Sunday, November 29, 2009

Delta shows its love for NYC

‘We want to be the No. 1 carrier in New York.’Its dual-hub strategy for JFK, LaGuardia consumes resources.

By Kelly Yamanouchi
The Atlanta Journal-Constitution
Sunday, November 29, 2009

In Atlanta, Delta Air Lines has grown comfortable in its decades-long marriage with the city. But in New York, Delta has become a perennial suitor, passionately trying to win over travelers from rivals like American, Continental and US Airways.

“Delta calls New York home,” reads one of the Atlanta-based airline’s latest New York advertisements. “We’re more than NY’s most global airline; we’re New Yorkers.”

This year, Delta has taken some of its biggest steps yet in New York —- including spending almost 90 percent of its advertising and media buying budget on the area, according to Gail Grimmett, Delta’s senior vice president-New York.

It has also announced an elaborate plan to establish what it calls a domestic hub at LaGuardia Airport while keeping its international hub at John F. Kennedy International Airport, where it has international flights to everywhere from Kiev to Kingston.

To build the LaGuardia operation, Delta struck a deal to trade some of its gates at Washington’s Reagan National Airport for some of US Airways’ gates at LaGuardia. That would enable Delta to double its number of nonstop destinations from LaGuardia, now at 32.

Delta’s merger with Northwest Airlines also significantly boosted its LaGuardia presence —- pushing it past American as the No. 1 carrier based on the combined passenger traffic for Delta and Northwest in the 12 months through September. Using those numbers, Delta now has a nearly 28 percent market share vs. 22 percent for American and about 19 percent for US Airways.

Delta also plans to spend $40 million on renovations at LaGuardia.

“If you’re going to be a world-class airline, as Delta wants to be, you have to have a big presence there. It’s just too big to ignore,” said airline consultant Darryl Jenkins. “For years that was a part of their network that was seriously lacking.”

Not for lack of trying. Delta’s efforts to build street cred in New York date to the 1991 acquisition of Pan Am’s European routes out of Kennedy and its East Coast Shuttle operation at LaGuardia. At the time, it had to battle a lingering perception that it was still a Sun Belt airline as it sought to establish itself as the premier carrier in the nation’s biggest city and financial capital.

That perception may be long gone, but gaining market share remains a tough challenge in a highly fragmented travel market.

One of Delta’s recent tactics is investing in more sports sponsorships in New York —- signing on as the official airline of both the Mets and the Yankees as well as Madison Square Garden, particularly in a high-end club area that will be part of a major renovation of the arena. All this, as Delta has relinquished its sponsorship of the Atlanta Falcons.

“We’re sponsoring all of the iconic things of New York,” said Grimmett, who moved to New York from Atlanta. She added, “I have never seen such fierce baseball fans.”

Robert Mann, an airline consultant who lives in Port Washington, N.Y., said such sponsorships come with a lot of media exposure.

“Any time you’re looking at a Rangers or an Islanders game on television, you’re seeing the Delta logo,” he said. And sports sponsorships may also come with access to games and suites. “You can entertain clients, SkyMiles customers, corporate accounts —- there are a lot of opportunities that are valuable and useful,” he said.

On Thursday, Delta was the official airline at the Macy’s Thanksgiving Day Parade, with a float themed “Winter Wonderland in Central Park.”

The sponsorships and advertising were needed, Grimmett said, “to catch up with everything else” the company has done there with new routes and upgraded aircraft interiors.
“We want to be the No. 1 carrier in New York,” Grimmett said. “Nobody owns the market.”

Mann said the marketing emphasis will also help Delta make the most of the Northwest merger.
“They’ve really taken on a higher profile here,” Mann said.

Still, comments from New York fliers reflect the challenge.

“I fly out of airports all over the New York area. I usually fly either Continental or American,” said Christy Desantis, who lives in Fairfield, Conn., and travels about once a month for her job in marketing. “I haven’t noticed a whole lot of [Delta’s] advertising.”

Shevonne Hernandez, who lives in Manhattan, said she has noticed Delta’s advertising, particularly at Madison Square Garden when she went to a couple of pre-season Knicks games. But she said that was offset by a bad experience with a Delta flight.

“I’ve noticed there’s a little more advertising” by Delta, said Michael Rudez, of Astoria N.Y. But Rudez said he’s long been a US Airways flier and doesn’t really consider other airlines.

Business travelers —- and contracts with their employers that make Delta the carrier of choice —- are the most important target for Delta in New York.

“Think of New York City and how big it is, and how much business goes on there —- how many people are flying to New York and how many people are flying from New York to other parts of the world,” Jenkins said. The city has “some of the wealthiest and longest-distance traveling fliers of anywhere in the world,” with some of the highest fares in the world in business class on international flights.

“So there’s a lot of revenue at stake. It’s a place that you want to build up,” Jenkins said. “You have so many large corporations’ headquarters there, and to get those large corporate contracts, you have to have a large presence in New York. It’s not about getting one or two travelers. It’s about getting all of the travelers from a large corporation. It’s a very big deal for them.”

But it’s not an easy city to grow in. Many more domestic fliers are starting or finishing flights there than connecting, which prevents any single airline from building the kind of hub operation that would dominate among local travelers. Mann said Delta’s LaGuardia operation will be closer to a “focus city” —- where an airline offers some connections but mostly serves travelers coming or going from that city —- than to a traditional connecting hub.

And at traditional hubs like Hartsfield-Jackson in Atlanta, airlines can feed their international flights with passengers from any domestic flight. Delta’s international flights from New York operate at Kennedy, and connecting to LaGuardia is not easy.

But Delta is plowing ahead.

Delta’s 2009 strategy, summarized in a document called the “Flight Plan,” highlights only one city: New York. The goal: “Position Delta as the leading airline brand in New York City, complete our New York City strategy and reach a JFK facility solution.”

The company is still working on those issues, particularly the badly needed upgraded of the terminal at JFK. (ed. note...Delta's JFK terminal is the old Pan Am World Port, an outdated maze of confusing gates)

“We’re the largest carrier in JFK, unfortunately with a terminal that’s not very desirable,” Grimmett said. “We’re working with the Port Authority. I think we’ve got a good plan. They recognize the sense of urgency.”

The Port Authority of New York and New Jersey wants to increase usage of gates and is concerned about planning for the possibility that the terminal may return to their custody someday, according to Grimmett. Another festering issue is delays in the New York airspace due to the heavy flight traffic in the area and the Federal Aviation Administration’s outdated air traffic control infrastructure.

“We have to plan accordingly,” Grimmett said. But, “shrinking your way to congestion is not the right way for anybody.”

Delta in New York

Delta says it is New York City’s largest carrier, with more routes from New York’s LaGuardia and John F. Kennedy International Airport combined than any other airline. But Continental, with plentiful international flights from its massive Newark hub, will remain the largest carrier in the New York area based on capacity measured in available seat miles.

Delta’s peak daily flights from:

JFK 158

LaGuardia 143

Newark Liberty International Airport 32

Delta’s international destinations from New York City airports:

Canada 2

Europe/Middle East 21

Latin America/ Caribbean 14

Africa 3

Asia 1

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