Delta’s new shuttle between Los Angeles and San Francisco, starting on September 3, will shake up what is already one of the country’s largest and most competitive air-travel markets. Delta (actually, Delta Connection) will fly 14 roundtrips every weekday, every hour on the hour from 7 a.m. to 8 p.m., with a reduced weekend schedule.
Delta promises an enhanced economy product: Flights will be on two-class Embraer 175s, with pre-assigned seating and first-class seats potentially available as upgrades to exalted frequent flyers. Delta will hand out newspapers and offer no-cost snacks and brand-name beverages to all classes. As with all Delta planes, Wi-Fi will be available. Shuttle passengers will use dedicated check-in counters and gates close to security, and will need only a 30-minute check-in time.
This is the first time in decades that a giant airline proposes to improve rather than downgrade an economy product. Embraer 175s are among the more comfortable economy class planes around, with relatively wide seats in a 2-2 configuration, meaning no middles, and the onboard service will be a step above standard economy, as will be the airport improvements. Clearly, Delta designed the service to target business travelers.
At this point, Delta’s fares are competitive with the other airlines. But both Delta and U.S. Airways exact stiff premium fares for their comparable East Coast shuttles linking New York/La Guardia with Boston and Washington/Reagan National. Because both LaGuardia and Reagan National are slot-controlled, Delta and U.S. Airways can get away with noncompetitive pricing. Travelers looking for reasonable fares must fly from either JFK or Newark. Delta may not enjoy such pricing freedom in California.
Delta’s move roils what is already a busy and complicated marketplace. Travel between Northern and Southern California is one of the country’s largest airline markets, when measured as the aggregate traffic on all the 15 possible routes between each of the Bay Area’s three major airports (SFO International, Oakland, and San Jose) and each of Southern California’s five (LAX International, Burbank/Bob Hope, Long Beach, Orange County/John Wayne, and Ontario). SFO to LAX remains the biggest, with 74 of the total 174 weekday flights each way. The only route with no current nonstops is San Jose to Long Beach, and at least one airline flies on the other 14, although many flights use regional rather than mainline flights.
Currently, the overall market leader is Southwest, with 91 of the total 174 weekday flights on 10 of the 15 possible airport-to-airport routes. Next largest is United, with 27 flights on five of the routes; no other airline flies more than 15. Although 14 daily flights will make Delta a small player in the total market, the airline will operate more flights between LAX and SFO than the second-place airline, Southwest, at 11. But Southwest dominates each of nine other routes it flies and is the only option on six. And long-time California flyers may be surprised to see how United, which once flew roughly every half hour between SFO and LAX, is now down to just four trips, with more flights to Burbank and Ontario.
Obviously, Delta’s move presents a challenge to the competition. Will Delta try to capture a price premium? Will other airlines accept Delta’s attempt to put its product in a class above usual economy, or will they match? Will any competitive responses be confined to SFO-LAX, or will they leak over to other routes? Stay tuned: This story isn’t over yet.
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