Last week Delta Air Lines announced that it would restart service to Hong Kong. While this was somewhat of a surprise, the real surprise was the route that they are using. Instead of flying between Seattle (SEA) and Hong Kong (HKG), where the airline would have no competition, Delta decided to go up against United and Cathay Pacific on the crowded Los Angeles (LAX) to HKG route.
During the airline’s 2Q earnings call, United Airlines CEO Scott Kirby provided his thoughts on the new route from his largest competitor.
United CEO Thinks Delta Will Lose Money Flying to Hong Kong
Scott Kirby has made no secret regarding the fact that United is looking to overtake Delta as the country’s most premium carrier. While watching the two CEOs go back and forth over the last few years has been entertaining , the most direct jab that I can remember came from the United CEO late last week.
As first flagged by xJonNYC, Kirby made some interesting statements during the carrier’s 2Q earnings call wherein he spoke directly about the new route from Delta. Leslie Josephs from CNBC asked Kirby about Delta’s upcoming Hong Kong service to which he responded:
“We fly 6,000 flights a day. So a couple of new routes aren’t that big of an issue for us. But I guess I feel complimented when other airlines feel like they’re worried about us getting ahead and have to fly routes that are going to lose money for them.”
While I can’t claim to know the ins and outs of Delta’s route planning team, I find this comment to be hilarious. United clearly feels that it has a great market position and that Delta is operating from a position of weakness.
Why Los Angeles?
While it is great to see Delta return to Hong Kong, really adding anything outside of flights to Seoul is impressive for the carrier which has a joint venture with Korean Air, I’m surprised that they chose Los Angeles as their U.S. gateway for this flight.
The route is already well served by United Airlines (2x daily flights) and Cathay Pacific (3x daily flights). These airlines are part of Star Alliance and OneWorld alliances, respectively.
Delta is the largest of the big three U.S. carriers at LAX but all of them operate a hub at the airport. This isn’t a defensive move, as the carrier is the last one to enter the market, but it has been making a major expansion push at the airport. In recent years, Delta has opened an overhauled terminal, known as the Sky Way at LAX, along with a new Delta One Lounge.
Seattle on the other hand has no direct service to Hong Kong and is one of Delta’s primary transpacific gateways. Logically, to me, this is where the airline is best positioned to restart service to Hong Hong.
Ultimately, this move seems based around bragging rights in Los Angeles as Delta attempts to position itself as the top carrier in the market. Given the fact that United and American (via its partnership with Cathay Pacific) have more frequencies on the route, one has to wonder how Delta will be able to compete.
Summary
Delta has recently announced it plans to restart service to Hong Kong next summer. While this is a welcome development, it’s a bit confusing that they are choosing to operate the route from Los Angeles instead of Seattle.
United Airlines CEO Scott Kirby appears to be amused at this announcement, predicting that Delta will lose money on the route which is already well served by United and Cathay Pacific. It will be interesting to see how the flight performs for Delta, which will be at a capacity disadvantage compared to its competitors.
