Delta Air Lines went big into Austin once American Airlines pulled back flights. Based on early sales and pricing it looks like Delta doesn’t expect these flights to do very well.
Austin is a unique market,
- passenger traffic has been growing quickly, year-after-year among the fastest in the United States
- airline capacity has grown at an even faster clip
Barbara Jordan Terminal, Austin
So why get into the market? The airport is full and likely will remain full for the rest of the decade. There aren’t available gates at the airport.
- As part of planned expansion, they’re even getting rid of the low cost ‘South Terminal’ and will need to accommodate Frontier and Allegiant in the main terminal.
- They’re building 3 new gates, to deliver in 2026, but that just makes it possible to take 3 gates offline for construction of a connector to a new midfield concourse.
Delta Sky Club Austin
It will be the 2030s before we see midfield concourse gates and greater capacity in Austin. Until then Delta has pretty clearly squatted on some gates by running flights they don’t expect to make money on. And they’ve done it in a low cost way: regional jet flying to Midland and McAllen, Texas. It won’t cost them that much, so they won’t lose that much, but they position themselves in the airport and block growth by other carriers.
While it seemed obvious that competing with Southwest Airlines on Midland to Austin made little sense – Southwest flies four times weekly, Delta will fly up to three times daily, and they won’t get much connecting traffic except at a deep discount into their own hubs (so potentially undercutting other fares they’re selling on those flights from Austin to their hubs), we now have a new reason to know that Delta doesn’t actually care about flying to Midland, Texas: they didn’t even tell the airport they were doing it until 48 hours before they announced it.
Airports hire consultants and make pitches to airlines. There were no active conversations between the Midland-Odessa airport and Delta. The Atlanta-based airline merely gave the airport a two day heads up that they’d be starting service.
- Delta used to serve Dallas Fort Worth – Midland, signed a 5 year deal, and then “backed out after nine months.”
- According to the airport there, even, Delta is adding Midland service “because they’re trying to make” Austin “a hub.” (In fact, a focus city.)
They were supposed to stay five years last time … We did a five-year contract with them and we held them to it. But you know what? They say they’re planning to be here for the long haul. They’re trying to build up their traffic out of Austin. They’re trying to make it a hub, so they’re starting Midland and McAllen same day to kind of bring more passengers into Austin where they can make easy connections to get to the other places Delta flies.
- They had had zero conversations about this service.
Delta contacted the Midland airport about coming back on a Wednesday and said they were going to announce it that Friday that they were going to sell tickets out of Midland.
“Usually, airports reach out to airlines, or the airline will reach out and say, hey, we’re looking into expanding to your area. Do you have room for us and it leads to a negotiation, but not this time, which is okay,” Ruff said.
- Nothing was even set up with the airport before announcing April 22 service start:
Contract negotiations and logistics have to be settled and the airline will have to bring computers in.
“They have to bring radios in to put on the roof to talk to the aircraft. It’s not physically talking, but it’s a communication method that they use. All the airlines have antennas up on the roof that they use. It’s just the logistics of getting it done. We’ll get it done,” Ruff said.
The airport has some empty ticket space that they have called the Delta space for the last 20 years because that’s where they were before and Ruff said that’s the space Delta is returning to.
They have shell ticket counters that look the same as everyone else’s and then the airlines put in their inserts.
“We already have the shells, and they’ll just make an insert that fits in there,” Ruff said.
Delta And International End Of The Austin Airport
It sounds like Delta decided they needed to plant their flag in Austin, realized they needed a place to send planes in order to do so, and as an afterthought told Midland, Texas they’d be coming – only just before announcing it to the public.
(HT: Enilria)
Hoping this bodes well for an AF nonstop AUS-CDG. But in light of the PHX and CLT announcements, it still might be awhile.
If I were Delta with all that Free Cash Flow, I’d be offering Austin some serious cash to build a terminal that would allow Delta to make Austin a small hub. Texas really is the only real deficiency in Delta’s domestic network and though AUS wouldn’t be anywhere near the breadth of DFW or even IAH within 10-20 years, it could effectively build a small hub with good corporate demand. Frankly, their JV with Aeromexico would allow Delta to potentially start some small-city Mexico city service like dFW & IAH have.
I just wonder if the Austin airport folks would allow that or if their vision is more along the lines of LAWA where no one can really truly dominate long term…? The Austin airport and Southwest are certainly pretty close but Delta’s Cash does open doors.
You do get wedded to your own narratives and repeat them ad nauseum. Feel free to let us know how much Delta will lose with its regional jet flights, Gary.
Those two regional jet markets won’t come close to filling up even one gate. DL has announced multiple new flights to its hubs in addition to what it has as well as several non-hub flights. You don’t seem convinced those are going to lose money. How come?
You and others are fixated on Delta in Texas. They don’t have a hub, are not trying to build one, but do recognize that the TX market is important enough that they have to be present in it.
You do realize that Delta is the 2nd largest carrier not just as AUS but also HOU, DAL, and DFW and has the second largest number of mainline flights at IAH? Because DL’s flights from Texas all go to to much more distant hubs, Delta generates more revenue per flight from its Texas hubs than AA, UA and WN which run flights to its Texas hubs only for most passengers to connect.
DL will grow in Texas. They are ensuring they have the gates to grow. They play the long game and outwaited AA’s attempts to gate squat with dozens of flights that didn’t make money.
WN just said they will slow their growth in part due to Boeing delivery delays while UA is reluctantly admitting that its growth plan won’t work as they sold it – something some of us knew months ago. Fares in Texas will be going up. AUS makes sense as does every other Texas city.
Delta will be there.
Max’s point is valid.
Southwest operates about 100 flights/day. Delta is at about 1/3 of that amount; AA at its peak was at or above 2/3 of WN’s level. It doesn’t require a huge investment in gates or airplanes.
The real value of a Texas hub is traffic within the southwest US and between the southwest US and the eastern part of the SE.
The real loss to Delta when it closed its DFW hub was markets in Louisiana, Mississippi and, Alabama – all places where Delta is strong as well as OK and AR – to the southwest – NM, AZ and southern CA where a connection via SLC is just too long. A good part of a potential AUS hub could be 2 class RJs or small mainline – 717s or A220s. DL could easily push 10 flights/day on small mainline or RJs through a single AUS gate. They are scheduling 9 flights/day – most on the A319 – on their single gate at Love Field.
Throw in some international including to Latin America and Mexico as well as more Europe and Asia via DL or one of its JV partners and AUS will do backflips for DL.
And DL/JV are more likely to be able to add flights to ICN than AA/JL or UA/NH will be able to add flights to Tokyo. ICN, post Asiana merger, has more growth capacity than HND and NRT does not work as a local market as long as the highest fare passengers can be siphoned off of NRT by HND flights.
And the same principle of Asia flights applies to BNA, CVG or IND, RDU and other potential focus cities
Years ago, McClain Airlines was planning to start ORD LAX service but, in the interim, started ORD service from Rockford, 90 miles away, to squat on slots. It happens.
Half of AA’s NYC operation is slot squatting
“Delta, we’re less premium than Too Premium United.”
Looking just now at Southwest’s AUS-MAF schedule, they fly one non-stop per day 6 days/week (no non-stop on Saturday), not 4x/week. They also have 6-10 connecting flights per day.
Gene,
which United are you talking about:
– the one that ceded the #3 position at AUS to Delta years ago and is now watching DL become #2
– the one that made $2 billion less than DL in 2023 even though all of the big 3 generated within $1 billion in passenger revenue
– the United that never made as much money as Delta flying the Atlantic, even when it had all of those old, tired 777s to pop back in service after the pandemic
– the United that burned 6% more fuel than Delta and paid hundreds of millions of dollars more to generate less revenue
– the one that is not growing the Atlantic in 2024 but rather reshuffling routes according to UA execs while DL is growing. DL generated more revenue in 2023 across the Atlantic excluding India and the Arab Middle East which DL doesn’t serve and will retake its own pre-covid position as the largest carrier across the Atlantic by revenue including all destinations
– the United that is watching Delta fly those old 767s that you love to mock to destinations in S. America that UA serves with 737MAXs that the world is fearful of flying
– the United that is serving other S. American destinations with its own 767s while Delta uses 350s
-or the United that will watch Delta grow across the Pacific using its next dozen 339s and 36 A350s including the A350-1000s, the most cost efficient ultra long haul widebody in service, to not only build a hub in ICN that will be larger than UA has at Tokyo and add nonstops from the US to Asia in markets that UA cannot serve with the 787.
You see, Gene, United isn’t really that premium or at least it doesn’t know how to run as good of a business as Delta. 2023 financial results show that.
and we know that you don’t care about money but United shareholders do, United customers clearly don’t pay as much for UA services as they for DL services, and UA employees make much less than DL employees because their company makes less.
So, tell us which really-not-as-premium United you are talking about, Gene.
IN the meantime, Delta will be growing at AUS.
Delta deploys precise, premium stealth when snatching up scarce gates.
yes, Matt, in comparison with the brute force and mass that AA deployed in AUS and is still trying to use at LGA and JFK for slots.
Tim, we were doing so well today 😉
Curious where you think AA is slot squatting in NYC? Delta has become a bit famous for it in the last year or two. If the FAA gives a slot waiver, that isn’t slot squatting just by pure definition.
AUS… agree to disagree there. AA has a very strong following there and they knew where those customers wanted to go. AA still offers more business destinations via AA/AS on their corporate contracts than any other carrier.
The entire NEA came about because AA was not using its slots, MAX.
They still cut a higher percentage of their flights than any other airline before dot.gov said that everyone was strongly encouraged to park 10% of their slots.
You are free to argue that Binghamton or whatever cities you want to cite were slot squatting but LGA and JFK are hubs and there is no restriction on how long the flights had to be to be considered a “real flight” vs. slot squatting. DL used its slots as required by the FAA, something B6 was also able to do but AA and UA both got swatted for not doing.
and AA ditched their RJ heavy operation at AUS; feel free to tell us why but don’t tell us that it was because the new pilot contract prohibited that many RJs compared to mainline flights. Those restrictions existed before AA did its AUS buildup.
AA started its AUS buildup knowing it was against its pilot contract but trying to race to build a focus city (or whatever AA wanted to call it) before DL could, DL likely knew the pilot restrictions at AA, and DL just waited until AA was forced to pull it all down
Premium, Tim? What’s more premium, an airline that goes out of their way to help me during IRROPS to get me to my destination, or an airline whose reps treated me like raw sewage and forced me to have to rent a car and drive four and a half hours to get somewhere I absolutely needed to get to? The former is United, where I’m a 1K. The latter is Delta and their reps at MSP. Then again, I have no status on Delta, something the FAs make sure I’m aware of on the rare occasions I fly them, where a glass of water and a Biscoff seemingly deserve that I kiss their feet.
@ Tim — Why do you keep harping endlessly on corporate finances? I do not care if ANY airline makes ANY money. Other than you, I doubt anyone here really does either. They are all dishonest to customers and only survive on government handouts.
Gene,
the reason I mock you (and ORD in this case) is because you INCESSANTLY think the world revolves around you. JUST YOU.
If you don’t get that airlines are businesses, not your personal concierges, then you really have no business participating in aviation chat forums. Gary DOES NOT discuss just customer issues. He discusses business issues and today’s lengthy list of articles has far more to say about airlines as businesses than what they do for you.
ORD,
I don’t know and don’t care about your situation at MSP but I am certain that Delta, just like every other airline, did what they could. The fact that you had no margin in your schedule to accept an interruption probably explains why you were dissatisfied. And it has nothing to do with status.
And what is premium is that Delta gets more revenue for its services and turns into more profits than any other airline – in the world. Generating higher revenues than your competitors IS the definition of premium.
Given that 2023 is now closed financially for the US airline industry, it is clear that Delta IS the premium airline in the US – and their customers made it so.
Burning the most jet fuel and flying the most seat miles is not the definition of premium even though UA wants you to believe.
None of which changes that Scott Kirby is freaking out over further delivery delays of Boeing aircraft after saying for years that he couldn’t buy A321s because, if he did, AA would get part of the price UA paid as part of AA’s most favored nation pricing. And, yet, Delta managed to order over 250 A321s before UA got around to it. Airbus is supposedly running around the world trying to find customers that will sell back their A321 delivery slots back so Airbus can sell a bunch more jets to United – because Scott Kirby’s NEXT program is complete toast if Boeing has anything to do with it – and those are the contracts he signed.
And it is precisely because of UA’s lack of long-term consistent strategic planning that Scott Kirby is now trying to fix 20 years of mismanagement – and why Delta continues to grow in markets around the world including in AUS.
@ Tim — TLDR. Blah, blah, blah.
I guess my thoughts on Delta and AM doing well with a small city Mexico operation out of austin are ridiculous now since the JV, apparently, won’t be renewed now per a story on OMAAT
Though it’s not the stated reason for the renewal. Thank god for DOT stepping in. Some people on here (cough cough, tim) and other real delta employees on other sites have been practically bragging about the coordination delta is doing between DL/AM/LA to the point of ridiculous illegality.
I don’t have a problem with delta’s JVs with AM and LA but when delta is pulling the strings between LA and AM, something should be done and that’s been pretty obvious that delta is doing that with their Latin and European JVs absent authority to do so
Your reading comprehension is weak, Max.
Ben specifically said the reason is because of the Mexican government policies regarding access to MEX.
The US has made several moves regarding US carrier service at MEX so DL knew this was coming.
and do you really think that DL sends money to its equity partners and doesn’t have a voice or AA sends it to China Southern or Gol and sits quietly?
You can’t stand that Delta really does have a viable strategy for growing its international network in partnership with its equity and JV partners.
DO you realize how many widebodies – and larger widebodies – Delta is flying to S. America compared to what AA and UA use and compared to what DL used pre-Latam JV?
AM is a great partnership but LA is worth much, much more now and in the future
and nothing stops AM from starting their own routes to AUS if the market exists. It isn’t likely they were going to count on a bunch of traffic to start new routes relying on Delta feed anyway.
You’re in luck, Timmy
My internet messed up my post.
But no one believes you anyway so it’s fine
Read what I wrote before you accuse others of reading comprehension issues. It makes you look even more like an idiot when you don’t
sorry for the internet screwup but it doesn’t change that Ben said exactly why the DL-AM JV is getting pulled. He says
“The DOT is blaming this on actions taken by the government of Mexico in relation to Mexico City Benito Juárez International Airport (MEX), which is Mexico’s largest and most important airport.”
Instead of admitting that you were wrong, you turn to an attack on me. So very MAX.
be very careful who you call an idiot, MAX.
Yes, tim. And I said in my post that coordination by delta wasn’t the reason for the pulling of the JV authorization. I’m simply saying “read what I write” since I already wrote what you’re trying to call me out on. I literally said what you’re trying to counter with…
Tim, with your relentless focus on financials, I have to ask: when you go grocery shopping, do you make sure you go to the most profitable grocery chain in your area? When you buy a car, do you only consider the most profitable car company??
The source of almost all conflict in these comments is that everybody (except you) who reads these airline blogs does so from the standpoint of the consumer – what is the best flying experience for my dollar and loyalty? – while your perspective is all profitability, which is fine for financial boards, but makes as much sense here as the questions I opened with.
A pox on both your airlines…