DL expands SEA further with SEA-SFO flights

[MAH4546]

MAH,
the simple fact is that DL does have a 12% revenue premium to the US domestic industry which means that for every $1 the rest of the industry collects in revenue, DL collects $1.12.
If DL can do that without having the corporate contracts you think they don't have, then apparently corporate contracts don't matter.
 

 
This has nothing to do with Delta's supposed revenue premium.
 
At least you indirectly admit that Delta continues to fail tremendously in stealing corporate contracts in New York and Los Angeles. And let's not for one second make pretend this isn't important - it would especially weaken AA significantly in New York if Delta was able to make significant headway in this area. But it can't. And it has tried desperately to do so. Even after the major LaGuardia slot swap, it continues to fail to convince AA and UA customers in Manhattan that it is the right carrier for them. Why does it continue to fail? And if it's not important as you try to claim, why does Delta keep trying so hard to gain them as customers? 
 
Despite delivering what I think is an amazing, top notch shuttle product between Los Angeles and San Francisco, it still carries a minuscule amount of the local traffic and has made zero headway in the Los Angeles business traveler sector that continues to be dominated by American Airlines. 
 
Though maybe if Delta treated their elites like, well, elites, it would have more success in that arena. 

 

[WorldTraveler]

are you serious?

DL has grown to be twice the size of AA in NYC, its average fares are above what AA gets, and you say that DL doesn't get premium revenue?

DL is within a couple percent of the share that AA carries in the JFK -LAX market.

The facts don't agree with your perception, Mark.

Perhaps now would be a good time to face the reality that AA has lost a lot of ground and DL is in fact picking up key revenue which AA USED TO carry.

I'm sure it will totally rot your socks, but AA's average fare from LAX is actually THE LOWEST of the four network carriers based on the most recent quarter. And that statistic is true whether int'l revenue is included or not.

AA isn't the premium revenue airline compared to everyone else that you want to think they are, Mark.

But since you think AA is still a premium revenue carrier, how about you show us some data that shows it.

 

[commavia]

MAH, remember who you're dealing with here.
 
Remember three years ago when we were were assured that Delta's NRT hub was perfectly safe, and that the AA-JAL joint venture "cannot work," and also that Delta would "depress yields" for "as long as it takes" to "finish Japan Airlines off once and for all?"  Remember that?  Well ... we see how that has worked out.  Once again ... too bad reality had to get in the way.
 
JAL is highly profitable, generating a net margin of 12.4% in the April-September 2013 period (comparable Delta margin during the same period, for those keeping score at home: 10.2%).  The AA-JAL joint venture by next summer will be operating sixteen daily flights between the U.S. and Japan (Delta's schedule: fifteen daily flights).  The AA-JAL joint venture has used 787s to open up several new U.S. markets, including BOS and SAN, nonstop to NRT (and Asia) for the first time ever.
 
And Delta, meanwhile?  Their NRT hub continues to be dismantled - losing two more markets in the next six months (again, on top of three more dropped in the last few years) - as more and more Asian cities are linked nonstop with SEA.
 
So much for Delta "finish[ing] Japan Airlines off once and for all," and so much for all of us admitting when our predictions turn out wrong ...

 

[WorldTraveler]

but wait, you just said the measure of viability was that DL's NRT operation is 20 some percent smaller and yet you now want to argue that the same metric doesn't apply to JAL? Yes, we know they are using smaller aircraft - but that was exactly the point that you used to argue that DL was not viable.

You are trying to tell us that JL is profitable but dismiss DL's statement that NRT is their post profitable hub?


JAL has lost more capacity at NRT than any other US or Japanese transpac carrier.


Did it occur to you that perhaps DL AND JAL have figured out how to adapt to the changing dynamics of the market and that both carriers really are doing well?

That of course would make your statements that DL is not viable at NRT incorrect but that is exactly the reality.

The market is adapting. DL is succeeding. SO is JAL.


Your attempts to label DL as failing are incorrect.

More significant to this discussion, DL has a hub in SEA that it can use to rebalance its Asian network. JL has to use AA. There is no evidence that JL can help AA on routes from Asia to the US that don't touch Japan but more significantly, AA is losing tens of millions of dollars per quarter trying to build an Asian route system.... and that fact is confirmed in DOT data which AA itself have provided.

 

[commavia]

"Those who think DL will pack its bags and leave its presence in Japan will be in for a rude surprise. DL still is the largest foreign airline in Japan and will still operate more than enough flights to depress yields over the Pacific and in Japan as long as it takes to finish Japan Airlines off once and for all.... and in the meantime, DL will be pulling traffic left and right off of JL and AA."
 
-- WorldTraveler, February 7, 2010
 
In 2014, the AA-JAL joint venture (the one incapable of ever "com[ing] close to being a competitive force in Asia") will be operating 22 daily nonstop flights to Asia from 8 U.S. gateways.  Delta, meanwhile?  22 daily nonstop flights to Asia from 8 U.S. gateways.
 
Next.

 

[WorldTraveler]

and the reason why AA-JL is still holding onto its US-Japan capacity is because they are willing to subsidize losses to the tune of tens of millions of dollars per quarter.

In the 1st quarter of this year when AA lost 25 cents for every dollar of Pacific revenue, DL had a 12% profit margin. AA lost money in the 2nd quarter of the year with a negative 12% profit margin so it isn't just a winter thing.

While DL was the only US airline that MADE MONEY on the Pacific in the first quarter of 2013, AA was the only US airline that LOST MONEY on the Pacific in the 2nd quarter.

You want to say that DL's NRT hub is failing yet DL is the most Japan-centric carrier and yet they managed to make money in the slowest quarter of the year, right after the yen devaluation yet AA lost tens of millions of dollars.



Those are JL's losses too... not sure if there are loss limit clauses in the JV contract but the fact that JFK-HND got canceled says that both parties said enough was enough. still, a -25% profit margin is far more than losses on just one route. It is the equivalent of 2 out of 8 AA tpac flights making no money while the rest are breaking even.

We don't know the details of JL's Pacific routes because the DOT requires more data than is required of foreign airlines but AA presence on the Pacific is not making money which further validates that they are remaining in the market without making money.

Next is you recognize that AA is holding on in the Pacific despite massive losses and that strategy is not sustainable. Parker cannot afford and will not support AA's visions of grandeur in markets that AA saw as strategically necessary but which did not produce profits.

BTW, AA+JL is still smaller than DL across the Pacific to the US and smaller than UA.

PS.

DL has also added another SEA-ANC RT by next summer... they are up to 3, one of which is on a 757.

This isn't child's play anymore, Mildred.

 

[robbedagain]

Just a question here..... how much is the money made on DL just passenger wise? Seperately how much is made on the cargo alone?

 

[topDawg]

Just a question here..... how much is the money made on DL just passenger wise? Seperately how much is made on the cargo alone?

for the year.....about 1 billion. TechOps is ~700M or so. 
 
and, my this thread as gone way off topic. WT you have some....interesting ideas? about Delta/American
Com/MAH you guys also have interesting ideas about American/Delta  
 
And just from some quick reading, all three of yall seem to be talking right out your asses. Oh well, carry on. 
 
PS Delta is adding SEA-JNU/SJC. No idea if its been covered or if we are way to worried about the stupid AA/DL pissing contest. 

 

[topDawg]

and the reason why AA-JL is still holding onto its US-Japan capacity is because they are willing to subsidize losses to the tune of tens of millions of dollars per quarter.

In the 1st quarter of this year when AA lost 25 cents for every dollar of Pacific revenue, DL had a 12% profit margin. AA lost money in the 2nd quarter of the year with a negative 12% profit margin so it isn't just a winter thing.

While DL was the only US airline that MADE MONEY on the Pacific in the first quarter of 2013, AA was the only US airline that LOST MONEY on the Pacific in the 2nd quarter.

You want to say that DL's NRT hub is failing yet DL is the most Japan-centric carrier and yet they managed to make money in the slowest quarter of the year, right after the yen devaluation yet AA lost tens of millions of dollars.



Those are JL's losses too... not sure if there are loss limit clauses in the JV contract but the fact that JFK-HND got canceled says that both parties said enough was enough. still, a -25% profit margin is far more than losses on just one route. It is the equivalent of 2 out of 8 AA tpac flights making no money while the rest are breaking even.

We don't know the details of JL's Pacific routes because the DOT requires more data than is required of foreign airlines but AA presence on the Pacific is not making money which further validates that they are remaining in the market without making money.

Next is you recognize that AA is holding on in the Pacific despite massive losses and that strategy is not sustainable. Parker cannot afford and will not support AA's visions of grandeur in markets that AA saw as strategically necessary but which did not produce profits.

BTW, AA+JL is still smaller than DL across the Pacific to the US and smaller than UA.

PS.

DL has also added another SEA-ANC RT by next summer... they are up to 3, one of which is on a 757.

This isn't child's play anymore, Mildred.

Only two, 1x 738 1x 752. 
JNU 1x 738 FAI 1x 738. 
 
along with a 757 from ATL and SLC and two 757s from MSP to ANC and two 757s from MSP to FAI. 

 

[WorldTraveler]

Delta.com shows 3 flights/day SEA-ANC). Use Friday June 6 as an example day.

DL has long flown ATL, MSP, and SLC to ANC in the summer along with MSP-FAI.

Let us know what parts of the discussion between MAH, Comm, and I you seem to disagree with.

Dawg is correct that Tech Ops is a profit center for DL and helps to keep DL's maintenance costs the lowest among network carriers, which in turn makes it possible for DL to economically operate an older and diverse fleet.

 

[FrugalFlyerv2.0]

Well regional carriers DO matter since they are part of the revenue generating formula that legacy carriers use, including AS. Where do you think the revenue for regional operations go? The operating certificate may have the name of the regional carrier but they are no more than an operator whose revenue is completely controlled by the major carrier.

Since the discussion is about schedule additions, the appropriate metric is forward looking schedule data; BTS data is based on current boardings. This discussion is about all of the market additions that haven't even been flown.

SJC and JNU are just the latest two markets that DL is starting. Some of those markets won't operate for 9 months.

DL has announced plans to start serve to most of AS' largest SEA markets which ensures that DL will have the feed it needs plus have a large presence in a market that the Nationwide network carriers have left to AS for years.

But even if you want to look at current boardings, DL is currently the #3 carrier at LAX including its regional carriers.

The #3 carrier in a truly competitive market regardless of the industry is usually vulnerable. But LAX, like many coastal cities has not been truly competitive and won't be in the future. The coastal cities like BOS and LAX have long been divided fairly equally between carriers. NO carrier can become a truly dominant carrier at LAX because of gate limitations.

Thus, any carrier that rearranges the market using the existing capacity will benefit. DL is upsetting the order at LAX and SEA. The overall market can't really grow nor can any carrier add significant amounts of capacity.

DL has indeed built a position on the west coast that is much larger than what DL has been since all of the west coast capacity was pulled down after the Western, Reno, and PSA mergers which is precisely when Alaska grew so much. DL focused its attention on the east coast but is now refocusing on the west coast and doing it from a position of strength.

With the lowest mainline CASM among the network carriers, it is an absolute given that DL will succeed at gaining market share from AA and UA.

WT
1)  I asked what numbers you're using to state that DL is within 10% of AA/US at LAX.  I believe you may be rounding up way too  much.  Just looking at the BTS numbers, DL is approx. 20-25% below AA.  That is just comparing DL and AA.  I did  not include Eagle or US in  AA's numbers and I did not include the regional feed in DLs numbers.  Why can't you just answer the question, especially if you have the numbers on how you arrive at the statement that at LAX DL is within 10% of AA/US? 
 
Your credibility would be a lot better if you would share the data instead of making a statement and then when questioned providing some numbers instead of now stating that passenger counts should not be considered but instead the future schedules.
 
Speaking of passenger numbers, by my math from the BTS numbers DL will not be 60% of LAX at SEA, but instead closer to 45-50%. 
 
Again, if you can provide a more accurate data, such as providing the regional passenger totals in addition to mainline DL and AA, your premise would be more sound.
 
2)  I see you found a convenient exclusion / disclaimer / qualifier / * to answer the question of how DL is exempt from your theorem that a #3 carrier in a given market will not be up-sh!t-creek. 
 
Your last statement that it is an absolute given that DL will succeed just speaks to your blind obsession with DL.  As if other carriers will just roll over, be they network or LCCs (which BTW have CASMs lower that DL).
 
Spin away.

 

[WorldTraveler]

Frugal,
I'm glad you asked and challenged... that is the basis of a healthy discussion.

This is thread about future schedule changes. My comments about the size are based on seats offered based on the announced schedule additions.

The same principle applies to LAX even though the primary focus of the discussion is SEA.

DL's year over year growth rate at LAX in terms of number of flights is 25% with seats added increasing by 15%. DL is adding with large RJs which are smaller on sverage than DL's existing aircraft size at LAX.

Based on published schedules, AA's growth rate is about a couple percent while UA's is negative 10%.

For next June, standalone AA and DL are within 500 seats/day of each other in terms of size - just under 19,000 seats for AA. If you include US, there are another couple thousand seats per day.

The difference in number of seats is about 10%.

The total number of seats offered by AA/US combined are very close to what UA is offering - all of this based on current schedules.

Your statements about current boardings is correct based on HISTORICAL boardings. Because DL is growing at a much faster rate on the west coast, historical performance does not say what the future results will look like.

Furthermore, regional carriers are very much a part of the strategies that US network carriers use. It is for AA and UA from LAX just as it is for DL. Legacy carriers have the advantage of serving markets like OKC which AA serves which would not justify a mainline aircraft - the only option for WN. My statistics include regional carriers for all carriers that use them, including AA and UA at LAX and AS at SEA.

Number three companies in a market ARE vulnerable - if the market is truly competitive. But BOS and LAX have long been markets where one of the legacy carriers does not have a significant size advantage over the others. LAX esp. is a market that can never support one carrier significantly larger - which means the size difference between carriers is never going to be very large.

The difference in size between the three network carriers at LAX is between 10-15%... and no carrier has more than about 20% of the seats.

If one carrier had 50% of the market and the rest had 15% or less as is common in the major interior US hubs, then there usually is a significant advantage... but that doesn't exist at LAX and can't.

The only way that the market will significantly shift in favor of one carrier over another is if a significant number of gates change hands.... it could happen but so far no one is letting go of any of their gates.

 

[eolesen]

I didn't include the regionals (for AA and DL) in the numbers here, but even if they were to be included I think your math would be even more incorrect.  I also did not add the US numbers to AA, but I think that would not help your case.

 
When you add regionals into the mix, you'll find that Skywest is flying more segments for AA @ LAX than they are for DL. That's just going to increase the gap, not close it.

It's true that gates will be the determining factor, but AA is gaining gate space at TBIT within the immediate future -- four gates if I recall. There will be a sterile side connector between TBIT and T4, which is an advantage DL can't readily overcome given geography. It's almost the exact reverse of the situation at JFK, where DL has space in T4 (don't recall what the connector situation is, though).

 

[FrugalFlyerv2.0]

This is thread about future schedule changes. My comments about the size are based on seats offered based on the announced schedule additions.

 
OK, thanks for the clarification.  I thought you were basing your statements on the # of passengers, which would make your claim incorrect.  Also, since AA and others may adjust their schedules (add/remove seats), then your statement about DL being within 10% of AA/US is temporary and hypothetical until the schedules are flown and passengers carried counted.  So wouldn't it therefore be better to use data such as # of passengers carried?
 
Also, if you're including AS at SEA into DL's numbers, it may be that DL is closer to 60% of LAX at SEA.  But I think including DL and DL connection only would be a better comparison. 
 
Did you include the AS codeshare seats and SkyTeam codeshare seats in the DL numbers at LAX?

 

[WorldTraveler]

I am not including AS in anyone's count in any city because codeshare capacity can't be allocated to any carrier... that is true in LAX or SEA.

Seats in all cases are for the mainline carrier and the regional carriers they directly control...

E is correct that AA is utilizing SkyWest which also operates for DL and UA... the division of passengers using BTS data is impossible given multiple codesharing. That is why DOT revenue data is necessary to actually know who gets what in terms of share.

It is absolutely correct that this is all based on schedule data that can change.

It has been noted several times that AA has access to some gates at the TBIT but they also have to accommodate US' operation which for now will be in T3.

No carrier is clearly in control of LAX but the stability that has existed at LAX between the big 3 is being unended in part because of DL's growth on the west coast which is more heavily focused on SEA than LAX. Nonetheless, DL is shifting its strategic focus to the west coast and it does have advantages that it can use in achieving a larger piece of the market than it has had in the past when it has been much more heavily focused on the east coast.