Delta’s Trans-Atlantic Strategy: Uh Oh

We’re starting to get some data that suggests Delta’s strategy of shifting capacity to trans-Atlantic routes may not hold up during the downturn: The airline released its February traffic figures, and the trans-Atlantic flights are ugly. Very, very ugly.

Stripping out the Northwest operations, Delta’s trans-Atlantic load factor (roughly the percent of seats filled) in February was 60.7%, down 6.6% from last year. However, they had grown the available seat miles in that market by 9.1%. These routes make up about 2/3 of all international traffic for the airline, and about 1/4 of all available seat miles.

Certainly, the busy summer season won’t look like that (one hopes), but it’s going to be a very rough few months getting to there (which is why you can fly to Europe for less than $400 all-in through May). But even those very low fares don’t appear to be stimulating demand.

The worst part? I’m not sure where else they can turn. The focus on trans-Atlantic made sense before the world fell apart, but that won’t recover for a while. Northwest’s Asian operations look great by comparison, but how long will that last? And can you really throw more capacity at that? (Answer: No. No you can’t.) They’re getting hammered in every direction.

Anyone have any ideas what to do?

Bookmark and Share
Leave a comment ?


  1. Delta needs to cut back its international capacity. Ground airplanes. Lay off workers. Adjust to reality.

    I was always a bit suspicious about their big int’l expansion. Continental had operated a hub at EWR for many, many years and has been VERY focused on transatlantic expansion. But they have done it methodically. Suddenly, Delta starts service from JFK to every city you can name (and many you couldn’t). Was Continental just lazy and stupid about “the opportunities”? I don’t think so. I think the reality is that these were marginal routes and Delta, faced with too many widebodies in their fleet, decided it was a better strategy that what they were doing (flying the widebodies on domestic flights to small hubs like CVG). This does not make it a WINNING strategy.

    For the past 6 months, I’ve believed the more domestic focused US airlines would have a much easier time of it this year. Airlines like AirTran and US Airways, which would benefit from the massive reduction in domestic capacity. That seems to be how this is all playing out. Of course, from an investment standpoint, such a realization has been 100% worthless (or worse!) because the market is not valuing the lack of int’l exposure as a positive. It is impossible to know if they ever will.

  2. Your last point is interesting because “going international” was seen by just about everyone as a solid strategy a year ago. The economic situation has changed everything, and no airline is getting credit for shrinking itself to (near) profitability. Won’t it be odd if the airlines that thrive this year are those with almost no international exposure at all?

    That said, the stock market has finally realized that Allegiant is the real deal.

  3. Going international was a good strategy when people were buying international tickets. Rise of the dollar has also ended cheap shopping runs to the US. How much of that extra capacity was being filled up by Europeans coming to the US? It would be interesting to see business class ticket sales — I suspect they are completly gone. A friend flew on united from Rome and said he was the only person in business class, and I’ve seen two iberia flights now where business class LOOKED empty (I was in back, so maybe there were 2-3 in there)

  4. @charlie — I have a hard time believing that no one (or only one) on the United flight was willing to upgrade. Business travelers may not get C tickets from their employers anymore (I never did), but they certainly still want to fly in comfort.

  5. From the feeling of this article, it sounds like it should have been Northwest that bought Delta, not the other way around. Haven’t airlines learned anything from the mistakes of the past? Juan Trippe who ran Pan Am for many years had the vision to be “everywhere” in the world. Pan Am was on all continents (except Antarctica) and spread themselves so thin that they eventually vanished. Anyone remember Braniff? They did the same thing and started adding routes like there was no tomorrow and suffered the same fate as Pan Am. Delta is the largest airline in the world since the merger with Northwest but it is not too big to falter. Let’s hope they take the mistakes of the past and put them to heart in today’s depressed market place.

  6. I don’t think int’l expansion was per se a bad idea (when practiced with some prudence), just an unlucky strategy at the moment. It seems obvious that there’s a broader fare base that can make domestic flying profitable. After all, very few people actually pay for domestic first class. On int’l flights, though — and in particular transatlantic flights — the front cabin revenue is an integral piece of the pie.

    Not rocket science to conclude that there will be fewer people paying to fly upfront on transatlantic flights for the forseeable future. Couple that with plenty of capacity — almost all the pulldowns have been on domestic seats — and you have a problem.

    My only thought is that the problem is not yet severe, though, because airlines are hardly rushing to cancel flights these days. It will be interesting to see what happens in the months ahead.

  7. Delta is apparently poised to do what we all think they need to do — cut their international network down to a more realistic level.

Leave a Comment

NOTE - You can use these HTML tags and attributes:
<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Switch to our mobile site