Battle: Los Angeles

I’m feeling pretty lucky to be living in Southern California these days. Oh sure, it’s the beautiful sunshine and all that, but it’s also about to become a nice little hub of cheap flights. I say that because airlines are starting to get into an old-fashioned turf war here. That inevitably leads to stupid decisions pushing too much capacity into the market. And you know what that means… cheap fares to try to fill all those seats.

While we really can’t forget about Virgin America’s decision to become the sixth nonstop carrier in both the LA to Vegas and San Jose markets, the bulk of the brawl has been between American and Delta. United seems to be sitting and watching the others fight it out while Southwest probably can’t grow much even if it wanted to until it gets more gates. Though I do have to note that Alaska and Delta have been slapping each other a little as well.

Airline Brawl

Reminiscent of World War I, this fight started from seemingly minor events. Consider American’s launch of nonstop flights between LA and Raleigh/Durham to be like the assassination of Archduke Ferdinand. (Yeah, yeah, it’s a stretch. Work with me here.)

Last December, American announced it would start a daily nonstop between LAX and Raleigh/Durham on April 2 of this year. That’s a market that Delta had to itself. So it wasn’t a surprise when just a few days later, Delta announced it would begin flying from LA to Nashville on April 8.

Yes, American flies the LA to Nashville route, and it’s the perfect way for Delta to say, “Hey man, if you’re going to make this already marginal route horribly unprofitable by adding unnecessary capacity, then we’ll do the same for you.” At least, that’s how I read it.

In the meantime, Delta quietly started adding random routes here and there from LA. To me, most of these looked like a bunch of unrelated moves that were trying to take advantage of pockets of opportunity. But at some point, Delta realized that it had added enough service that it could position this to look like a big LAX expansion. On March 6, the airline put out a press release lumping all these changes together:

  • Daily to Nashville on April 8
  • Thrice daily to Seattle on April 8
  • Daily to Boston on June 10 (summer only)
  • Thrice weekly to Anchorage on June 21 (summer only)
  • Weekly to Bozeman on June 22 (summer only)
  • Four times daily to San Jose (CA) on July 1
  • Daily to San Jose (Costa Rica) on July 1
  • Daily to Spokane on July 10
  • Additional flights to Guadalajara, New Orleans, Oakland, Phoenix, Puerto Vallarta, and Sacramento

American apparently got jealous that Delta was growing in LA and decided to launch an expansion of its own. I call it the “Let’s Lose a Bunch of Money Before New Management Comes In Tour – Summer 2012.” This round of growth was announced on April 10.

  • Twice daily to Eugene (OR) on June 12
  • Daily to Redmond/Bend (OR) on June 12
  • Daily to Columbus on August 27
  • Daily to Indianapolis on August 27
  • Daily to Hartford on August 27
  • Daily to Northwest Arkansas on August 27
  • Daily to Pittsburgh on August 27

After that move, Delta quietly bumped up its nonstops in Columbus and Indianapolis to be daily year-round. As someone with in-laws in Indianapolis, I support this move. If the airlines want to lose a bunch of money on routes I use, then that sounds great to me. Stupid, but great.

But wait, there’s more. Though it doesn’t center around LA in the same way, there have been some interesting moves between Delta and Alaska as well. Did you notice that Delta flight from LA to Seattle? That seems strange considering how closely the airline is tied with Alaska Airlines, but it’s just one of many moves where the airlines are stepping on each other’s toes.

Last November, Alaska announced it would start Seattle to Salt Lake. Delta announced LA to Seattle was coming back in December. In February, Delta announced its LA to Anchorage flight and it upped capacity on the LA to Seattle run. Later that month, Delta decided to fly from Seattle to Anchorage and Vegas. This month, Alaska decided it would fly Portland to Atlanta (and Dallas to the home of its other major codeshare partner). Then in the last week, Delta added yet another couple flights in the Seattle – LA market. It also announced service from LA to Portland. Fun stuff, huh?

Am I really suggesting that these moves are all meant to target each other as tit-for-tat moves? Of course not. But on the broader spectrum, this is definitely a fight. No airline dominates LA. In fact, you have a big presence from just about everyone in LA, and from time to time the airlines jockey for position. This is one of those moves where Delta and American are both trying to be “LA’s carrier.”

In its press release, Delta noted that this “positions Delta to be Los Angeles’ preferred carrier.” American said the “Los Angeles hub plays a vital role in our domestic and international network strategy,” and then it even included a quote from the Mayor of LA to give the airline even more street cred (or lack thereof). As for Alaska, the airline has already made a claim for LA by moving to a new terminal and strengthening partnerships with both American and Delta (despite the little network fights).

In the short run, there will be a clear winner – travelers. Fares will drop as the airlines realize that they can’t fill all these seats. But that will only be a near-term victory. Eventually, the airlines will abandon the excess capacity and we’ll go back to where we were before. Nobody is going to win this battle for LA. But that apparently doesn’t prevent these airlines from trying.

34 Responses to Battle: Los Angeles

  1. Dale says:

    Delta used to have nonstops between LAX and both SEA and PDX. In fact at least some of the time those routes were operated by widebodies. In the early 1990′s a friend of mine flew PDX to LAX on a Delta Boeing 767. Delta got those routes initially when it took over Western Airlines. Western used to operate DC-10 “Spaceships” on some of its LAX-SEA flights and I remember the seating being 2-4-2 and the stewardesses served everyone orange juice (morning flight) before pushback from the gate!

    • I wonder if that was related to an international routing when PDX was part of Delta’s failed attempt to have an international gateway from PDX…

      • CF says:

        Nick – That wasn’t the reason for the route to exist but it was the reason for the heavy metal on it. I flew LAX-Portland in the early 1990s on an MD-11 because it went on to Asia from Delta’s little Transpac hub there. (I flew back from Seattle on a 727.) But the routes, as Dale mentioned, were Western legacies.

        Of course, with Alaska in the market now, that should be sufficient. I guess not.

  2. CF – You’re clearly missing the point. Carriers are getting into a fare war so it’ll be cheap for all of us to fly down and have some spotting with Cranky at the LAX In n’ Out

  3. Ron says:

    A bit off-topic, but still related to LAX: What’s the story with the north runway separation? I was under the impression that the master plan of several years ago called for moving 24L/6R closer to the terminals, but the recent plans will move 24R/6L farther away. Have the plans changed? Or did I misinterpret the master plan?

    Oh, and who will win the election today? :-)

    • CF says:

      Ron – There’s a ton of back and forth about the north runway situation. Last I heard, they are still trying to push north and the residents of Westchester are fighting. But I think it’ll happen.

      As for Mayor, as an LB resident I don’t get a vote, but I’d put my money on Garcetti winning. I seem to recall him having some supportive words for the Westchester folks, though that could always just be politics. We’ll find out tonight who wins.

      In the meantime, as I expected, outgoing Mayor Villaraigosa has weaseled his name on to the new Bradley concourse. The great hall will now be the Villaraigosa pavilion. Garbage.

    • Ron,

      The initial plan to move the runways closer to the terminals called for the terminals to be knocked down and rebuilt. That, obviously, would have required a ton of money and effort. In a perfect world, maybe it would have happened. But the current leaders at the airport weren’t up for it.

      Hence, the change to moving the runway closer to Westchester. It has been approved by the city council. But there will be massive litigation ahead.

      Brian Sumers
      Airports and Airlines reporter
      Los Angeles News Group
      @briansumers

  4. On the surface, American’s new routes to the east are to places where US Airways has some strength. America West also flew from Phoenix to Hartford at one time, and there’s lots of insurance industry related business in Hartford. I can see United abandoning the L.A. – Pittsburgh route (which at one time was flown by US, and was operated on a less-than-daily schedule last time I checked).

    It seems logical to me that American would try to build up LAX as an international gateway. Since it’s the only west coast city where it has a sizable presence. If this is true (and with the realization that this is sheer speculation), then American is going to have to increase its presence to some extent. But, to your point, it shouldn’t be stupid about it.

    • Phil says:

      I don’t know why United would abandon the PIT-LAX route. Pittsburgh only has 2 routes to the west coast (PIT-LAX and PIT-SFO) and both are operated by UA. I have flown these routes multiple times and seats are scarce. United is even using a A320 or 737-800 on the route more frequently over the A319. I think the demand is there for a third non-stop.

      • DesertGhost says:

        You may be right.

      • astra says:

        Why do people always say, “But the seats were full!” every time an airline axes a route, as if that has anything to do with it’s profitability?

        • Thats because people don’t get how airlines price tickets and that they’re really about filling the plane at the highest possible price. Sometimes the highest possible price isn’t profitable, but its better to sell a seat and get something for it than to not sell it and get nothing for it.

          Its the same reason why a hotel clerk can bargain with you for a room price for a single night at 11 pm, we’d rather get something for the room than nothing. As long as you cover the costs to service your room when you leave, we’ll take your money.

  5. Very nicely done. Just for giggles, I looked at the loads on AA’s RDU-LAX flight today and tomorrow, and DL for tomorrow. They’re both fullish. Tonight’s AA flight is all 0′s. Wonder what the pricing/yields are to achieve that?

    • CF says:

      MJ – Well, that may also be an anomaly. American may be full today, but tomorrow they’re still selling a ton of seats. But I would bet that they’ll still end up pretty full on average. That does bring up the last question you ask, however – how much are they getting for those tickets? It’s too early for American’s numbers, but we can see what Delta was getting in Q4 2012 thanks to DOT data.

      Looks like in the local market, the average fare was around $265 one way. Not too shabby, but there were only about 86 passengers per flight in the local market, and it ran only 10 to 15 times a month. It ran about 85 percent full on an airplane with 160 seats, so that means there were another 50 seats on connections and 24 empty. I’m guessing profitability was marginally ok, but now with a lot more capacity…

  6. George says:

    Cranky-Archduke Ferdinand?!?! and a little further down “wait, there’s more” This column made me smile. And being a little more serious-what is this for Delta-the 4th, 5th time they have upped the flights at LAX? And for American-ok whatever. And you’re right-I guess about 2-3 years it will be back to about where it is today. And of course it could get even more insane-United could add, and then LA World Airports decide let’s move the north runways south, rip out a ton of gates, and not build the repacement gates on the west side of the airport for several years.

    • CF says:

      George – I stopped keeping track. Certainly they came in strong when they bought Western. I know there have been at least two other efforts to ramp up.

      • SEAN says:

        Cranky,

        A few questions for you.

        How does the AA/ US merger play into the LAX story if at all? At one time, US had a half way decent schedule out of LAX, however most of those flights were Vegas bound originating from there HP days. Also AA ran a RDU – LHR flight that out lasted the shortlived NC hub. Are we seeing an atempt to return longhall service to the research triangle?

        • CP says:

          AA still runs the RDU-LHR route.

        • CF says:

          SEAN – The merger is huge for what happens in LA. I’m working on a piece about that right now, but it’s going to be for a subscription site. In summary, LA should lose a lot but could gain some as well. Phoenix will be able to take a lot of that traffic that touches LA today.

          I would be surprised if this RDU flight lasts much past the merger. My understanding about the RDU-London flight is that it’s there (and still is) for big pharma. Not sure if that makes sense or not, but it’s lasted this long. I really don’t expect much in the way of new service at RDU.

      • I bet DL’s average daily departures from LAX on a graph by year over the last 20 years or so would look like a sine wave!

  7. I always think it’s funny when airline put out big press releases and make a big deal out of new service, but they keep quiet when they reduce or drop service. Let the public think they are huge and can take them anywhere, but don’t let the public know they failed on a route. Watch one day the Feds make that a rule, where for every big to-do on new service, they have to make a big press notice of discontinued service.

  8. Amol says:

    LAX-RDU also connects impeccably to RDU-LHR on AA, which has made using miles for LA to London very easy.

  9. Ed Kelty says:

    It is interesting to note that the legacy airlines are starting to follow the example of Alllegiant: Fly once a day or a few times a week to relatively minor cities.

  10. Ben says:

    I think the Delta-Alaska fight is odd. I don’t understand why adding a SLC flight would trigger 2 long allies to start going tit for tat. I lived in Minneapolis when Alaska started flying there from Seattle, a long time Delta stronghold route. Delta didn’t add a bunch of flights on the west coast because of it. And at LAX, didn’t Delta make room for Alaska to move into its terminal? Why start fighting now?

    • SEAN says:

      Could that be a sign of a DL/ As merger? Personally I doubt it.

    • CF says:

      Ben – It wasn’t actually Delta opening up its terminal at LAX. Delta remains in T5 and Alaska is in T6 where there used to be a lot of the cats and dogs (JetBlue, Spirit, etc.) But part of the beauty was Delta and Alaska passengers could connect behind security for the first time without a bus. So that was a big part of it. And there is still a big partnership, even bigger in Seattle where Alaska is needed to fill Delta’s transpacific flights. So I don’t really know what these little spats are all about.

      • Alex Hill says:

        I suspect it’s partly about flight timing. Alaska’s SEA-LAX flights have horrible connections to DL’s LAX-SYD flight, for example: the several times I’ve tried to book that, AS has had a flight 5 minutes less than the minimum connect time or an almost 4 hour connection. DL’s new flights connect perfectly. Obviously, AS and DL can’t coordinate timing (with no anti-trust immunity), but DL can with itself.

        Obviously, that doesn’t explain all of this, but it helps and probably makes the other DL metal flights more viable.

  11. Brett – This is an interesting take on the LAX situation. The Archduke Ferdinand moment, if there was one, was not later than September, 2009, when AA announced its “Cornerstone Strategy.” Battle Los Angeles has been underway ever since, involving no fewer than five domestic airlines – depending on what criteria you use to evaluate their inclusion/exclusion – either passively or actively.

  12. Sanjeev M says:

    Meanwhile United is actually doing something right in LA. change we can believe in :)

  13. yo says:

    Family Airlines just announced 747 non stop service from Palmdale to Henderson, Nevada.

    It’s ON!

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