MIAMI — In early August, Delta Air Lines announced that it would be bringing its Delta Shuttle service to the West Coast via an hourly Los Angeles-San Francisco shuttle service beginning September 3rd. The west coast Delta Shuttle, which was reviewed by Airways last week, joins existing Delta Shuttle service on the triangle of New York La Guardia, Boston, and Washington Reagan, as well as between New York La Guardia and Chicago O’Hare.

With the inaugural of Delta’s Shuttle happening last week, we thought we’d take a deep-dive look at one of the most heavily trafficked air routes in the world.

Market Analysis

The overarching market, between the Los Angeles area and the Bay area is the largest O&D market in the United States, with an average of 9,014 passengers traversing the myriad air routes between the two metro areas each day. With an average fare of $135.08 in the market as a whole, the air route was worth $219.18 million dollars in O&D revenue. The other airports in the Bay Area are San Jose (SJC) and Oakland (OAK).

The other airports in the LA area are Ontario (ONT), Orange County (SNA), Long Beach (LGB), and Burbank (BUR). The table below shows an overview of air service between the Bay Area and Los Angeles. 14 out of 15 possible airport pairs in the city pair are served; San Jose – Long Beach used to be served by JetBlue, but was dropped in 2010.

Of those 9,014 passengers, 2,747, or 30.5% of them, travel between LAX and SFO. Digging into those figures further, the following graphic illustrates the O&D market shares for the five carriers on LAX-SFO.



It should come as no surprise that United, Virgin America, and Southwest dominate the O&D market share on this route – that dominance is steeped in history (for the first and last carrier), and practicality for the middle carrier. Pre Deregulation, the route was dominated by low cost carrier (LCC) Pacific Southwest Airlines (PSA), who continued to serve as the market leader until its merger with US Airways (then USAir) in 1988. However, US Airways wasn’t able to sustain PSA’s western route network, and actually dismantled the entire network it inherited from PSA by 1994.

Southwest stepped in to fill that void, using Los Angeles and the Bay Area as bases to consolidate its domination over domestic travel on the West Coast. Meanwhile, United has historically had strong operations in both Los Angeles and San Francisco, building both cities into strong hubs post-deregulation. In that manner, United and Southwest rose up to dominate the market in the wake of PSA’s effective demise.

Despite some missteps along the way (at one point United tried its doomed Shuttle by United concept on the route), that was largely the case up until 2007, when new entrant Virgin America entered the market. Like United, Virgin America has hubs at both Los Angeles, and San Francisco. And the potent mix of aircraft rotations necessitated by the hub on either end, Virgin America’s unique and passenger-friendly product, and its relatively low fares has won Virgin America a large share of the O&D travel in the market.

American and Delta, as more recent entrants into the market with much less capacity overall, have smaller shares, though Delta’s growth in the market with the new shuttle (capacity increasing about 20% on a weekly basis) should allow them to capture a larger share of the O&D on the route.

Turning to average fares, the market average one way fare for LAX-SFO was $112.27, actually about 16.9% lower than the average for the LA – Bay Area market as a whole of $135.08. This is primarily due to three factors. First, LAX-SFO is one of the shorter airport pairs in the city pair market distance wise, so its fares are closer to the average on a distance adjusted basis with a yield of 33.2 cents vs. 36 cents, or a gap of just 7.7%.

This differential is largely explained by the fact that the majority of award redemptions in the city pair market happen on the LAX-SFO airport pair (understandable given that this is where the majority of the capacity is deployed).

Finally, as was shown in the city pair air service overview above, many of the other airport pairs are monopolies or duopolies, which means that fares are naturally higher due to the lesser competition. Now the chart below displays the average fare airline by airline on the route. All of the airlines involved have a first class cabin of some sort except Southwest.


Understandably (given its historical roots and dominance of corporate contracts on both ends of the route), United has by far the highest average fares on the route at $137.47, but surprisingly Virgin America is second on the route at $124.60, with Delta, Southwest, and American all clustering around $115. Even with all this capacity clustered on the route, fares are astronomically high.

Just for comparison’s sake, looking over the next few months, United has a decent chunk of capacity on Newark-Miami priced at around $150 each way. Keep in mind, of course, that Newark – Miami is three times longer than LAX-SFO at 1085 miles. Even the laggards (American), are doing very well from a fare/profits perspective on the route.

Looking at the composition of traffic on the route, LAX-SFO skews more business heavy than some of the other airport pairs, which tend to be more tied to visiting-family-relatives (VFR) traffic. This makes LAX-SFO by far the most important airport pair to serve in the market if you want to win corporate contracts, with LAX-SJC a distant second in that regard.

Passenger Experience and Convenience

Of the five carriers currently competing on LAX-SFO, four are full service carriers (excluding Southwest). Southwest flies a mix of its 737-300s and 737-700s on the route, both of which seat 143 passengers in a single class 3-3 configuration. Meanwhile, United flies a potpourri of aircraft, pretty much its entire mainline short haul fleet for aircraft rotation purposes; the Boeing 737-700/800/900 which are configured with 12 (the -700), 16 (the -800), or 20 (a sub-fleet of -800s and the -900ERs) first class seats.

Availability of Economy Plus on these aircraft varies, with 13 737-9000ERs and 31 737-800s yet to be reconfigured with Economy Plus as of press time. United also flies its Boeing 757-200s, seating 182 passengers in a 3-class configuration (24F / 50Y+ / 108Y), and its Airbus A319/A320s configured with 8 (A319) and 12 (A320) first class seats respectively and varying numbers of Economy Plus and Economy class seats. American exclusively flies its 150 seat Boeing 737-800s (16F / 56Y+ / 78Y) on the route, while Delta exclusively flies its Embraer E175 aircraft on the route, seating 76 passengers in a 3-class configuration (12F / 12 Y+ / 52Y).


The following graphic gives an overview of the 5 competing schedules for the current month (September 2013), and represents peak weekday schedules. The schedules have been overlayed time-wise to show the gaps, or lack thereof, in each carrier’s schedule.


The following table summarizes the frequency offered by each carrier on the route.







Daily Frequency






Both Delta and United are roughly at parity on the route with 14 and 15 flights per day in each direction respectively. United’s schedules are slightly weaker in the morning and a little less consistent (spacing between flights varies from 30 minutes to an hour and 45 minutes, Delta’s flights are essentially every hour on the hour), while Delta lacks a red-eye flight at the end of the day.

Southwest’s schedules are relatively competitive, though they lose out on fewer frequencies, while Virgin America has notable gaps in mid-morning and early afternoon. American has by far the weakest schedule with a gaping hole during the mid-morning hours, and poor schedules as a whole before noon. On such a short route, frequency is king; so United and Delta lead the pack.

Airport Experience

Los Angeles as a whole has mostly older terminals with the exception of the new extension and remodeling of the Tom Bradley International Terminal (TBIT), where American will eventually have 4 gates connected behind security to its Terminal 4 facility, which it recently refurbished: re-doing the gates and expanding the check in area.

United operates from three terminals; 6,7, and 8 at LAX, and it recently announced nearly $400 million in upgrades to its facilities; “including improving passenger security screening checkpoints, installing a better baggage sorting system, renovating passenger waiting areas, replacing boarding bridges, and consolidating the two current United Clubs (and the Global First Lounge) into one larger facility.”

Delta, who also shares part of Terminal 6 with United and Alaska Airlines, broke ground in April on a $229 million renovation of its Terminal 5 at LAX, featuring “new baggage carousels; upgraded facilities to improve international baggage recheck; and 15 new restaurants and shops (as part of a phased opening).”

Southwest is also investing roughly $400 million in its Terminal 1 facility, which will “add a new checked baggage security system, improve passenger security checkpoints, refresh passenger waiting areas, refurbish the baggage claim area, construct new passenger boarding bridges, and renovate the terminal lobby” Virgin America operates from the older Terminal 3 facility – which has the least amenities of any of LAX’s terminals.

Clockwise from top left: United Terminal Six ticketing, Delta Terminal Five, Southwest Terminal One, and American Terminal Four: All from LAX.  Chris Sloan / Airchive Archives

All of the carriers except Southwest offer some sort of standard Premier Access expedited security line for first class and elite customers traversing the route, while Southwest offers a paid option in the same vein through its EarlyBird Check In program. American offers a dedicated Flagship Check In area for its Concierge Key super-elite members, while United’s refurbishments will see the creation of a dedicated Global Services Check In area in the vein of those at Newark, San Francisco, and Chicago O’Hare.

However, Delta will be offering dedicated check in counters for Shuttle Passengers traveling to San Francisco, with 30 minute check in times (versus at least 45 at every other airline).

Lounge facilities are available for every airline on the route save Southwest, but since it is a standard domestic flight, access to these lounges is often paid. Moreover, using the lounge before such a short flight kills some of the time advantages of flying (versus driving), especially for Delta.

As mentioned before, all of the terminals are older, constrained, and somewhat dingy. The one relevant factor here is that Delta guarantees gates close to security for Shuttle flights, whereas you might be walking “The Long and Winding Road” to a gate at the end of Terminal 1, 3, 4, 6, 7, or 8 for the others.

On the San Francisco side, American and Virgin operate from the newly built Terminal 2 facility – considered one of the nicest domestic terminals in the US. Terminal 2 features “more than 350 power outlets for laptop-tethered business travelers, art exhibits with cellphone-accessible narrations of the works by guides, a play area for children, and even ‘hydration stations,’ where travelers can fill water bottles for free before making their way to gates.” United operates primarily from Terminal 3 and the G concourse in the international terminal, which are both nice and airy facilities, though increasingly crowded as United continues to expand its operations. Delta and Southwest operate from the older Terminal 1.

As far as check in areas go, all of the carriers have the same early check in options as mentioned above, and Delta once again has dedicated counters for Shuttle passengers and the shortest check in requirement at 30 minutes (everyone else here . American does not have a Flagship Check in area at SFO, but it is worth noting that United Global Service passengers have their own dedicated check in area and security lines at SFO.

The same analysis applies to lounges as above, and while Terminal 2 is not that big of a facility, Terminal 1 and the United terminals are. So Delta does have a competitive advantage in offering the close-in gates here as well.

Inflight Service

As far as economy class seats go, all 5 carriers offer between 31-33 inches worth of seat pitch, though it’s worth noting that the Airbus equipment used by United and Virgin America, as well as the E175s used by Delta have about an extra inch of seat width in economy versus the 737s used by United, American, and Southwest at 18 inches vs. 17.

As far as service goes, alcohol and snacks are strictly buy on board for American, Virgin America, and United on the route, while Southwest gives you their famed bag of peanuts. Delta, on the other hand, offers “complimentary onboard snacks provided by LYFE Kitchen, a California-based lifestyle food brand,” and “Sierra Nevada Brewing Co. craft beer, Starbucks coffee and wine from Wente Vineyards in all classes of service”

Of the four premium economy cabins, Delta’s Economy Comfort is the tightest, with 34 inches of seat pitch.  United’s Economy Plus offers 35-36 inches of pitch, American’s Main Cabin Extra offers 35-37 inches, and Virgin America’s Main Cabin Select has the most generous legroom at 38 inches. Food/drink options are the same as above, except Main Cabin Select passengers on Virgin America get “select complimentary food and drinks.”

First class cabins on the route are pretty much standard domestic first class cabins, though Virgin America’s seats are probably closer to the recliner long haul business class seats of yesteryear. United, American, and Virgin America all offer a truncated snack service (instead of a formal meal), while Delta offers the same LYFE Kitchen snacks as in Economy Class.

In-flight entertainment is available in the form of GoGo inflight WiFi on every Delta and Virgin America flight, on some American flights, and on every Southwest flight operated by a 737-700. The Southwest service also includes free streamed Live TV. United on the other hand, hasn’t made much progress on installing in-flight WiFi, but its 737s do have DirectTV (for a fee that’s pretty steep for the flight length). Keep in mind that all of these IFE options are priced at a relatively steep rate for such a short (under an hour and a half) flight. Delta also offers a bit of unconventional free IFE, with complimentary newspapers for all customers including The Wall Street Journal, USA Today, Financial Times and more.

Frequent Flyer Programs

United, Delta, and American all offer similar frequent flyer programs (MileagePlus, SkyMiles, and AAdvantage) with varying levels of elite status. Upper tier elite status in each of these programs also confers elite status in the corresponding global alliances (Star Alliance, SkyTeam, and oneworld). United and Delta both will switch to revenue based elite status qualification for their frequent flyer programs in 2014, and American is expected to eventually follow suit. But for the serious frequent flyer on the route, meeting these minimum spending requirements isn’t difficult.

From an award mile earning perspective, United and American offer similarly expansive mile-earning opportunities (generally considered the two best frequent flyer programs from an earning and spending miles framework), while Delta is more restrictive with mileage earning on partner airlines. On the redemption front, United and American offer similarly strong programs, while Delta Sky Miles are notoriously difficult to redeem for award tickets.

Delta does, however, offer about 33% higher mileage earning on the route at 500 base miles versus 338 for the other two. All 3 have frequent flyer programs that can get you to hundreds of cities around the world through the alliances – Star Alliance has the widest reach, oneworld the narrowest.

Virgin America Elevate is revenue based for earning miles on Virgin America proper, though they do have redemption options for Virgin Atlantic, Virgin Australia, and Hawaiian Airlines. Southwest’s Rapid Rewards is also revenue based, and can only be redeemed for travel (at a set dollar value per point)

On the upgrades front, United offers the most seats, but is more restrictive with who can upgrade versus Delta and American, even for top-tier elites. Neither Virgin America nor Southwest offer complimentary upgrades.

Strategic Implications

For United and American, the offering on LAX-SFO is primarily about keeping its existing corporate contracts in the LA area (for American) and in both the LA area and the Bay Area (for United). United and American are the leaders in daily bi-directional origin and destination (O&D) revenue at LAX with $5.7 million and $4.8 million respectively, and both carriers use Los Angeles as a connecting complex, though LAX plays a more important role in American’s network as it has to share connecting flows with San Francisco and even Denver in the United network.

United is about 14% larger than American in total enplanements, and about 8.2% larger in daily O&D, so LAX is still a larger connecting complex for United (much of it to international flights).

Keep in mind that these figures do not include American’s most recent expansion out of LAX, which saw the carrier add service to Eugene, Columbus, Harford, Indianapolis, Fayetteville (AR), Pittsburgh, and Redmond (OR). The route also serves as an important vehicle for aircraft rotation between two United hubs; at times in the past, United’s international Boeing 777-200ERs have flown the route for fleet optimization purposes.

Virgin America also has the same aircraft rotation use for its frequency on the route, which also connects its two hubs and biggest core markets. Virgin has actually done a good job of winning travelers on the route and high yield travelers in the LA area and Bay Area more generally, though still not enough to guarantee consistent profitability. Southwest meanwhile, just wants to maintain the status quo; its overwhelming (64.0% in Q1) dominance of O&D traffic on the broader city pair, and its general position as the market leader on the West Coast.

It is for Delta, however, that the new Shuttle plays the most important strategic role. LAX has grown substantially in importance for Delta in the past 2 years. From an operational trough of just around 90 daily flights, Delta has grown over the past 3 years to nearly 120 daily departures this summer, serving 40 destinations, and upgrading all flights to include first class (eliminating 50 seat jets).

Delta’s daily O&D revenue from LAX has jumped up to $4.3 million, where it used to be a distant third behind American and United in the $3.8 million range just 2-3 years ago. Once again, those figures don’t even include the latest expansion by Delta in the market. And the addition of the Shuttle is really designed to help Delta win over corporate contracts, both in the LA area, and nationwide.

The O&D revenue figures show that Delta has already made inroads into winning over independent frequent flyers and business travelers at LAX. But in the US today, an outsized (though declining) share of corporate contracts are won (and lost) in NYC and Los Angeles. Delta has shored up its position on the NYC side via its Win New York strategy, and the addition of the Shuttle on LAX-SFO only brings them one step closer in the LA market.

How will things play out?

There is certainly tons of capacity in the market today, but it’s one of the rare markets that can handle so much capacity given the demand. Delta’s move was more about frequency than about adding seats, and fares are at a sustainable place right now. But it is possible that United and American might come back with some cosmetic changes (re-timing on the side of United, adding frequency for American) to make their schedules more competitive with those of Delta, as well as some product enhancements.

But the Shuttle concept is a niche unique to Delta (though American will get access to it assuming the merger with US Airways is completed), and they may have positioned themselves to win over some more corporate traffic in the never ending tug of war between the five (perhaps soon to be four) biggest US airlines.