Travellers along the west coast are experiencing something that has become rare in the USA – a bona fide battle for market share among some of the country’s largest carriers.
Alaska Airlines, Delta Air Lines, JetBlue Airways, United Airlines and Virgin America are all participating with new flights and increased capacity on routes from Los Angeles, San Francisco and Seattle/Tacoma to points all over the country.
The San Francisco-Seattle/Tacoma market will join the fray in 2014. Atlanta-based Delta’s announcement on 1 October of six daily flights from 28 March 2014 prompted Alaska to add an additional daily flight for nine and United to shift all of its flights to mainline aircraft and increase frequency by one to 11 on the route. All of the changes go into effect towards the end of March and in early April 2014.
“If everything we’ve seen filed remains in the system, there will be a very fierce battle out here and it will be very interesting to watch,” says Henry Harteveldt, a San Francisco-based travel industry analyst at Hudson Crossing.
Commenting on Delta’s moves at Seattle/Tacoma, he says that there are legitimate reasons for an airline to use its own metal to feed international operations rather than a partner’s metal but the fact that Delta is launching multiple daily flights rather than one or two is “very intriguing”. He adds that it could drive partner Alaska into a closer alliance with American.
Delta has also added new service between Seattle/Tacoma and both Los Angeles and Las Vegas with multiple daily flights during the past year.
“On domestic, Delta is no different than other competitors,” said Ben Munson, director of network planning at Seattle-based Alaska, in an interview earlier in October. “The moves they make in Seattle [are] for their reasons and we will respond.”
United is not sitting on its laurels either. It increased capacity by a third on the Los Angeles-Seattle/Tacoma route in July compared to April following Delta’s entrance into the market on 8 April, Innovata FlightMaps Analytics data shows.
In addition, the Chicago-based carrier disclosed plans to launch new twice-daily nonstops between Los Angeles and Minneapolis/St. Paul, and San Francisco and Atlanta from 1 April 2014 on 6 October – just five days after Delta’s San Francisco-Seattle/Tacoma announcement.
Delta also launched a dedicated shuttle between San Francisco and Los Angeles – a route that United has long dominated – on 3 September.
“No question that some airlines smell blood in the water between Virgin America and United,” says Harteveldt. “United’s poor on-time performance and lack of passenger amenities, like wi-fi, make them vulnerable to poaching.”
United’s reaction to Delta other carriers is a signal that it has woken up and realised that it has taken some of its west coast markets for granted, he says. Though he notes that the Atlanta and Minneapolis/St. Paul routes are “rational and in fact relevant route additions” at its Asia-Pacific gateways.
Bay Area-based Virgin America also has the attention of its competitors. Its recent route launches to Austin, Newark and San Jose, California, have been met by notable capacity increases by its competitors, including Delta, JetBlue and United.
Most notable are the Los Angeles-Newark and San Francisco-Newark markets. United increased available seat kilometres on the routes by more than 94% and more than 70%, respectively, from March to May. Virgin America began service on 2 April.
"It's old-style American airline management," Richard Branson, founder of the Virgin Group, told Flightglobal in April. “It won't succeed. They will be the losers. They certainly won't drive us out of Newark.”
Branson’s prognosis for US airlines’ management may not be far from the mark.
After years of capacity discipline, all of the US mainline carriers are anticipating either flat to modest growth this year with US Airways expected to lead the pack with an about 3.6% increase in available seat miles (ASM) in 2013.
“I call it capacity creep,” says Helane Becker, an airline analyst at Cowen Securities. She points out that while fleet counts remain largely flat or declining, the number of seats per plane is increasing on average 4% to 12% with the trend continuing through at least 2014.
Frontier Airlines, JetBlue, Southwest Airlines and United are all in the midst of installing additional seats on either all or large portions of their fleets, while Delta is removing the majority of its 50-seat regional jet fleet and replacing them with larger 76-seat regional aircraft or 110-seat mainline aircraft.
Becker says that the competitive moves out west, which she says are “definitely concerning”, are just an indication of the larger trend towards more capacity throughout the domestic market.
“Everybody has spent four or five years focused on maintaining capacity discipline but when push comes to shove and you look ahead you’ve got to wonder how long before someone breaks rank,” she says.
Harteveldt is not as quick to write off the mainline carrier’s capacity moves.
“This isn’t a matter of airlines doing a scorch the earth, lets light up every destination we can strategy,” he says. “What I see in Delta is an organisation that’s very nimble.”
Harteveldt points out that economic and population growth has recovered nicely in the west, especially in the Los Angeles, San Francisco and Seattle metropolitan areas, since the 2008 recession. However, air service patterns to these cities has changed little, with the exception of Virgin America, during the past five years, he says.
“The environment here’s been sleepy,” he says. Things are definitely waking up.