stronger local market better than UA is at EWR.
DL doesn’t need to carry as much flow traffic which means their hub won’t necessarily look the same.

But just for good measure, DL’s domestic operation at LGA and JFK IS NOW larger than UA’s at EWR – post slot deal.


In fact, DL now offers 17% more domestic seats from LGA and JFK than UA does from EWR.

The chances are really quite high that DL will surpass UA as the largest carrier of local NYC revenue. They’ll start first with the domestic market and may reach that goal within a few months. The international part might take a little longer.

 

[700UW]

And CVG is Kentucky not Ohio.

 

[FWAAA]

You do realize that even before the slot deal, DL carried 98% of the domestic passengers from the three “NYC” airports (if we can call EWR a NYC airport) that UA carried from the same three airports….
And DL carried 93% of the domestic revenue.

So adding more than 100 more flights should most definitely allow DL to surpass UA in the domestic NYC market…. We haven’t seen more int’l announcements based on their NYC strategy but a birdy tells me they are coming too.

Delta carried 98% of the domestic passengers from the NYC airports even before the slot deal? That leaves UA and AA and B6 and WN (and all other airlines) with just two percent of the NYC domestic passengers? That's not believable.

And Delta captured 93% of the domestic revenue from the NYC airports? So UA and AA and B6 and WN (and all other airlines) had to share just 7% of the domestic revenue in NYC? Just like the above, not believable.

 

[USFlyer]

Delta carried 98% of the domestic passengers from the NYC airports even before the slot deal? That leaves UA and AA and B6 and WN (and all other airlines) with just two percent of the NYC domestic passengers? That's not believable.

And Delta captured 93% of the domestic revenue from the NYC airports? So UA and AA and B6 and WN (and all other airlines) had to share just 7% of the domestic revenue in NYC? Just like the above, not believable.

Here's what he said: "DL carried 98% of the domestic passengers from the three “NYC” airports (if we can call EWR a NYC airport) that UA carried from the same three airports".

I take this to mean that Delta carried 98% of the traffic that United carried -- meaning, in the NYC market, Delta was already almost as big as UA before the slot deal. So, if United carried 10,000 passengers, Delta was carrying 9,800 passengers.

 

[FWAAA]

Here's what he said: "DL carried 98% of the domestic passengers from the three “NYC” airports (if we can call EWR a NYC airport) that UA carried from the same three airports".

I take this to mean that Delta carried 98% of the traffic that United carried -- meaning, in the NYC market, Delta was already almost as big as UA before the slot deal. So, if United carried 10,000 passengers, Delta was carrying 9,800 passengers.

Ahh, I see. Many thanks for deciphering WT's assertions for me.

My apologies, WT, for I was wrong. See how that's written? I was incorrect.

So WT is saying that DL carried almost as many domestic passengers as did UA: 98% as many, in fact.

 

[Crash Pad DCA]

http://www.anna.aero...k-market-share/
With its additional capacity at LaGuardia, Delta will this summer become the single biggest carrier (in terms of capacity) in the New York area, passing Continental. However, if Continental’s figures are combined with those of its merger partner United, then Delta is still in second place. American Airlines just holds off JetBlue for third place, while British Airways remains the leading foreign airline serving the three major New York airports.

 

[BoeingBoy]

...

The usual BS...WT is always right and anyone who disagrees is by definition wrong...

I'd invite anyone to review our back and forth to see your "evolving" positions and instances of you saying something only to deny saying it later.

Jim

 

[Crash Pad DCA]

http://www.anna.aero/2012/06/13/deltas-jfk-base-gets-nine-new-routes-but-overall-flights-are-reduced-as-airline-expands-at-laguardia/
In 2011 Delta ranked second among carriers serving the three main New York airports (JFK, LaGuardia and Newark) with a total of 20.37 million passengers, beaten only by Continental with 23.31 million thanks to its base at Newark. Counting only domestic passengers Delta (16.05 million) just beat Continental (15.72 million). Delta’s traffic was split across all three airports with 11.43 million passengers at JFK, 7.15 million at LaGuardia and 1.64 million at Newark.

 

[wings396]

This dude is more excited about Delta and LGA than an 8 year old kid on Christmas eve...
Kind of Nutty that anyone would be so wrapped up in anything like this, and even more bizzare if they no longer worked for the company. Sounds like too many years of drinking that Southern brewed Koolaide.....

 

[WorldTraveler]

Thank you, USFlyer. Your assessment is correct.

The simple reason why the LGA slot deal is so significant is because it represents the single largest change in share in the NYC market in decades.

Given that US told its people NYC didn't matter, I'm not surprised to see that their people don't understand the magnitude of what has happened in NYC this year.
I'm sure it doesn't make US people feel real good seeing a competitor take the assets that US had just a few months ago and use it to change a market as signficant as NYC, esp. since US agreed to give DL far more slots at LGA than DL had to give US at DCA, even considering the little bit of money and the GRU slot after Open Skies that DL threw in.

NYC is the largest market in the US by a wide margin and it, like LAX, BOS, and WAS was divided between the network carriers except for CO/UA's position at EWR.

DL made the strategic decision coming out of BK that they intended to create hubs at LGA and JFK that rivaled what CO offered at EWR. With the UA/CO merger, the bar was raised even further since UA had a decent domestic presence in key domestic markets from LGA and JFK.

It is worth noting that the domestic market inside the perimeter at LGA and JFK combined is more than twice the size of what it is from EWR to inside the perimeter markets from LGA.... so a carrier that achieves even half of the market share at LGA and JFK will have a larger market share than one at EWR that achieves 100% market share at EWR - and UA doesn't have 100% share of the EWR.

And, yes, Jim, EWR can't grow either. Slot restrictions mean the market will be redistributed between existing players or grow thru overall increases in revenues.

The significance whether you, Wings, want to admit it or not, is that DL HAD already become the largest domestic airline from NYC even before the slot deal. After adding more than 100 flights and gaining a 17% advantage in seat size over UA, it isn't hard to see that DL has eliminated the dominance of the greater NYC market that CO had - and which the UA merger only increased.

If you don't see the significance of a change in market share of that magnitude in a market of that size, then you probably don't understand or don't want to talk about anything regarding the revenue side of the US airline industry.

If you find another market that has had such a signficant change any time in the past dozen or so years, let alone what is happening now, please do bring it to our attention. We want to make sure we keep the LGA slot deal in its proper perspective.