Possible DL Expansion in Miami?

[eolesen]

Hands tied? Oh, the drama...

The limiting factor at GRU is the poor facilities at GRU. There are no capacity controls on markets being served, so DL could easilyrequest to move one of their JFK or ATL frequencies (the only risk would be someone else filing to serve the market in their place).

Yet, they haven't.


They could be freely serving BSB or CTB, and leveraging their ownership stake in G4 to increase presence at CGH (more convenient than GRU to most people).

Yet, they haven't.


The interim agreement before Open Skies takes effect has added an incremental 14 weekly frequencies for to any point (including GRU) in both October 2013 and again in October 2014. DL could have applied to serve MCO-GRU or MIA-GRU, and likely come out the winner of the route case given the ample service provided by the other frequency holders and the introduction of TAM into oneworld.

Yet, they haven't for the 2013 route proceeding, and it's not clear that they did for October 2014 (which should already be out for sale shortly based on how far in advance DL publishes their winter schedules).



So, talk about hands being tied, but in this case, DL's had opportunities they could have exploited.

And they didn't.


You're probably right they're going to exploit the areas where they have a dominant position, because in your mind, they can successfully play catch-up later. It's the approach you've proposed for AA would take in the Pacific (except that there's no light at the end of the tunnel regarding when China will consider Open Skies, so using your approach, AA would never actually expand in Asia).

 

[WorldTraveler]

DL did win half of the awards in the 2013 and 2014 route cases.... ATL GRU #2 starts in a couple weeks and the Oct 2014 frequency will replace the DTW GRU route which DL traded away as part of the DCA/LGA slot deal, only to win it back a couple years later. MAH has accurately noted that with the AA slot divestiture at DCA, DL gained 125 slot pairs at LGA for about $60 million dollars.

Once again, DL is growing in Latin America - they just haven't shifted their attention to deep S. America or to MIA as a gateway. 30-40% growth rates year over year are very impressive, and as has been alluded to, the chances are high that DL will focus on narrowbody markets from MIA before going after deep S. America just because there is less risk involved.

But as has also been noted, DL's strategic focus for this year is primarily on the west coast and LHR which were two of DL's biggest strategic needs.

Don't assume that because DL could legally expand from MIA to deep S. America but haven't yet that they won't.

And even when they do show up, they will likely put just enough capacity in there to begin to win over the national and global accounts that need MIA-Latin America as part of the contract. They won't be there to try to take away AA's butter but rather to have a globally balanced network with the necessary presence in the largest Latin America gateway.

stay tuned.

 

[boston]

How may routes does Delta operate in Miami, would you say 50-100 ?

 

[700UW]

Routes or flights? I doubt they fly to 50-100 cities out of MIA.

 

[737823]

Atlanta
Detroit
Los Angeles
New York JFK
New York LGA
Minneapolis-St. Paul

All mainline MD-88/90, A319/329, 737-800/900ER, and 757-200

Josh

 

[WorldTraveler]

DL offers about 3500 seats/day from MIA on between 20-25 flights/day compared to AA's domestic operation which offers about 24K domestic flights/day.

removing all of the connecting traffic that AA carries, DL has about 15% of the MIA local market compared to about 70% for AA; if you exclude Latin America from MIA, which DL cannot compete in without serving it nonstop, DL has about 20% of the market compared to about 60% for AA.

DL carries the majority of the local market to/from its interior US hubs of ATL, DTW, and MSP and even has a double digit market share in LAX where it only operates one flight/day that doesn't even operate on a daily basis as well as about 40% of the LGA/JFK-MIA market compared to AA's 60%, the idea that DL can growth in MIA isn't that far-fetched. Considering that DL only started LGA-MIA a couple years ago after the slot swap, DL has attained a pretty decent position in one of the largest markets from MIA.

As has been noted, DL has a very strong market base in Florida, including in MIA. Thus, the real driver of when DL will focus on the MIA-Latin America market is when DL has the strategic bandwidth to focus on the market; right now, DL's strategic focus is primarily on the west coast and Asia after having becoming the largest domestic airline in NYC and a strong #2 in NYC int'l. Further, DL is #1 in NYC-Europe in the most recent reporting period so UA's lead in NYC int'l comes from Latin America and Asia where DL has not focused as much strategic attention in favor of SEA-Asia and ATL-Latin America, although DL will be operating several new Saturday only JFK-Central America flights this summer.

It isn't hard to see that DL is managing its strategic very methodically and will take on MIA-Latin America at the appropriate time but also after it has maximized its Latin America position from ATL, NYC, and its other hubs before taking on MIA.

 

[eolesen]

You might want to check the point of sale for all those strong markets you're mentioning.

A lot of it looks like is originating in DTW, SoCal, NYC, MSP, and not in South Florida...

 

[WorldTraveler]

that's true in most markets involving a hub... the carrier with the stronger hub usually gains a higher percentage of the bookings.
Factor in that most domestic Florida traffic originates outside of Florida and your point is not a surprise.

You should also look at the shift in point of sale in markets like LGA and JFK to MIA, ORD, and DFW where DL entered those markets based on the strength it gained as a result of the slot swap with US but has managed to increase its market position in each of those markets from the non-NYC end of the market.

That is exactly what happens in any market... but the challenge for AA at MIA is that such a high percentage of the traffic originates in cities where other carriers have the potential to pull traffic on their own strength.
And once again, DL's purpose in starting MIA to Latin America when it does will not be to overtake AA but to have a position in markets that are significant to global contracts that DL can provide a larger network than other carriers.

 

[eolesen]

The point of sale shift had more to do with the corporate contract signing spree that DL went on in both BOS and NYC several years ago. Granted, the slot swap may have been the incentive for some of those contracts to change over, but those contracts should be at or in the renewal phase by now.

Arguably, the playing field has changed with respect to both UA and AA, so I wouldn't say it's a slam dunk that DL is going to keep all of the contracts they won in the 2010-2011 timeframe.

 

[WorldTraveler]

but you really don't know that, do you? you're just hoping that DL will slip on a banana even though all of the evidence says that DL's revenue growth continues to lead the industry.

Maybe DL is just intoxicated on its own success but show me where either DL is at risk of losing what it has or that AA or UA is succeeding at removing what DL gained?

I don't suppose it in an option in your mind that DL might actually be INCREASING its revenue growth including in those two cities -which is why they continue to grow there?

 

[eolesen]

Whatever, WT. I could care less if they slip on a banana peel or if they grow their revenue.

Seems to me you're the one intoxicated. You drink up any sliver of success DL's ever achieved, and manage to spin it into the greatest stories ever told...

 

[WorldTraveler]

and you're the one that can't seem to accept that DL really has achieved pushing its way into markets that were previously the domain of AA and UA - but AA and UA haven't done the same thing to DL. Perhaps that is why DL's share of industry revenue continues to grow relative to AA and UA.

It doesn't take too much to realize that a trend like that will change the balance of power in the industry if it is not corrected from AA and UA's perspective.

 

[robbedagain]

yep the delta domination of the us and the world continues     and if aa or ua did the same exact thing youd be cryin foul

 

[WorldTraveler]

why would I cry foul if they choose to compete? Foul is when there isn't a level playing field. Let me know where DL has done that to the expense of someone else.

 

[topDawg]

And dont worry about the pesky fact of needing route authorities.

 
No need if they wanted to. 
but they don't. 
 
Delta is focused on the west coast. That is where (along with NYC) the majority of the marketing budget is going for a while. 

I've been hearing rumors around work about Delta possibly expanding/introducing service to South and Latim America from Miami. I didn't think much of it but recently I've noticed they've been putting a lot of positions in MIA on ebid.  I know rumors and workplace gossip aren't good sources but I figured I would post here and see what others think.

 
no. they did a test run of the market with LHR/TPA/MCO and simply got their asses handed to them. LHR/SEA/LAX/NYC are the focus markets now. 

since GRU is the largest market in the region, DL would be going in with their hand tied behind their back.

Further, DL is clearly focusing its competitive efforts on the west coast. Based on current schedules, DL will offer more than 15% more seats in the 3 west coast states by the end of the announced buildup at SEA and will be on par with AA/US in terms of size.

Given that DL's already started Pacific expansion depends on its west coast growth, it makes sense to get that right first.

DL is still growing at a very fast 30%+ growth rate in Latin America and the Caribbean- with the growth primarily focused on Mexico, Central America, and the Caribbean and is neck and neck with UA for #2 in the region depending on the time period measured.

DL will take on S. America and Latin America from MIA in time...

No they wont. I can pretty much promise you that. 
Just like the 737-700 fleet that hasn't left yet. 
 
Delta can't even make LAX-MIA work daily year round(hell its not even daily in the frickin summer!) and doesn't even have SLC/CVG flights.....its not happening WT. move on. 

How may routes does Delta operate in Miami, would you say 50-100 ?

ATL
11 M88
DTW
1x M88 1x 738
LGA
6 M88
JFK
3 M88
MSP
1 320
LAX
Anywhere from 4x weekly to daily 738 flights.