MIAMI — The head-to-head battles in the Los Angeles (LAX) marketplace are heating up in 2016. In order to get a sense of how the constant growth from carriers such as American and Delta will play out, we conducted an in-depth analysis of the LAX market along several axes. In part one of the analysis, we took a broad look at the overall market, as well as the specific operations of Alaska, Southwest, United, and Virgin America. In part two, we will focus in on the head to head contest between Delta and American.

To assess these carriers head to head, we will once again use as reference, the following table that outlines the LAX operation for each of the six most important carriers at the airport: Alaska Airlines, American Airlines, Delta Air Lines, Southwest Airlines, United Airlines, and Virgin America. The date in question is a peak summer day for air travel, July 14, 2016, which encompasses every announced route by the six carriers, including American’s most recent announcement. The table displays frequency for every route (airport pair not city pair) operated by one of the six carriers at the airport on this date. Additional destinations by the airline that are not served on this peak day are marked with an “X”, as are seasonal services that may not operate during the IATA Northern Summer season.

LAX hubs 1
(Credits: Author)
LAX hubs 2
(Credits: Author)
LAX hubs 3
(Credits: Author)
LAX hubs 4
(Credits: Author)

American, Delta, and United are closely clustered in market share


American will be the largest carrier at LAX in the summer of 2016 by a substantial margin in terms of frequency and network, with 26% more daily departures than Delta and service to 68 destinations versus 62 for Delta. Thanks to the US Airways merger, American is also #1 in passenger market share at LAX, with 19.2%. The full 2015 market share data for LAX is shown in the chart below.

The chart only reiterates some of the key assertions from part one, namely that rumors of United’s demise in the LA market are overblown and that American and Delta are the two biggest and most important competitors. It is important to note, however, that Delta actually had a higher share than American Airlines proper, and only fell behind once US Airways was added in.

American is once again LAX’s largest carrier

American has had a large presence in Los Angeles since its inception, as the airline’s key route in the 1930s was its flagship DC-3 transcontinental route from New York to Los Angeles. Throughout the years, American’s LAX presence waxed and waned depending on the particular strategy of the management team in a given year, but maintained a steady pace of long run growth.

For example, shortly after deregulation in 1983, American had just 23 daily departures in 1983 to seven destinations. By 1989, it had built out a 156 daily departure hub to 23 destinations, split between mostly widebodies on mainline service to hubs and major domestic destinations, and turboprop service on American Eagle to a bevy of destinations in California. Throughout the 90s, American maintained the LAX hub at 160-165 daily departures with a similar mix of destinations and aircraft. The operation crested in 2001 after the TWA merger, at a massive 231 daily departures, though roughly 70 of those were Saab 340 turboprop flights within California.

Source: Los Angeles World Airports
Source: Los Angeles World Airports. (Credits: Author)

And then things went sideways. Between the collapse of the 90s tech bubble driving a recession and the knock off effects of 9/11, American dismantled large chunks of its California prop operation and saw its overall traffic decline slightly, ending up at ~150 daily departures in 2005. By 2009 amidst the global financial crisis, American’s LAX “hub” had fallen to just 118 daily departures, a far cry from its heights earlier in the decade. But after the recession receded and American pivoted to its “Cornerstone” strategy of focusing on core hubs and focus operations, LAX grew in concert.

The hub operation today is actually larger by capacity and destinations served than the prior peak back in 2001, though frequency is still a bit short of that 231 figure. Meanwhile, the route network for American at LAX is a mix of high frequency service to hubs, and key business travel markets around the country with mainline aircraft, high frequency regional jet service to key destinations in the Western United States, low frequency (1-2 daily flights) service to mid-continent and transcontinental markets with strong origin and destination (O&D) travel demand, and a small but growing trans-Pacific gateway. This mix is borne out in the breakdown of daily departures by aircraft type which can be seen below:

  • 28x A319
  • 61x A321
  • 34x 737-800
  • 1x 757-200
  • 3x 767-300ER
  • 2x 777-200ER
  • 6x 787-8
  • 4x 777-300ER
  • 19x CRJ-700
  • 3x CRJ-900
  • 52x E175

Much of American’s recent buildup in Los Angeles has been with regional jets (RJs), so it’s no surprise that 70+ seat RJs are just under 34% of total departures. The big story with American’s LAX operation is the rise of the A321. Even if you exclude the high frequency flights to New York JFK, the A321 now replicates much of American’s peak 2001 network that was served with 767s and 757-200s.

Delta is trying to “Win Los Angeles”

Like American, Delta has a long and complicated history in Los Angeles, and its operation at LAX has run the gamut from barely a focus city to important hub for Delta since deregulation. LAX’s first cycle as a key hub for Delta came via its merger with Western Airlines in 1987, which saw Delta inherit a hub with 160 flights per day to a variety of destinations across the United States (including 69 commuter departures daily in the Western US). Delta operated its inherited hub for almost 10 years nonstop, with the operation peaking at 216 daily departures in the summer of 1992, driven largely by high frequency services in the Western US (both mainline and commuter).

Despite the loyal customer base it had been seeded with from Western, Delta struggled to make LAX work in the 90s in the face of growth from both American and United, and by 1997 had dismantled its hub back down to 110 daily departures. For the next decade and a half, LAX wandered the proverbial wilderness in Delta’s network, sometimes catching the fancy of Delta’s route planners after getting hit on the Delta Dartboard, while at other times shrinking after traffic and revenues failed to keep pace with expectations. The absolute trough for Delta came in 2009, when its LAX operation dwindled to just over/under 80 daily departures and its market share nestled into fourth place, far behind United and American and even trailing Southwest.

Then, the tables turned. The best analog for what Delta has done in LAX over the last six years is the buildup it engineered at New York La Guardia after its slot swap in an effort to “Win New York.” In many ways, Delta is attempting to do the exact same thing at LAX. Just like New York JFK, the Seattle hub handles the kind of international flows that would normally bolster a hub in LAX’s geographic position, so Delta’s buildup in Los Angeles has really been focused on domestic O&D traffic, adding high frequency services in the Western US, strategically deploying narrowbodies on mid continent routes, and making smart, if unconventional investments into the market at large. Put another way, Delta has spent the last six years trying to “Win Los Angeles,” and like in New York City, victory here is loosely defined as competitive parity with the number one carrier (United in NYC, American is Los Angeles) on key routes for the purposes of corporate contracts and a number two position overall.

Accordingly, today the route network for Delta at LAX is a mix of high frequency service to hubs, high frequency RJ and Boeing 717 service to key destinations in the Western United States, low frequency (1-2 daily flights) service to mid-continent and transcontinental markets with strong origin and destination (O&D) travel demand, daily and less than daily nonstop service to key Mexican and Central American destinations, and a tertiary trans-Pacific gateway after Seattle and Detroit. This mix is borne out in the breakdown of daily departures by aircraft type which can be seen below:

  • 5x A319
  • 2x A320
  • 1x A330-300
  • 34x 717-200
  • 32x 737-800
  • 6x 737-900ER
  • 24x 757-200
  • 7x 757-300
  • 4x 767-300
  • 6x 767-300ER
  • 3x 777-200LR
  • 12x CRJ-900
  • 31x E175

For Delta, the key takeaway from the aircraft type breakdown is the rise of the 717s, which were nowhere to be seen just 2-3 years ago at LAX. Delta’s 70+ seat RJ departure counts have actually gone down even as overall frequency has skyrocketed thanks to the 717s, and unlike American, Delta hasn’t pulled the 757-200s out of LAX quite yet.

Fuel prices have created a land grab between the two carriers

A head to head comparison between American and Delta’s LAX network reveals distinct strengths and weaknesses for each carrier, though the overall edge almost certainly tilts towards American. Thanks to the current price of fuel and competitive environment in LAX right now, the battle between American and Delta has really coalesced into a land grab for beach heads in critical markets. Thanks to massive overall profitability at the network level, both carriers can afford to lose money on the marginal LAX market (many of which are profitable due to fuel anyway), and accordingly are racing to add destinations and frequencies to as many destinations as possible.

The logic behind this expansion is that an early presence in said markets will give the first carrier to cultivate them a leg up in winning O&D market share and customer preference. On a macro level, there is also an arms race where each carrier must keep pace with the other in order to retain corporate contracts and frequent flyers.

Looking specifically at the holes and strength areas in each airline’s network, it is instructive to consider distinct geographic buckets of service. The following chart outlines destinations served by at least one of the six hubbed carriers that Delta and American respectively do not offer service to.

AA vs. DL at LAX
(Credits: Author)

Looking at the chart, it is clear that the biggest hole for Delta is in the middle of the continent, where it lacks any service to two massive O&D markets in Chicago and Houston. These are absolutely critical holes, and along with the thinner destinations, it is clear that the mid-continent is a major hole for Delta. The Western US also appears to be relatively balanced but is in fact tilted towards American, as the cities where it lacks service (outside of Boise and Spokane) are largely tiny or vacation destinations while Delta’s network is lacking in key metro areas like Fresno, Colorado Springs, Albuquerque, and Reno.

The trans-continental network and long haul networks are a wash, in particular because both carriers have a bevy of alliance partners to draw connecting feed from. American’s one real weakness at LAX is to Central America and Mexico, where Delta has spent much of the 2000s carving out a niche in serving key Central American destinations. These are huge O&D markets in LA, and American needs to bolster its service offering to the region in order to build a comprehensive hub.

How will things play out?


LAX can probably support all four major hubbed carriers with fuel at current prices, but in a recession or fuel spike, only two out of United, Delta, and American will likely be able to sustain a 200+ daily departure hub. With that as the backdrop, here is how we expect the LAX market to shake out over the next 3-5 years.

Virgin America will continue to muddle along, maintaining a mostly static presence at LAX as it turns its focus to other markets in the US and building San Francisco. Alaska will keep on chugging along with its oddball operation, perhaps shrinking its west coast point to point (p2p) operations as American and Delta flex their regional muscles. Southwest would probably like to grow LAX but can’t thanks to terminal constraints, so its operation will look more or less the same, only with some Hawaiian routes mixed in and more 737-800s.

United, we believe, is likely to shift its west coast focus firmly to San Francisco, but LAX is too large and important a market to just abandon outright. Instead, United is likely to shrink its LAX operation down to mirror American’s focus city at New York JFK, with a cadre of long haul flights, high frequency service to hubs, and a few flights per day to key domestic O&D destinations. This could be achieved easily by pruning the remaining intra-California services and cutting routes and frequencies in the Western US. Delta will likely grow its LAX operation to 225-250 daily flights, focused heavily on high volume domestic routes. It will fill the obvious holes to Chicago, Houston, and Washington D.C. while also bolstering its mid continent and western networks.

But the ultimate king will be American, who will build the largest hub at LAX with close to 275 daily departures and a true trans-Pacific gateway to rival Delta in Seattle and United at San Francisco, adding nonstop service to Seoul, Taipei, Beijing, and Melbourne, Australia. Thanks to its dominant gate position at LAX, American Airlines is poised to seize the mantle as the airport’s top carrier.

Note: This article was written before American announced its new nonstop service from LAX to Hong Kong. Said service adjusts some of the figures in this article slightly, but does not materially affect the overall analysis.