ANALYSIS: Delta's fight or flight south of the border

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Delta Air Lines is in the midst of a three-year pullback in capacity to Mexico, despite comments that it is a growing market for the carrier.

The Atlanta-based SkyTeam alliance member's capacity to Mexico is at its lowest point since 2010. Scheduled available seat kilometres (ASKs) will be down 16.4% to 178.3 million in April compared to the same month in 2010, according to Flightglobal/Innovata data. They are down an even more remarkable 41.5% from a peak of 305.1 million in April 2011.

Flightglobal/Innovata

System capacity is up 2.3% in April compared to the same month in 2010, according to Flightglobal/Innovata.

With this trend in mind, it is interesting that Delta sees the market between the USA and Mexico as an opportunity for expansion. Christine Kennedy, general manager of international network planning for Latin America and the Caribbean at the airline, told Flightglobal that it planned to expand in the market by building on its codeshare with Aeromexico with additional capacity to the Mexican carrier's hubs in Guadalajara, Mexico City and Monterrey, at the Routes Americas 2013 forum in February.

"I'd rather see five-times daily to Mexico City [from Atlanta] and let Aeromexico serve all of the different [small] markets," she said.

Keeping with this, Delta has filed an application with the US Department of Transportation (DOT) to upgauge its existing flight between Detroit and Monterrey to a 126-seat Airbus A319 from a 76-seat Bombardier CRJ900 from 10 June. It also axed plans to launch a spoke-to-hub flight between Fort Lauderdale and Mexico City earlier this month.

Focusing on just flights between Atlanta, Detroit, Los Angeles, Minneapolis-St. Paul, New York John F. Kennedy (JFK) and Salt Lake City, and Aeromexico's three hubs provides Delta ample room for expansion.

Delta US-Mexico routes, April 2013

Innovata FlightMaps Analytics

But Delta has ended more flying to Aeromexico's hubs than it has begun in recent years. It has cut flights between Los Angeles and Guadalajara, as well as between Memphis, Minneapolis-St. Paul and Salt Lake City and Mexico City during the past 18 months.

Some of these cuts are certainly attributable to the extensive partnership that Delta and Aeromexico forged in late 2011. This includes a broad codeshare covering most trans-border flights and a 4.17% equity investment by Delta in the Mexican carrier.

But capacity is still down. Aeromexico and Delta's combined capacity between the USA and Mexico will be down nearly 15% to 500.4 million in April from a five-year peak of 587.2 million during the same month in 2011, according to Flightglobal/Innovata.

Flightglobal/Innovata

"We will have flat capacity growth this year," said Kennedy. "That makes [route] development activities more difficult." A fact that will limit Delta's ability to expand capacity anywhere in Latin America, let alone in Mexico, this year.

The question ultimately is whether well placed flights to Aeromexico's hubs with connections onward throughout the country will work. Delta is up against strong in-house networks between the US and Mexico at American Airlines and United Airlines from their respective hubs at Dallas-Fort Worth and Houston Intercontinental.