MIAMI — Delta Air Lines is set to become the sixth airline to fly between Los Angeles and Denver; it will launch five daily roundtrip flights between the two cities on June 1, 2016 with SkyWest CRJ-900s.

Logical Add

Although competition is already tight on the route, it does seem like a logical city pair for Delta to add as it continues growing its presence at LAX; Denver is just about the only large western U.S. city that Delta does not connect with Los Angeles yet; with this addition, it adds more feed to help LAX become a stronger connecting point for Delta customers to other destinations in the U.S., Asia, Australia, or even Latin America.

Delta currently serves more than 45 year-round and seven seasonal cities from Los Angeles. Additionally, it has a joint venture with Virgin Atlantic for flights to London Heathrow as well as codeshares with Virgin Australia and WestJet which all operate out of LAX as well.

As Delta continues to up-gage many flights to the Boeing 717, it is freeing up several CRJ-900 and E-170/175 aircraft; Delta is beginning all mainline 717 flights between LAX and Oakland in April as well as LAX and Portland on June 1. Plus, the Delta Shuttle will become all mainline 717 aircraft starting June 1.

The new flight is not just logical just to help add more feed to LAX, however. Los Angeles is a very important market for airlines as its a booming city with more than 3.8 million people, and many major corporations are headquartered or at least have offices in the area. Passenger numbers direct each way are remaining strong at an average of about 5,000 between the third quarter of 2014 and the first quarter of 2015, according to the U.S. DOT.

Delta definitely recognizes the importance of LAX in its network; it is working to up-gage many of its regional aircraft to 717s, and earlier this year, it completed a $229 million renovation to Terminal 5 which included a new premium check-in, new concessions, a renovated Sky Club, an expanded ticketing lobby, and four more security screening checkpoints. The airline also launched a new ad campaign “LAX to LUX” to help attract local LA residents to fly Delta as it works to take luxury to a whole new level with even more attention to detail.

“We are relentless in our pursuit of becoming the airline of choice for Angelenos, an dDenver is a key addition to our growing portfolio on the West Coast,” said Ranjan GoswamiDelta’s Vice President – Sales-West. “With five daily flights and our recent investments in T5, Delta has a very competitive offering for customers traveling between L.A. and Denver.”

It’s also worth noting that since 2009, Delta has been the fastest growing airline at LAX, and the addition of the new Denver-LAX route just continues to fuel the carrier’s growth. Currently, Delta operate 160 peak day departures from LAX.

The Competition

While the Denver-Los Angeles market has strong passenger numbers, there is also strong competition on the route. American, Frontier, Southwest, Spirit, and United already fly between LA and the Mile High City.

On June 1, the following airlines plan to operate:

Airline

LAX-DEN Frequency Aircraft

American

5

All E175

Delta

5

All CRJ-900

Frontier*

2

All A320

Southwest

7

All 737

Spirit

2

1 A320 and 1 A321

United

9

Mix of A319 and A320

*Frontier’s schedule was not yet available; this is the typical number of frequencies they fly between the two cities

According to DOT Data, Southwest has held about 44% of the marketshare between Denver and Los Angeles between the third quarter of 2014 and the first quarter of this year; meanwhile, Frontier has been holding approximately 18% or so on average during the same time. Combined, Southwest and Frontier hold the majority of the market share.

Some have said that five daily roundtrip flights does seem a bit aggressive, but many frequencies are allowing customers better times to help connect them to other cities or to get in and out of either city for business meetings.

LAX Domestic “Holes” Left to Fill?

Looking across the Continental 48 states, there are not many big holes for Delta to fill on its LAX route map. If one were to view Infoplease.com’s list of the most populated U.S. cities based on 2014 data, one will notice that Delta flies to six of the nine most populated cities (excluding Los Angeles); it does not fly to Chicago, Houston, or Philadelphia. Yet, they fly to almost all of the ones listed 10 through 20 with the exception of Charlotte, El Paso, and Jacksonville.

Will these cities that they don’t fly to be the next ones added to its growing LAX route network?

Chicago

Chicago could be an interesting add for Delta, but again, it would have quite a bit of competition as American, Southwest, and United all operate flights between the two cities. Combined, American and Southwest hold just under half of the market share at about 49%.  American, Southwest, and United have hubs in the Chicago area (and have LA as a hub) where they hold a strong presence.  This would make Chicago a challenge; additionally, Delta has both Detroit and Minneapolis/St. Paul as hubs very close to Chicago.

Houston

Houston would be an interesting add for Delta; the airline already connects Los Angeles with Austin, Dallas/Ft. Worth, and San Antonio, which makes Houston the only big city in Texas not to have service. Should Delta be able to add service, it would have to go up against United which the DOT points out has had roughly a 40% marketshare on the route with about 2,800 passengers each way between the third quarter of 2014 and the first quarter of 2015. Additionally, Delta would have to go up against American, Spirit, and Southwest. Combined, Southwest and United hold about 74% of the market share on average, based on DOT data. While it would be great for frequent fliers to be able to use LAX as a connecting point to the western U.S. or to have nonstop flights to LAX, SLC may have to suffice for now.

Jacksonville

Could Jacksonville-Los Angeles work for Delta? It just might. During 2014, DOT data points out that there was an average of about 300 passengers between Jacksonville and Los Angeles per day. Additionally, Delta was the largest airline with about 28% of the marketshare, and Southwest was at about 26%. Delta would have to win more passengers over to help fill more seats, but it could work, especially since Jacksonville is one of the most populated cities in Florida (thanks to a very large area that encompasses Jacksonville). Also, Delta already serves three cities in Florida from Los Angeles, including Miami, Orlando, and Tampa. Though it is worth noting that Delta does not offer any service to its western hub, Salt Lake City, from Jacksonville so the demand for western connections may not be as strong and/or that it is a lot easier to flow passengers 270 miles to the north, Atlanta.

Philadelphia

From the third quarter of 2014 to the first quarter of 2015, American/US Airways and Southwest held about 65% of the market share between Philadelphia and Los Angeles with an average number of passengers each way around 1,700 per day. Meanwhile, Spirit is planning to enter the market soon. Could it be a logical add for Delta? It could, but it would definielty face big competition with American as they have a very strong presence in Philadelphia and also use the city as a strong connecting point.

Washington DC Metro Area

The addition of a Washington D.C. metro area to Los Angeles flight would be sort of limiting. Delta has about a quarter of the passengers that fly through Washington Dulles that it has flying through Washington Reagan, but Reagan is slot restricted which would make it difficult for the airline to add flights; it does hold four slot exemptions, but they are used to operate two daily roundtrip flights between DCA and Salt Lake City. Delta could consider offering one daily DCA-LAX roundtrip flight with one of its slot exemption, pending government approval. Should Delta opt to do it, Alaska would be a direct competitor on the route as it uses one of its slot exemptions for this route as well as American it uses two exemptions for. This would leave Baltimore as Delta’s best option should it want to launch LA-DC Metro area flights, but it would end up going head to head with Southwest, Spirit, and United on the route; there could be some room for Delta, but it would be a challenge. United has held about 35% of the marketshare between the DC metro area and LA, while Southwest has held about 15% on average all between the third quarter of 2014 and the first quarter of 2015.

El Paso and Charlotte

While Charlotte and El Paso both see a decent sized number of passengers between their cities and Los Angeles everyday, competition would be extremely tough for Delta. In El Paso, Southwest held nearly 70% of the market share between the first quarter of 2014 and the first quarter of 2015, and in Charlotte’s case, American/US Airways held more than 50% of the market share during the same period of time. Plus since Delta has its largest hub very close to Charlotte, it would be a bit easier to flow people through there.

Looking Onwards

Will Delta grow more in Los Angeles? Most likely. Where? Well, that remains to be unseen. There are opportunities to fill up its LAX route map. but they are sure to encounter competition along the way.

 

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