Delta Air Lines Goes for a Latin Flair

The third-largest carrier wants international flights to account for 35% of its systemwide revenue by the end of this year, up from about 20% in June 2005.


"We are a very formidable competitor in Latin America," American CEO Gerard Arpey said during a conference call last week. "Miami, both [for] its geography and community of interest in south Florida, positions us much more strongly than any other U.S. carrier." But Miami can't match Atlanta's domestic connections. From Miami, American offers 253 daily departures to 97 destinations, most of them international.

Fort Lauderdale, Houston and Charlotte also compete with Atlanta for international traffic. In Fort Lauderdale, privately held Spirit is the largest international carrier, with nonstop flights to a dozen Caribbean destinations. "On a 100-seat airplane to the Caribbean, we can fill 50 or 60 seats with local traffic, while Delta has to fill 80 with connecting traffic, which is always very competitive and very price-sensitive," Baldanza said.

From Houston, Continental has 779 daily departures and serves nearly 60 destinations in Latin America and the Caribbean, including 30 in Mexico. "We think Houston is extremely well positioned," Continental CEO Larry Kellner said during a conference call. Charlotte, meanwhile, has been a successful Caribbean hub for US Airways' (LCC:NYSE) unit of the same name.

Baldanza, a former US Airways executive, said Delta's buildup could hurt Charlotte. "Every person who flies to the Caribbean on Delta through Atlanta, there's a better than average chance they would have connected in Charlotte."

Consultant Mike Miller of the Velocity Group says Atlanta faces tough competition as a European hub. For European traffic, he says, northern hubs such as Chicago, Newark and Philadelphia can offer more direct routing. "From a lot of places, it does not make sense to go to Europe over Atlanta," he says. "But it does make sense to go to over Atlanta to the Caribbean and South America."

Sarvis says it is often suggested that he start flights to Latin America or the Caribbean from the two south Florida airports. But in Fort Lauderdale, he said, connections are limited, even though Delta is the airport's leading carrier, while in Miami, airport costs are high, about $30 per passenger vs. $3 in Atlanta.

"We have been asked often to expand into Fort Lauderdale, but every time I do the stats -- I look at the options, the connections, the cargo -- and I put flights into Atlanta instead," he says. "And I am asked every day, why do I not put flights into Miami? But when I compare Miami to Atlanta, it's just not worth it."



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