Delta’s President reported told investors at Monday’s Raymond James conference that the airline will maintain Austin and Raleigh-Durham as focus cities, but will drop that status for Cincinnati, Nashville, and San Jose.
Cincinnati: From Delta Hero To Delta Zero
Cincinnati, of course, used to be a full-fledged hub but has declined in importance over the last dozen years. The CEO of the Cincinnati airport put on his happy face, declaring that it “remains a top 20 airport on the Delta network.” Delta no longer operates a pilot base at its former hub, either, and has only a satellite base for cabin crew.
According to Delta’s Senior Vice President of Network Planning, dropping the focus city moniker from Cincinnati means instead of serving the top 25 markets from the airport they’ll serve “the top 10 or top 15, it’s going to be the destinations that are relevant” and this ultimately depends on the return of business traffic. Among the cities not likely to return to Cincinnati would seem to be Austin; Baltimore; Charlotte; Chicago-O’Hare; Dallas-Fort Worth; New York-JFK; Hartford; Houston Intercontinental; Phoenix; Kansas City; Philadelphia; Raleigh; Seattle; San Francisco; St. Louis as well as Toronto and Paris.
Silicon Valley Remote Work And California Exodus Leaves Other Airlines To Compete For San Jose Scraps
San Jose travel is impacted by the ease with which Silicon Valley companies can work from home. With more workers remote, even when they return to business travel it may not be from their company’s home airport (and many companies are even leaving town).
This creates a strong opportunity for Alaska Airlines, and American should assist through their partnership because they have an opportunity to be suddenly more relevant in the Bay Area in a way they haven’t been in years. It’s an opportunity that’s somewhat diminished, but still potentially lucrative when business travel returns – and the reduced Delta sales presence makes it an opportunity to seize.
Isn’t Everyone Going To Nashville These Days, Though?
Nashville seems a curious choice as it’s the beneficiary of some of the exodus from California and the Northeast, a fantastic city with much of the same appeal as Austin but that hasn’t yet been bid up to the same degree. It’s a former American Airlines hub, though there’s significant Southwest competition.
Delta Seems To Be Avoiding Competition
To date Delta has brought growth back primarily to its Atlanta, Detroit, Minneapolis and Salt Lake City hubs where they do not face significant competition. Los Angeles and New York have been heavily impacted by Covid-19 restrictions and face widespread competition from other airlines, and their Seattle and Boston hubs are competitive places as well – the former with Alaska Airlines bolstered by its American Airlines pact, and the latter with JetBlue bolstered by their new deal with American.
In Austin And Raleigh, Delta Sees Where The Puck Is Headed
Delta wants to be Wayne Gretzky, skating where the puck is going, not where it’s been. More tech has left San Jose than moved in, whether just down to Los Angeles or out to Texas.
Delta SkyClub Austin
Delta SkyClub Austin
Amazon, Oracle and Tesla have all made big moves in Austin over the past year, following growth by Facebook, Apple and Google. Samsung is expected to build a chip plant. Elon Musk, Joe Rogan, and James Van Der Beek have all declared Austin their new home.
Prior to the pandemic the Austin airport was among the fastest-growing in the country for several years, with high fares due to limited capacity. The airport grew its gate space by a third two years ago.
Barbara Jordan Terminal, Austin-Bergstrom International Airport
Austin has been the fastest-growth large metropolitan area in the country, but Raleigh is second.
Delta appears to be betting that the places growing fastest before the pandemic will maintain or accelerate their growth, as high cost areas (San Jose) slow down and legacy operations (Cincinnati) realign.