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Delta’s Great International Experiment Is Basically Dead

Back in 2007 Delta made a bold decision to expand its international flying signficantly from both Atlanta and JFK.  The theory was that the domestic market was oversaturated, and that there was plenty of opportunity to grow to second (and third-) tier cities and stay out of the way of competition.  757s made it cost effective to fly longer thinner routes and, the idea went, if one city didn’t work, just shut it down and try a different 2nd tier city.  Over time new flights were introduced to Prague, Bucharest, Kiev, Dubai, Kuwait City, Pisa, Valencia, Fortaleza, Recife and more.  Plus, Delta launched extensive new services to Central America and the Caribbean, giving American a bit of competition for customers traveling from the Southeast to these sun destinations.

An even more ambitious plan was rolled out to connect little known destinations in Africa (Luanda, Malabo, Monrovia) by building a mini transit hub in Cape Verde.  If it worked, it would have served as a base to build out once- or twice-weekly flights from Cape Verde to many capitals across Africa.

But that may have been the tipping point.  Delta had been quietly pulling back some of these routes already.  They dropped Kuwait City about a year after launch.  Mumbai service is reduced.  Capetown is reduced, then eliminated.  Cape Verde is dropped, then all of the cities it would have connected.  JFK to Bogota is suspended in the fall.  Kenya is out.  Seoul, Shanghai, Bucharest and Edinburgh are cut in one swoop.  Seasonal suspensions are announced for Moscow, Shannon, Pisa, Malaga, Valencia, Kiev, Buenos Aires, Prague and Guayaquil.  Fortaleza and Recife are suspended and frequencies are cut way back when they return.

Just like that, the grand international plans have been scaled back.  The theory – that you could fly thin international routes year round if there was no competition – didn’t prove out in most cases.  Don’t get me wrong, Delta has a much larger international footprint than they did 5 years ago.  And the addition of Northwest’s extensive Asian market gives them a stronghold they could never built themselves.  This doesn’t mean the airline is withering away – hardly.  And they’ve moved relatively quickly to cut bait where they were losing money – a nice change from years past.

But as an airline dork, it was interesting to watch Delta quickly try to match Pan Am’s global footprint.  No airline since Pan Am has been able to grow as extensively across the globe, but Delta looked like it was heading in that direction.  However, without the protection and regulation that Pan Am enjoyed there was no way to make it work (I know, the economy didn’t help).  And I’m sure that Delta’s pullback also means that we won’t see another airline try for years.

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  1. I don’t think that you should underestimate the effect that the current global economic slowdown has had on the cutbacks.

  2. I agree – the economy has certainly dealt a major blow to the international strategy. I’m just saying that (due to the economy, in part) that strategy is now kaput, and, given how painful the demand contraction was, I don’t expect any other airlines to roll it out anytime soon…

  3. Avi Greengart

    Isn’t this essentially Continental’s strategy, too? Have there been cutbacks there?

  4. CO has had a transatlantic hub at EWR for years. They’ve been steadily expanding int’l service — growing about 2 routes a year, I guess (I remember when it was just London when they bought the operation from PeopleExpress in the late 80s!). Despite the significant domestic feed (lacking for DL at JFK), CO has never tried to be too exotic. No Eastern Europe for example, and few “secondary” (or at least “tertiary” cities). And CO has plenty of ETOPS-qualified narrowbodied aircraft.

    Since CO management is widely regarded as among the industry’s best, I always figured that if the numbers didn’t work for them, they wouldn’t work for DL — especially out of JFK without the feed. I thought DL’s strategy was more reactionary (“what do we do with all these excess planes”) than opportunistic (“boy, there are so many great unserved int’l destinations we could fly to”).

    Obviously, the harder economic times were the final nail in the coffin for some of these destinations. But I think the big problem was that the strategy was fundamentally flawed. The current “model” for transatlantic profitability — fly routes with good biz class demand and plenty of leisure traffic in high season — doesn’t work to the more obscure destinations.

  5. I feel the need here to give IAH-PHX credit…when I mentioned Delta’s international expansion in a post in 2006 ( he wrote in the comments: “I’m a little skeptical that Delta will find a pot of gold from this strategy… If these transatlantic routes are so great, why didn’t Continental do them…”

    Turns out he was right. Well done…

  6. Thanks for the shout-out. Especially when “fundamental analysis” of airlines isn’t doing so well on Wall St. these days (largely because “fundamental analysis” of the oil market is currently a stone cold loser). :)

    Seriously, though, the airline business is a very tough business. Most “new ideas” don’t work. When someone claims they have a brilliant new game plan, be skeptical. It’s usually warranted.

  7. I just returned from Luanda (Angola) and although business there is booming, just about everybody from all corners of the world, and their mother, are in there building something MINUS the U.S. Our footprint is so minimal, I only ran into 2 Americans; 1 of them at the hotel we were staying at.

    I flew from BOS to SAL (Cape Verde) on its airline, TACV and SAL – Luanda (not on the same day) on TAAG, Angola’s airline, WITH a stop in Sao Tome & Principe. THAT, the S. Tome stop-over, is the purpose for the existence of that flight. We left Sal with very, very few on board and on S. Tome, the plane filled up. Same on the return leg AND this happens twice or three times/week.

    So I wouldn’t quickly discount a reconsideration for the US – Cape Verde – Luanda route. My advice to whichever airline that wants to take up this route, (1) form a partnership with the Cape Verdean airline, TACV and another with the Angolan Airlines, TAAG for the Sal (Cape Verde) to Luanda leg; THAT route alone will more than cover the overhead AND keeps them in the game as the market grows ’cause it will grow. There’s already something to Luanda out of Houston; huge oil biz going on. The airline is SONair, I believe a subsidiary of the Angolan National Oil Company, SONangol (crews are a mix of Angolan nationals and Texans; kidding, I meant Americans)

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