Delta's New Miami Flights Are Almost Exactly What You'd Expect

Delta, LATAM

When Delta decided to spend billions of dollars to wrestle LATAM away from American, it knew it had to invest in building up Miami. Miami is the unofficial capital of Latin America, and it’s a big operation for LATAM. But if LATAM was going to lose feed from American, it had to replace it somehow. The first tranche of new Delta destinations fits as you’d expect with only a mild surprise.

Delta’s initial growth plan involves four destinations from Miami:

  • Orlando – 5 daily EMB-175s (eff May 4)
  • Raleigh/Durham – 2 daily EMB-175 (eff May 22)
  • Salt Lake City – 1 daily 737-800 (eff July 28)
  • Tampa – 5 daily EMB-175s (eff May 4)

This makes perfect sense, and now that I have access to Diio by Cirium, I can really dive in. Cirium was kind enough to turn on access to FMdg data for me which is effectively ARC/BSP settlement data. You can click that link above for more info, but basically it means I can see international data which isn’t publicly available using DOT numbers. As you can imagine, this has significantly impacted my ability to get a good night’s sleep.

It also has made analyzing US to South America traffic flows much easier. I dove into the 12 months ending November 2019 for this analysis. I looked at daily passengers each way (PDEW) between the United States and South America. That’s the market where LATAM competes, and within the US is where it needs the most support.

Naturally, Miami has the most PDEWs originating/terminating with an astounding 29 percent of all traffic between the US and South America. That is good, but we need to dig deeper. LATAM doesn’t need Delta to help with travelers starting and ending in Miami. It needs help connecting people into LATAM there.

The Big Five

Let’s start with the big five. There are five markets that make up 70 percent of the passengers traveling to South America from the US, and each one tops 1,000 PDEWS.

FMdg data via Diio by Cirium

Miami is number one, as discussed, but number five can also be lumped in there. Nobody is going to run flights from Ft Lauderdale to Miami, so it’s not worth considering for Delta. That leaves them with three options.

New York is already served by Delta nonstop from JFK to South America, but it can also connect into LATAM with existing nonstops to Miami from both JFK and LaGuardia. Since Delta already serves Miami from there, we’re down to two.

That brings us to Orlando, a downright massive market. Today, Delta carries about 6 percent of the market between Orlando and South America, but American via Miami carries 8.5 percent on its own. The routing via Miami is much quicker, and there’s just so much traffic there that Delta had to enter that market. It was a no-brainer.

The last of the top five is Los Angeles. I expect we will see Delta re-enter this market at some point, but for now, it has decided to hold off. The problem here is that much of the traffic avoids Miami and heads down nonstop or through other gateways. Possibly more importantly, LATAM already service Los Angeles directly, so it may not need Delta’s help. So adding that flight doesn’t bring as much value as others, especially since it’s so long and requires a lot of aircraft time. But I still imagine we’ll see it one of these days.

17 Over 100

Beyond the big five, there are 17 additional US markets that have at least 100 PDEWs in them. Of those, Delta already serves three (Atlanta, Boston, and Detroit) from Miami. There are an additional 7 which have are airline hubs (Baltimore/Washington, Chicago, Dallas/Fort Worth, Denver, Houston, Philadelphia, and San Francisco) and are less likely to be worthy of getting service in the early rounds. That means there are 7 markets that remain ripe for the picking. Here they are.

FMdg data via Diio by Cirium

As you can see, the three markets Delta chose beyond Orlando are in this group, and that makes a lot of sense. It also gives a blueprint for where Delta might go next.

Tampa is the most obvious one here. Because of its location, taking passengers via Miami is much faster than routing through Atlanta or somewhere else. In fact, American carries about a third of all traffic from Tampa to South America via Miami. That’s a market that is ripe for the Delta/LATAM picking.

Meanwhile, Raleigh/Durham and Salt Lake were lower down the list than some others, but their status as focus cities/hubs must have been an important influence. For Salt Lake, it makes some sense to be able to route passengers from throughout the smaller cities in the mountain west and funnel them into Miami to connect. Meanwhile, for Raleigh/Durham, it’s a growing focus city for Delta that seems like a strong candidate. But I’m actually surprised it was chosen over Austin.

Austin is also a strong and growing focus city for Delta, and it has about the same number of passengers going to South America each day, but that’s where the similarities end. Today, American takes about a third of traffic from Raleigh/Durham but Delta takes 20 percent through its existing hubs already. That means the new Miami flight is more prone to cannibalizing existing traffic.

Meanwhile, Austin puts about 20 percent of its traffic on American via Miami, but Delta today gets only 7 percent of that traffic. Austin seems like it would be a good opportunity to pull traffic from elsewhere without much risk of just stealing Delta’s own traffic. To me, this suggests that maybe there is a corporate need in Raleigh/Durham that pushed this higher on the list. Regardless, whenever the next round comes, I’d expect to see Austin on the list.

While we’re at it, you’d think Seattle would be there too. This is a Delta hub, and its prime competitor there, Alaska, doesn’t fly into Miami. American only has a redeye from Seattle, so it doesn’t even connect into the South American banks. That’s likely on the list.

San Juan and Las Vegas seem further from Delta’s strategy, but they could be on the list down the line. Then again, it’s not clear just how much Delta is going to add to support LATAM here.

The adds Delta has made go a long away in providing opportunities for Miami connections from those cities with big South America demand that don’t touch other airline hubs. At the same time, Delta has bulked up frequencies especially on the intra-Florida routes to be able to capture the local traffic in the market as well. The blueprint seems pretty clear on what Delta will do next if it decides to keep growing. Watch out for Austin and Seattle as the next most obvious candidates.

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28 comments on “Delta's New Miami Flights Are Almost Exactly What You'd Expect

    1. Not so sure if LDS is the whole story as SLC is a sizeable DL hub. Not as large as say Denver as noted last week, but still quite sizeable & is better situated then say MSP for this type of connection.

      1. I don’t think DL really cares. The front cabin to South America will probably mostly be filled to/from Miami.

  1. It seems the farther west you go, MIA becomes increasingly too far away as a connecting point, thus adding a lot to elapsed travel time to South America. SLC makes sense because of DL’s large, uncontested presence, but SEA and LAS make more sense connecting over DFW (AA) and IAH (UA) than MIA. Both UA and AA have very robust South and Latin American schedules from DFW and IAH, making travel times shorter, not to mention length of haul costs. Plus UA offers Alliance and Equity Partners to connect to in IAH.

    1. I think it depends on the destination. A lot of South America is pretty far east. For a destination like Lima, for instance, you’re right. But Miami is almost on the great circle between Seattle and Rio, for example.

  2. When will the partnership with American officially end? Will AA Frequent Flyers still earn mileage points up to that point if their flight reservation on LATAM was made in October or 2019?

    Thanks, Gary

    Sent from Mail for Windows 10

    1. Gary – Well, the codeshare partnership ends after this month, but LATAM isn’t leaving oneworld until September or October, so I would think mileage earning would continue through then.

  3. I suspect there will be a lot of people that will be surprised at how much share Delta already carries from Central Florida to S. America. Delta also carries fairly high shares from other markets outside of S. Florida that are major markets to Latin America given its share of the total Latin America market relative to AA. Thank you for confirming that the new flights aren’t about gaining lots of new share in markets which Delta already serves fairly effectively via Atlanta.

    It also shows why Delta’s previous plan to build a Latin America hub in Orlando wasn’t necessary; not only does Orlando not have the amount of business demand relative to leisure demand but Delta competes fairly effectively in Central Florida (TPA included). Delta is already the largest legacy carrier at both MCO and TPA. Further grounding of the MAX could push Delta into the top revenue position at MCO and TPA ahead of WN; there isn’t a huge gap between the two now even if WN will continue to carry more passengers.

    Delta’s investment in Latam is about Miami and New York to Latin America which you note are the top markets along w/ a sprinkling of LAX.

    Contrary to what some people think, DL’s investment is to funnel connections that DL could carry over Atlanta to Latam, in some cases creating a 2nd and 3rd connecting opportunity – but in the process help Latam fill its flights from Miami w/ connections so that it is on a similar basis as AA at MIA – with feed for connections on top of the large local market.

    Your data also should show that American did not feed a whole lot of traffic to Latam which was confirmed by Dougie’s statement shortly after the DL-Latam deal was announced that there was minimal impact to AA because they did not connect much to Latam at JFK or MIA or in Brazil, the largest Latin America market with the opportunity to connect within country – as exists in the US.

    DL’s buildout of MIA follows exactly what it has done with every other previous spoke city that became a focus city and then, as Boston and Seattle became, hubs. Delta focuses on the biggest non-contested industry markets as well as DL’s own hubs and focus cities. Then they add other large markets and then they add other airline hubs. The latest adds from Boston are all other airline hubs; as from Seattle, Delta now serves most of the top other airline hubs – but not all as they do from ATL/DTW/MSP/SLC.

    It’s important to remember that DL and Latam don’t have a joint venture yet. They won’t add any flights that would fall under the JV. Delta will add more domestic markets and will likely add some flights in the Caribbean and Central America that won’t be part of the JV and won’t overlap with AM. When the JV is approved, they will start adding flights on DL metal from MIA to Brazil and other Latam hubs while Latam will add more flights that will benefit both Latam and Delta.

    Keep in mind that the DL investment in Latam is by far its largest in any foreign airline – half of all of the investments it has in a half dozen other airlines. There is huge potential and much of it revolves around MIA to Latin America.

    Considering that AA already has unit costs 10% higher than Delta and DL has succeeded at increasing its share and revenues in AA strength markets from NYC, BOS, ORD, LAX and more, a DL buildout of MIA, the only US carrier monopoly to a global region for AA, was going to happen sooner than later.

    We are now watching it happen.

    glad you have access to important industry data, CF. The way you see and report on the industry will change.

    1. Good point about the JV, that’s essential to maximizing benefit when DL/LATAM don’t overlap as much in MIA. It’s relatively easy for AA to flow oceans of demand between the US and Latin/Caribbean over MIA, DL has to tune its pricing and its RM system to take LATAM connections to TPA, SLC and AUS and reject cheap local traffic.

  4. Regarding SEA: presumably funnelling that traffic through LAX makes more sense than starting a flight to MIA? And also with SEA, the flight has to be timed right, meaning a late afternoon/early evening arrival into MIA to connect to South America and then a morning (but not 6 AM) departure to connect from South America. That’s hard to do with one plane (though of course DL could cycle one plane SEA-MIA-ATL and another ATL-MIA-SEA or whatever).

    SEA would also make sense if the flight can also serve the local market (eg cruises), but flights timed for LATAM (or MIA-SEA-Asia) connections aren’t great for that.

    1. Alex – The problem with LAX is that there aren’t many destinations from there. Sure, you can fly LATAM to Santiago or Lima but that’s it. So from Seattle, it’s a double-connection. If you add Miami, then LATAM can carry passenger to a whole bunch of other destinations. (They fly to up to 10 cities in South America depending upon the season.) It seems to me that with the volume coming out of Seattle, this might be a worthwhile add.

  5. While AUS certainly has the potential for SA traffic…AA now runs 2-3x mainline daily…local traffic yields aren’t great right now, and look like they won’t get better. Wasn’t hard to find $66 one-ways on AA, though granted these were the Wednesday and Saturday evening flights into MIA. Guessing AA can’t fill a mainline aircraft worth of seats at higher fares due to ULCC competition into FLL…and F9 is starting a few flights per week right into MIA soon enough.

    Maybe DL can fill a daily E75 with international connecting traffic so the trash yields in the local market don’t matter…and I’d pay a premium to take that flight in on my annual trip.to MIA…but I don’t blame them for avoiding the market for this round.

    And connecting traffic to MCO/TPA isn’t going to be a money-maker when nonstop competition exists and ATL, though maybe they could shave a half-hour of travel time via a MIA connection?

  6. For SEA/LAS, funneling to LATAM’s LAX flight would likely make more sense than routing via MIA. Same goes for most of the Western markets (PDX, SFO), all of which can be covered via LAX, even if MIA is sometimes shorter from a Great Circle perspective. TPA has been a long-neglected market and it’s great to see Delta enter the intra-Florida market with these routes.

    On a separate note, Diio’s tools look awesome. Would love to go exploring in that database — Is there any other source of fare data beyond DOT that is more open/accessible without being a large enterprise?

    1. It is worth noting that LAX-Brazil is possible; Delta flew it a couple days of week briefly before. If AA can make it work now, Delta and Latam certainly can find the right combination of aircraft, days of week and connections on both ends.
      The eastern US to Latin America is clearly larger; LAX to western South America (Latam’s roots) is the highest priority but Delta already serves LAX to several markets in Central America. Added together, Delta and Latam would have a decent position to Latin America even from LA.

      As for Seattle, it is higher risk just because of the distance but SEA to MIA could connect to DL’s flights to Asia and also provide connections from SEA to Latin America.

      There is potential but the next big step is getting the JV approved.

    2. Adam – While LAX is better, it doesn’t have nearly the number of destinations you can get via Miami. So you’ll end up adding a stop and that makes it less competitive.

      As for tools, the DOT data is the only data I know of that’s easily accessible by the public.

  7. Delta used to fly a daily MD88 MIA/MCO to connect to the GRU flight, so this seems odds DL didn’t at least throw some mainline lift back on MCO/MIA

    1. my guess is that Latam will add some flights to ATL in time – at least after the JV is approved.
      The vast majority of DL’s Latin America network is to/from ATL and, as CF noted, they do pretty well at getting their share of competing in some of the top O&D’s – but they underperform from S. Florida and NYC. Delta’s Latin America network excels at connecting scores of small and medium sized cities that do not have nonstop service to Latin America to the region – just as their Asian and transatlantic networks do.
      Both DL and Latam will grow their networks in time. Just as Virgin Atlantic has a decent position in Atlanta which helps its overall visibility in the US, so it is very likely Latam will have a position in Atlanta and other interior US hubs; conversely, DL will need to have its own metal in some of the key markets from MIA that will be part of the JV.
      Based on current schedules – which aren’t likely to change before the JV is approved – DL and Latam both serve JFK-GRU. Connections will be enhanced as Latam moves to Terminal 4 at JFK w/ DL .
      Hopefully, CF will look at AA’s markets in Latin America – both ethnic and Caribbean – and compile a list of markets that DL will have to serve in order to be a viable competitor to AA. After you include what Latam already serves, the list is not terribly long; less than a dozen A319s or even A220s could serve large portions of the ethnic Latin markets that would be necessary to get to 80% of AS’ local market revenue that DL has managed to achieve from Seattle – or even the 100% of B6’s local market revenue that DL now has from BOS. As in BOS and SEA, DL doesn’t have to be the largest airline in those cities in order to reach revenue parity – meaning that DL competes as well for the local market revenue that its hub competitors get.

    2. southbay – I’m sure it’s entirely possible when the joint venture is up and running. I think about something like Virgin Atlantic where they move airplanes with Delta depending upon the needs. I can imagine Delta putting 757s into thinner routes from Miami into Latin America since LATAM doesn’t have that option today. And it wouldn’t surprise me to see a 787 or 777-300ER from LATAM into Atlanta at some point as well.

  8. If I were to place a bet, I’d bet that within the next 10 years DL transforms MIA into a medium sized hub providing they can get resources/rights. There are many similarities with SEA and honestly seeing how poorly AA is managed these days, DL wouldn’t be that crazy to try to attack them at MIA or at least replicate part of the network.

    1. I would bet you are completely wrong. In ten years, AA will be significantly larger in MIA than it is now, and LATAM (if it still exists) won’t be. Ask Gary Kelly how well Southwest’s effort to drive Parker-controlled US Airways out of PHL went.

      1. But that was when Scot Kirby was calling the shots on AA’s PHL Strategy.
        He left a big hole at AA when he left for United.

      2. other than what you WANT, what rational basis do you have for thinking that Latam will cease to exist?

        And American on a consolidated basis for 2019 had a CASM (cost of production) 10% higher than Delta.

        Do you know when that last happened? Right before AMR filed for bankruptcy

        Whether that happens again, American is at a huge competitive disadvantage that size won’t fix.

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