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Delta continues macho expansion with high-risk 'strategic' capacity moves

19th November, 2010
Delta Air Lines CEO, Richard Anderson
Delta Air Lines CEO, Richard Anderson

Delta Air Lines continues to expand its network adding new city pairs, as well as service on existing routes. Some of the service is seasonal and much of it will only be implemented in 2011, but the roll-out of additional service is impressive.

In several of the new moves, Delta threatens to overload the supply-demand balance, as it seeks to leverage its huge market presence into a wider dominance.

European expansion routes could lead to oversupply

The airline has claimed the routes relinquished by BA and American as conditions of oneworld’s ATI, and from late March will use the slots to operate twice daily between Heathrow and Boston and once daily from LHR to Miami.

Both of these trans-Atlantic flights will be “orphan” services with little or no feed at either end, especially to Boston, where both American and British operate multiple daily flights and Virgin also adds to the mix, making for formidable possibilities of a capacity glut. Boston will also get a third daily service to Paris.

Additional flights will supplement existing service and expand the seats available on New York/Paris and Seattle/Amsterdam. And, five times weekly, a Delta B757 will operate between JFK and Reykjavik.

Delta beefs up Japan market

Across the Pacific, Delta already operates non-stop service from Detroit to both Shanghai and Hong Kong. It has now applied to add Beijing as well. From Atlanta, the carrier plans twice-weekly non-stops to Shanghai and hopes to restart its Guangzhou/Narita service that was withdrawn in 2008. Delta also plans to operate a second daily flight from Narita to Manila on a seasonal basis. The additions will give Delta the most comprehensive connecting schedule at Narita.

Delta is working from the disadvantage now of not having a partner in the Japan market, while oneworld's American has JAL and Star  Alliance's United/Continental has ANA, so this expansion helps to offset SkyTeam’s handicap.

Additionally, Delta is one of the US carriers to have been granted rights to Tokyo’s Haneda, from Detroit and Los Angeles.

A Florida confrontation

In the US, the carrier will directly challenge American’s dominant Florida position by adding flights from MIA to Orlando, Tampa and Jacksonville. All three sectors already have multiple flights operated by American Eagle and the markets may be hard pressed to absorb the additional capacity. Passengers will enjoy cheaper deals and, to the extent that these can be linked into Delta's network, may be viable. But the strategy seems to be more about "strategic" route development - always a dangerous move in the past.

Meanwhile, in Africa, the airline’s route to Dakar will be extended to Luanda, Angola, adding another African city to its expanding network there.

Macho or too mucho?

Since its merger with Northwest, Delta has demonstrated a strong determination to be a major player in many global markets. And its entry into the hotly contested New York/Chicago market shows that it is more than willing to do battle in places where others have previously dominated.

While it will soon lose its “largest US carrier” title to the newly reconstructed United, Delta apparently remains unfazed and continues to extend its reach as well as strengthen its home turf. As capacity almost inevitably comes back into the US market next year, Delta will discover whether it is pushing forward on too many fronts, or whether a fast grab for market presence has been enough to cement its position.

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