Delta to take up London Heathrow slots for Boston and Miami. Pretty aggressive route development

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

Source: Delta
All flights daily B763 aircraft

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

Source: OAG
AA 182/AA 113 Saturday only

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
Atlanta	Atlanta
Bermuda	Cincinnati
Columbus	Detroit
Cincinnati	Memphis
Detroit	Minneapolis
Indianapolis
Memphis
Minneapolis
New York
Orlando
Raleigh
Salt Lake

Source: OAG

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
BA B777	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

BOS
AA	7 x B763
	14 x B757
BA	14 x B747
	7 x B777
VS	7 x B747
Total weekly	F294/C1582/Y+1008/Y9975
MIA
AA	8 x B777
BA	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.