tphuang wrote:jagraham wrote:jbs2886 wrote:
That doesn't prove at all the route is a "huge money looser" - it just shows its getting less revenue per flight, which isn't really surprising given that it is new and up against established competitors. You are also assuming Delta doesn't want to take that revenue hit in order to get contracts for SEA-based customers.
An additional assumption is that $241 average fare is a money losing fare. Not necessarily.
And flying ORD to SEA is not just about SEA based customers. DL is building an Asian gateway at SEA. Internationally that means competing with the likes of EK. Which has proven that there is significant demand connecting Asia to Europe thru Dubai. EK is now building that model in the US as they are able to get route authorities.
So unless DL wants to be a domestic only airline, they must provide a lot of nonstop destinations from their gateways. To 15 or 20 metro areas. Including all of the top ten. And it does not have to be widebodies - they can do it using a couple of 717 if that is all the route can handle at this time.
That is in addition to UA/CO and AA/US now being national behemoths. AA/US has hubs in 7 of the top ten metro areas, and focus cities in 2, leaving only Houston as a top ten metro area without a significant AA/US presence. Eventually AA/US will rationalize their domestic network such that each hub and focus city has multiple nonstops to every other hub and focus city. And since over 80% of domestic travel is between top ten metro areas, AA customers will be able to fly nonstop for most of their travel needs. Even most of the small city flying will be only one stop. It is going to happen. UA is already starting to respond (see UA at LAX).
DL will have to make moves in this regard. Not a hub at ORD, but nonstop service from their hubs. And yes they have other holes such as Texas. Which they abandoned before all these megamergers. Things have changed since then.
The more relevant number to looking at is q3 since it’s for the full quarter. My point is that if they are yielding 25 to 30% less than ua on a flight to a non fortress hub like sea, how much worse would they do if they try adding a non hub route out of ord? Things to think about before banging on the door that delta will be a large player in Chicago.
DL will not be an AA or UA at ORD. But for their FFs, for the international passengers, and to have a shot at some more corporate contracts, they need these routes. Not 10 nonstops a day, more like 2 to 4. In other words, focus city level of service. Also, 25 to 30 percent less revenue per seat is not necessarily a money loser. Which they can control by putting the right size aircraft on the route anyway.