Delta Air Lines and JetBlue Airways each have laid out growth plans for the New York market that heighten competition between the increasingly combative East Coast rivals. JetBlue plans to add New York LaGuardia to its network, while Delta presses ahead with a significant service expansion at New York JFK. The two strategies—JetBlue's ambitions to dominate more of its lucrative home market and Delta's to develop further New York as a focus city in its East Coast portfolio—increasingly will rub up against each other as the airlines battle for business traffic and overall marketshare. The result will be more frequencies and lower fares on more routes from New York.
Along with a $300 million facilities improvement program, Delta's JFK growth will include eight new destinations—including Denver and San Diego—and several increased frequencies to such business markets as Cincinnati, Detroit, Los Angeles, Raleigh Durham, San Francisco and St. Louis.
The transcontinental flights, in particular, position Delta to better compete with low-cost carriers. JetBlue operates multiple transcontinental routes from JFK, while America West and ATA airlines recently inaugurated nonstop flights from the New York area to the West Coast.
"The transcon market is extremely important for us as a carrier catering to business travelers," said Lee Macenczak, Delta senior vice president of sales and distribution. He noted that Delta's New York-area growth generally will occur at JFK, while partner Continental Airlines—already with the metropolitan area's largest share —will continue focusing on Newark. "We can leverage that back and forth," he said.
In general, Delta's new and enhanced JFK routes will compete directly against existing JetBlue service. "Delta controls a lot of capacity, but if they match JetBlue's prices, they will lose a lot of money on that capacity," said Robert Mann of R.W. Mann & Co., an airline industry consulting firm in Port Washington, N.Y.
Mann also suggested Delta's growth strategy—both in New York and systemwide—is atypical for an airline currently involved in "high stakes negotiations with pilots." He contrasted Delta with Northwest's "contrarian and pragmatic" approach of minimal capacity growth as it deals with its own labor negotiations.
Meanwhile, just a few miles from JFK, LaGuardia serves as a key cog in Delta's East Coast network. JetBlue's entry—approved by the U.S. Department of Transportation and planned for spring—not only will pressure Delta but also is likely to impact other major carriers that operate at the airport. J.P. Morgan Securities analyst Jamie Baker suggested that JetBlue specifically will use LaGuardia as a launch pad for attacks on competitors' hubs. "Rather than cannibalize JFK demand or try and price complementary LaGuardia flying at a premium, we expect JetBlue to emphasize new destinations as part of its LaGuardia strategy," he said, citing Chicago, Dallas and Houston as possibilities.
Mann agreed that Dallas is a potential destination, as well as other places "with high monopoly fares." He suggested Delta's Atlanta base as a candidate but dismissed Chicago in light of O'Hare's congestion issues.
JetBlue has not provided specifics about its LaGuardia intentions but insisted any new service at the airport would not slow JFK growth. A source familiar with JetBlue's plans suggested that Florida destinations are among the likely choices.
Meanwhile, the competitive balance in New York certainly will shift should US Airways sell its Northeast shuttle operation, anchored at LaGuardia
(BTN, Jan. 19). Already number two in the overall New York market with sizable operations at all three airports, American Airlines long has shown interest in purchasing the US Airways shuttle.