When America West and US Airways merged, one of the first jobs in the schedule planning department was to consolidate flying in and around the airline’s strong hubs. After all, it was the non-hub (and weak hub) flying that contributed the least to the bottom line. That may have served US Airways well, but Delta doesn’t see things the same way. In fact, Delta is taking a page out of Southwest’s playbook and doing a fair bit of point-to-point flying. But this isn’t simply copying Southwest’s strategy. It’s much more methodical than that.
US Airways didn’t really have a position of strength anywhere except where it had a real schedule advantage. That’s why it focused on building up its hub operations where it could provide the most utility. Southwest, as we all know, focuses more on point-to-point flying. It carries a lot of connecting traffic over those various points, but the route map looks like a true mesh across the US (if you ignore small cities). So are these latest moves a sign that Delta is moving away from the hub system more toward Southwest? No way.
What this really means is that Delta realizes that it will be competing with United and the new American for the high dollar business traveler not just in its hubs but in every spoke around the US. And if there’s a city where Delta sees opportunity, it will grow there.
Over the last few years, Delta has seen plenty of opportunities outside its hubs and tried to pounce on them. It made a run at St Louis after American shrunk to virtually nothing. That didn’t work. (I believe it’s back to flying only to its hubs from there.) But that hasn’t stopped Delta from trying this in more places.
Raleigh/Durham, another former American hub, has long been a pet project for the airline. Outside of its hubs, Delta surprisingly also flies to Baltimore, Boston, Columbus, Hartford, Indianapolis, Orlando, Philly, and Tampa. It has also recently revealed it will start flying to Vegas and to Ft Lauderdale. (I’m not even including the weekly seasonal flights to places like Cancun and Nassau.) That sounds like a concerted effort to blanket the big cities from Raleigh, but I think we’re actually seeing a couple strategies here.
Flights to Baltimore, Columbus, Hartford, etc are clearly business-oriented flights. They’re on 50-seat regional jets, so the yields must be pretty high for the routes to make sense at all. I would imagine Delta has some corporate deals that fill up traffic on these flights or they wouldn’t bother playing on these routes, some flown by Southwest with bigger, lower-cost airplanes.
But runs to places like Cancun, Orlando, and Tampa are going to be on bigger jets, aimed more at the leisure traveler. Southwest serves these well (not Cancun… yet) but Delta isn’t really competing with Southwest. It’s offering service in some of these markets as little as once a week. The idea, I have to assume, is to give those business travelers a good opportunity to stick with Delta when it comes time to take the family on vacation. Of course, the business and leisure traveler can often end up being the same person just on different trips. So the end result is that Delta can provide a ton of utility to people in that region.
This is the case in bigger cities as well. Look at Boston, for example. Outside of the Delta hubs, we already know Boston has flights to Raleigh/Durham. But it also has flights to Amsterdam, Bermuda, Columbus, Indianapolis, Norfolk, and Orlando. Now it’s adding Jacksonville, Nassau, Providenciales, Richmond, and Vegas to the mix. It’s that same mix of business and leisure destinations.
I don’t imagine Delta is going to be alone in using this strategy. United is still trying to untangle itself from the post-merger mess, but once that happens, I’d expect we’d see some opportunistic flying as well. And the same goes for the new American once that merger is done. Maybe Southwest will get creative as well and start trying to serve smaller cities in order to get them into the airline’s network. (I never said my dreams were likely to come true.)
This kind of thing is good news for medium to large-sized cities that aren’t hubs today. It could also trickle down into smaller cities going forward. For example, Delta is launching a weekly flight from Norfolk to Orlando that will go up against Southwest’s flight. If there are cities that are under-served today, each of the legacies will probably be interested in filling that void. It’s just that Delta is getting a jump on the others.
[Original bicycle photo via Shutterstock]
