lowfareair

Enilria did an analysis of the top 100 airport-airline combos to see which had the best and worst range-adjusted RASM (Revenue per Available Seat Mile), which essentially captures hubs, focus cities, and large outstations. Delta has the number 1 & 2 spots with DEN and SEA. While DEN is obviously just an outstation, DL's operation at SEA has only 5% of their routes not in the bottom 40% of all DL routes from an adjusted RASM perspective.

Not a complete shock to me given the competition with WN/AS, but more so surprising that DL is doing that poorly there. There's speculation on some blogs that DL is going to hold out to ensure they maintain their gate space, but that seems very counterproductive if it isn't financially sustainable in the first place.

Thoughts?

Link to Enilria's Patreon post with more deets if you are a subscriber, the free post if you are not.

DLASflyer

Delta doesn't break it down but I believe their margins are much higher in ATL/MSP/DTW/SLC than they are at the coastal hubs. NYC, LAX, SEA and BOS are all high cost places that are super competitive. Hopefully Delta continues to see value in all of its hubs.

The Situation

Intuitively, that is right. The goal of SEA is to 1) feed international flights, especially TPAC flight and 2) stick it to AS for rebuffing their takeover attempt (although this goal is probably not as high on the priority list as it used to be given personnel changes over time). By those reasons alone, it is going to have lower RASM. DL has also been dinged on their SEA RASM due to the slump in tech business traffic. Pre-covid, while there were a handful of flights that were offpeak that you could get cheap, flights between SEA and tech centers at peak times commanded a pretty penny, even booking well in advance. One flight that I used to take regularly, I would book 6 weeks out for $350-$400 - now its only $144 to book 6 weeks out. While business traffic has recovered for visiting customers, it will never be the same for trips between companies' offices for SEA based companies.

findark

Would easily make sense. ATL/MSP/DTW/SLC are not only fortress hubs but also lesser O&D markets that get little to no attention from other carriers. It's always interesting to contrast against UA which has a hub focus in much more premium markets, but at the cost of the competition which comes with it.

dw

As someone who primarily flies out of NYC and LAX, it definitely makes sense as we haven’t seen as much of the price gouging that those of you at the DL fortress hubs have been complaining about over the past 1-2 years.

manacit

I have to assume this is part of it - Amazon and Microsoft alone each have dedicated checkin desks at SEA for both AS and DL. With AS (pre-OW) not being able to get people to a lot of places, DL was able to make pretty big inroads. Anecdotally every time I would fly between SEA and JFK I was always sitting next to diamonds in C+ who worked for big tech and were frequent commuters between the cities. I expect a lot of this demand is pretty flat right now, same with SEA/SFO etc.

I really wonder if DL has a long-term play here - SEA is just not that well-placed geographically and will never be what SFO is for UA, and the local market is not going to switch away from using Alaska in my experience. Personally, with AS status matching aggressively and being part of OW I am strongly considering switching over. Now that I can earn AS miles/status for flying BA to LHR and JAL to Asia the DL draw for international travelers seems a bit less. When half of the flights I want to take are nonstop on AS compared to either 1+ stops or impossible (SBP!) one starts to wonder how they're going to compete.

The Situation

Absolutely DL has a long term play, but it might be 10-20 years down the road. DL has wanted SEA to be a hub for TPAC flights for 20 years and I don't see this changing anytime soon. While it's not positioned well for domestic connections (unless you are going to AK or HI), it's the best positioned hub for TPAC flights and the PNW has a very large Asian population. DL started codeshares with AS back in the day to feed international flights. When AS no longer wanted to play DL's game, DL moved in with their own flights to feed the TPAC flights and stick it to AS. The fact that SEA was becoming an affluent community and a tech hub at that time was a bonus for DL and further justified the investment to build the SEA hub. In the past, present day and near future, SEA based pax were never the customers DL was specifically targeted (except as it applied to their fued with AS). The timing of so many domestic flights that are timed so poorly SEA based customers demonstrates that (I mean who wants to arrive at their destination at 11pm or 1am even?). DL also realizes that most of AS's pax will always be loyal to AS even though their flight schedules are not necessarily any better for SEA based pax as I discovered when I thought about switching this fall (although they do serve more destinations).

Now looking towards the future, TPAC flights will recover someday, the greater SEA area is and will continue to be affluent and the airport itself is severely limited in its capacity to serve demand in 10-20 years (and it's not like the government is ever going to get its act together to build an additional airport or go with the most logical option of expanding PAE). If you believe in supply and demand, that is a recipe for ATL-like airfares in the 2030's even with a lot of competition.

DL is returning to SBA next summer and I would expect to see more domestic destinations from SLC now that renovations are further along.

DLASflyer

American does too now.

DiverDave

So SEA is Delta's worst performing hub.

Given that Delta is rolling in money these days, being the worst performing hub does not translate to bleeding money.

It could well be that the hub is profitable, but less so than its Delta peers.

As noted, Delta is playing the long game. Gates at Seattle are hard to come by, and unlikely to return if ever given up.

The PNW is on a great growth trajectory, at least as long as a Cascadia earthquake does not occur.

David

PupManS

SEA and DEN have in common a very long average stage length.

DEN is far from most places apart from SLC and has limited express short haul.

Out of all the hubs I'd bet that SEA has the least short haul as well. It's really set up for SEA O&D, and feeding passengers into transpacific from medium and large markets that don't have TPAC of their own. SLC and LAX are both more connection oriented. So, SEA also has long stage length. Which dilutes RASM.

Longer stage length = more fuel and crew hours, so it certainly has an impact on margin, but I wonder if SEA is really that different or if there is just less high margin short haul to prop it up. If that's the case, adding short haul might not help if the demand isn't there (or is filled mostly by AS), and strategically speaking it's not what they built SEA for.

steveholt

Worth noting that this data is only domestic fares

tkelvin69

or one of the volcanoes or tsunami or . .. 😀

SuperEWR

I'd argue SEA's geographic positioning is pretty strong, Air Canada has used Vancouver's geographic positioning as a TPAC hub and has arguably nearly as strong an Asia presence as UA out of SFO. AC has the benefit of owning the Canada market vs Delta competing for SEA, but offset by fewer US flights for connections. Both are affluent metros with large Asian populations, but SEA has more corporate customers (not much of a benefit right now). SEA has a larger population and higher GDP per capita than Vancouver. A fair number of puts and takes, but I'm not sure why SEA grow significantly for DL, even if it doesn't quite become the TPAC megahub that is UA's SFO

sfozrhfco

The two are not comparable. Which other West Coast hub would AC use to Asia? YVR is the only option. The US West Coast has several other options including LAX/SFO which are far better departures points for Asia. DL got the booby prize of SEA because SFO was already taken by UA and the LAX market has way more competition.

moondog

I'm reminded of AA declaring that SEA was going to be its West Coast gateway shortly before COVID broke, after pretty much conceding defeat at LAX. I haven't heard a peep from them about SEA since, in spite of the fact that their AS partnership is stronger now. Maybe DL defense has something to do with this...or maybe they've simply decided that it's not worth bleeding money there while they try to gain traction?