Delta to take up London Heathrow slots for Boston and Miami. Pretty aggressive route development
The grant of anti-trust immunity across the Atlantic for the oneworld group,stipulated that the alliance must surrender slots from Heathrow to both Boston and Miami. At the time there was speculation about who might claim these slots and commence operations. The answer is now known: Delta, using them to improve service to Boston and Miami. This move bears the stamp of a large, confident carrier. But is is good strategy?
The SkyTeam alliance's US anchor, Delta, has announced that as of Summer 2011 it will inaugurate two daily roundtrips between LHR and Boston and a daily operation to/from Miami according to the following schedules:
Flight |
Depart |
Arrive |
---|---|---|
DL 270 |
BOS 1900 |
LHR 0645+1 |
DL 271 |
LHR 1030 |
BOS 1325 |
DL 144 |
BOS 2150 |
LHR 0935+1 |
DL 145 |
LHR 1330 |
BOS 1625 |
DL 260 |
MIA 1730 |
LHR 0730+1 |
DL 261 |
LHR 1020 |
MIA 1525 |
Boston, perhaps unexpectedly, is a major city of the US northeast that has no dominant alliance carrier. JetBlue is a powerful force in the domestic market and has recently entered into a codesharing relationship with American, a oneworld affiliate that was looking to expand its reach without expanding its presence. As a consequence, it has increased its feed at the airport.
Miami, meanwhile, is truly an American fortress hub, supplying most of the domestic and International lift in South Florida. Members of other alliances bring little to the party in Miami.
No shortage of lift, but not so much SkyTeam (or Star)
Both Boston and Miami also already have considerable service to London, as demonstrated by the following chart.
At Boston, flights are dominated by the oneworld group and operate from early morning until late evening.
Boston and Miami-LHR daily schedules
Flight |
Depart |
Arrive |
Flight |
Depart |
Arrive |
---|---|---|---|---|---|
BA 238 |
BOS 0815 |
LHR 1940 |
BA 213 |
LHR 1125 |
BOS 1330 |
AA156 |
BOS 0905 |
LHR 2045 |
AA 109 |
LHR 1135 |
BOS 1405 |
BA 212 |
BOS 1800 |
LHR 0515+1 |
VS 11 |
LHR 1505 |
BOS 1735 |
AA 108 |
BOS 1915 |
LHR 0650+1 |
AA 125 |
LHR 1515 |
BOS 1810 |
VS 12 |
BOS 1945 |
LHR 0720+1 |
BA 215 |
LHR 1625 |
BOS 1835 |
BA 214 |
BOS 2130 |
LHR 0845+1 |
AA 155 |
LHR 1805 |
BOS 2055 |
AA 124 |
BOS 2200 |
LHR 0935+1 |
BA 239 |
LHR 1930 |
BOS 2145 |
AA 56 |
MIA 1705 |
LHR 0635+1 |
AA 113 |
LHR 0820 |
MIA 1250 |
BA 206 |
MIA 1715 |
LHR 0635+1 |
BA 207 |
LHR 0940 |
MIA 1350 |
AA 182 |
MIA 1855 |
LHR 0825+1 |
AA 57 |
LHR 0955 |
MIA 1430 |
VS 6 |
MIA 1925 |
LHR 0905+1 |
VS 5 |
LHR 1115 |
MIA 1545 |
BA 208 |
MIA 2045 |
LHR 1000+1 |
BA 209 |
LHR 1340 |
MIA 1750 |
The same carrier grouping is present at Miami, as well as oneworld's Iberia with its links (along with American's) to Madrid. So not only does American dominate Miami, but regular travellers also have strong incentives and ties to that alliance's loyalty programs.
How do Boston and Miami fit into Delta's strategy?
This raises the question of how Delta hopes to find traffic for these new operations. Clearly Heathrow, as BA's primary base, provides a vast array of connecting flights to both oneworld carriers, British Airways and American Airlines, at the airport.
The same is however not true for Delta, whose European partners essentially connect London to their own hubs. With Air France-KLM as its major partners, it is improbable that a Paris-Miami or Amsterdam-Miami passenger would travel via LHR, given the availability of nonstop services between those cities.
So perhaps Delta is looking to the US cities for feed and de-feed traffic. Unfortunately, that, too, looks an unlikely gamble - as shown by the next table, which lists nonstop Delta services from Boston and Miami.
Delta domestic nonstop services from Boston and Miami
Boston to |
Miami to |
---|---|
New York |
|
Orlando |
|
The cities shown in bold already have nonstop links to London, many supplied by Delta.
And, especially for those Delta services to/from Boston, there already exist multiple connections between those points and/or Atlanta and Detroit so that through service on Delta is already available.
From Miami the choice is even more limited, as Delta flies only to its own hub cities, except for Salt Lake City which has only one-stop service.
Justifying the new capacity - with transfer traffic unlikely
In brief, this is hardly a banquet waiting to be served to travellers. The corporate press release is interestingly worded and is not fully supported by reality;
"As Florida's largest carrier offering international service, and the second-largest carrier in Miami, Delta and its SkyTeam partners are well-positioned to enhance competition between Miami and Heathrow. If approved, Delta would operate one daily flight on the route using Boeing 767-300 aircraft."
While interpretations may vary, it is difficult to parse the claim that the airline is "Florida's largest carrier offering international service" since this will be the carrier's first direct international venture from the state. Perhaps the meaning is that, as the nation's largest carrier and offering international service (albeit from elsewhere), such a statement reflects reality.
The second point, about being the second largest in Miami, is true. However, the difference in seat offer between first and second place is significant: American Airlines supplies nearly 75% of the airport's seats; Delta's share is less than 10%. And all of that 10% goes to other Delta hub cities.
An even more intriguing statement in the Delta press release is the following:
"Boston is one of the largest markets between the U.S. and Heathrow, with more than 270,000 passengers annually. The route is popular with business travellers in the financial services and technology industries."
This is undoubtedly true, but a quick look at existing capacity on the two routes follows.
The first chart depicts the configurations of the aircraft operating the routes, and the second breaks that into availability as of Summer 2010 - without Delta. (Note that some aircraft operate in multiple configurations, but those variations are minimal.)
Operating carrier seating configurations between LHR and the US
DL B763 |
C35/Y181 |
F14/C48/Y+40/Y127 |
|
BA B747 |
F14/C52/Y+36/Y227 |
VS 747 |
C44/Y+32/Y318 |
AA 777 |
F16/C37/Y199 |
AA 763 |
C30/Y194 |
AA 757 |
C16/Y166 |
Summer 2010 schedule, Boston and Miami-LHR
AA |
7 x B763 |
14 x B757 |
|
14 x B747 |
|
7 x B777 |
|
VS |
7 x B747 |
Total weekly |
F294/C1582/Y+1008/Y9975 |
MIA |
|
AA |
8 x B777 |
14 x B747 |
|
VS |
7 x B747 |
Total weekly |
F324/C1332/Y+728/Y7696 |
The addition of all those seats likely to provoke wide discounting
Totaling those figures for Boston and multiplying the sum by 52 weeks yields a present total seat offer of over 668,000 seats per year. The Delta 270,000 figure is not obviously substantiated, but probably represents O&D traffic.
As the airport is a transit point for many passengers, the overall traffic is enhanced. Nonetheless, the market already supplies nearly 400,000 seats in excess of O&D demand, making its difficult to understand the need for an additional 78,000+ seats generated by the Delta aircraft.
In an aviation marketplace fraught with difficulty and, in the US, contraction, it is always good to see carriers taking bold initiatives in the face of adversity. This move however, challenges not only logic but also loyalty patterns and raw numbers as well. But in this case, just how additional traffic, independent of existing loyalties and travel patterns, will be generated without massive discounting is unclear at best.
Or is it just the foot in the door to a wider argument....
Perhaps however Delta is considering the operations as a way to capture the available slots, with an eye to subsequently appealing for a change of routing sometime in the future.
If this slot surrender solution, mandated as a condition for oneworld's ATI approval can be shown to be unworkable, Delta may then argue that, in a market dominated by alliances, it is the viability of networks - rather than individual destinations - that creates true competition.
This might then lead to the argument that the intent of the slot release might be more effectively achieved if the slots were transferable and used to bolster an existing, competing alliance system, rather than just transferred within existing service patterns.
So, for yet another indeterminable period, Heathrow will remain a focus of transatlantic travel and upheaval. The attempt by Delta either to gain traction at these gateways, or repurpose the slots, would in any event create waves.
But, if, as some of the carrier's competitors argue, it is another example of the gorilla approach to route development, it could, in the absence of continued solid trans-Atlantic growth, be simply another avenue for diluting the yields of an already highly competitive market.