US airlines are the most profitable in the world. And Delta runs the most profitable airline operation in the U.S. Arguably that’s because Delta faces less competition than other airlines do in key markets.
Richard Anderson, who recently retired as Delta’s Chairman and before that its CEO, had previously led Northwest which was acquired by Delta.
There used to be a saying about Northwest’s near-monopoly markets in the Upper Midwest.
- They’re cold, they’re dark, nobody wants to go there but they’re all ours.
Arguably that’s still the case today, not only for the Upper Midwest but for much of the Southeastern U.S. as well.
Delta enjoys a monopoly on about 60 percent of its regional markets, according to Stifel’s analysis, compared with 53 percent at American and 41 percent at United.
…“We suspect that the Atlanta advantage along with Delta having much higher market shares in its other hubs—albeit hubs located in secondary markets—is showing up in the form of better revenue performance from its regional operation,” [Stifel analyst Joseph] DeNardi wrote in his July 9 report.
…At its five most critical hubs—Atlanta, Detroit, Minneapolis, New York, and Salt Lake City—Delta has less exposure to lower-cost rival Southwest Airlines Inc.
…[T]the most germane answer to why Delta appears to enjoy a structural advantage for profitability is simply a function of where the airline flies. Towns with limited air service, such as Valdosta, Ga,, Grand Forks, N.D., and Roswell, N.M., often host only one of the Big Three.
It’s no surprise then that Delta does whatever it has to in order to keep out competition. That’s why they led the charge for government to keep limit flying by Emirates, Etihad, and Qatar.
And by the way Delta miles don’t have to be as valuable as competitor miles precisely because there aren’t as meaningfully competitive mileage programs in their markets. Delta says customers love their miles and redeem more awards than ever. Network television used to say cable wasn’t needed because viewers tuned into their programs in large numbers, too.