Delta Air Lines and United focus on US domestic routes as United ramps up capacity and Pacific slows
The US major network carriers Delta Air Lines and United Airlines have turned a corner on their respective weak passenger unit revenue performances that have remained stubbornly negative since 2014. But Delta's unit revenue outlook for 3Q2017 is more robust than United's forecast of broadly flat growth year-on-year.
Delta and United remain at divergent phases in their network evolution. United is on a quest to regain lost domestic ground by bolstering capacity on routes in the US, whereas Delta is leveraging its strong domestic base to enjoy its position as a first mover in developing and selling branded fares, which represented nearly 40% of Delta's growth in top line passenger revenue for 2Q2017.
Both companies are zeroing in on a rebound in domestic pricing to sustain their unit revenue momentum, rather than betting on a quick recovery in trans-Atlantic and trans-Pacific markets. Although each airline expects some upside in those challenging entities, a consistent positive performance in those regions seems out of reach in the near term.
Both Delta and United are encouraged by improved business demand on flights to Europe, and robust US point of sale on those routes, but their performance in Asian markets continues to be battered by growing industry capacity. Delta is hinting that a turnaround in its Asian performance is not likely until 2018, while United continues to believe the Pacific remains its most challenging geographic commitment in the short term.
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