Things in the Sky

Yesterday we saw an interesting move from Delta, with the carrier announcing that it will beef up its regional operations at Raleigh starting on November 1. It’s an interesting move that’s…dare I say it…”Southwest-y.”

Southwest has done well moving in to a city that American abandons and then building up a mini-hub (ahem, focus city). The two biggest examples are probably Nashville and St. Louis. Not that Southwest hasn’t benefited from American cutting down Raleigh, but I’d argue that the other two cities saw more aggressive growth.

For example, I took a look at the T100 segment data for May and calculated market share in terms of percentage of total departing seats from those three airports. Southwest had 58.1% share at Nashville, 46.8% at St. Louis, and 25.5% at Raleigh. And plus Raleigh’s market share is more evenly spread than Nashville and St. Louis.

But back to my main point. American basically killed off the final remnants of its Raleigh hub when it announced its cornerstone strategy last year, where the carrier said it would focus on Chicago, Dallas, Los Angeles, New York, and Miami. Nowadays the only two non-cornerstone routes are ERJs to Washington-National ( high yield and slots there are valuable) and the 767 flight to Heathrow. (I don’t know for sure, but I’ve always heard that corporate traffic from glaxosmithkline makes the route work.)

So American ended flights to Columbus, Hartford, and St. Louis. Delta is picking those up and throwing CRJs (and one E-175 to Hartford) on those routes. The only competition is one Southwest flight to St. Louis. This makes sense. While Southwest has been able to pick up American’s dropped routes in the past, it can’t with regional routes. Delta can.

One would assume since American held on to these for awhile, they were high-performing. Just for the heck of it, I looked at markets in the DOT DB1B* database with over 5,000 departing passengers (from RDU) in the first quarter. If I did my math right, Hartford and Columbus come in at #10 and #11, respectively. St. Louis is #17.

Meanwhile, Delta’s adding two more Boston flights, for a total of five. American’s dropping its five daily (during the week) Eagle flights in a couple of weeks, so that makes sense. And even with Delta’s boost capacity will be down so that helps yields.

Delta’s also reinstating Orlando and Tampa service, which was cut back in 2008. Delta is competing with Southwest here, but my guess yields are pretty high to justify a few more CRJs.

Also, Delta says it will be adding a fifth Minneapolis flight, and it’s already added a second JFK.

So an interesting move from Delta here. But I think it’s very smart by building up this operation with some of the higher-yielding routes where it’s unlikely anyone will try to compete with them. What I will find more interesting is if Delta decides to expand its Raleigh network even more.

*Just a couple of quick notes on DB1B. When I say 5,000 passengers, I mean more than 500 in the data set since it’s a 10% sample. Also, it’s not uncommon to scrub out the very low fares in DB1B to remove award tickets, etc. Generally, I don’t do that, and did not in this case, either. If anyone wants to see how I calculated yields, shoot me an e-mail.