United and Delta Battle for New York

The battle for New York is heating up. America's two largest airlines, United Continental (NYSE: UAL  ) and Delta Air Lines (NYSE: DAL  ) are waging a running battle for the hearts and minds of New Yorkers, in an effort to win market share in the country's largest aviation market. More than 100 million people move through New York airports each year, and there is a heavy concentration of high-fare business travelers, making this a critical market for the legacy carriers.

While no carrier is likely to win supremacy in this highly competitive market, Delta is well-positioned to pick up market share over time. Delta's slot swap with US Airways (UNKNOWN: LCC.DL  ) , which was completed last year, gives it the largest market share at LaGuardia Airport, which is the most convenient airport for many New Yorkers. The airline is also expanding at JFK, the region's largest airport. Most importantly, Delta has the best reputation for customer service among the legacy carriers, which gives high-paying business travelers a good reason to choose Delta.

A war of words
Two weeks ago, United Continental celebrated the 25th anniversary of its Terminal C hub at Newark Airport, which is just outside New York City. The company highlighted upcoming improvements to its Newark facilities and its position as the largest airline in the New York area. United offers more than 400 flights per day from Newark Airport to more than 150 destinations worldwide. United also boasted that it offers more flat-bed seats, premium economy seats, and live TV-equipped aircraft than any other airline.

On May 24 -- later that same week -- Delta took center stage with the grand opening of its new Terminal 4 international hub at JFK Airport. The new facility offers modern amenities and is a big improvement over the outdated Terminal 3 that it replaces. When the project is fully completed in 2015, all Delta flights at JFK will depart from Terminal 4, allowing faster connections for passengers.

On the same day, United attempted to steal Delta's thunder by announcing that from now on, all United long-haul international flights from the New York area would have flat-bed seats and personal on-demand audio-video systems at every seat in the premium cabins.

Delta struck back last week with the beginning of nonstop service between Newark Airport -- United's home turf -- and Paris. The service takes advantage of Delta's joint venture with Air France, which offers a large connecting network in Paris. Delta now serves Paris from both JFK and Newark, allowing it to serve customers regardless of which airport they prefer.

Delta has an edge
United's major asset in the battle for New York is its large hub operation at Newark Airport. Due to slot restrictions at all three major New York airports, it's very difficult for airlines to grow in New York. United can therefore offer more destinations from New York and more connecting opportunities for customers traveling between the rest of the U.S. and international destinations.

However, the large local population in New York means that airlines are not as heavily reliant upon connecting traffic there as in most hub cities. As a result, Delta can serve the market very well even though most of its capacity is divided between LaGuardia and JFK. Delta also offers popular hourly "Shuttle" services from LaGuardia Airport to Boston, Washington, and Chicago, which United does not provide.

However, Delta's biggest edge in the battle for New York is its superior customer service. Whereas United came in dead last in the most recent Airline Quality Rating survey, Delta came in fourth (out of 14). For business travelers, who are not very sensitive to price, superior customer service metrics are a major factor in travel decisions.

Foolish bottom line
Delta is quickly catching up to United in the New York area, although United is making a valiant effort to reinforce its strengths, particularly its large hub operation at Newark. In the next year or two, American Airlines will also become a major player in the New York market, thanks to its merger with US Airways. The merger will combine US Airways' strength on the Boston and Washington shuttle routes with American's international gateway at JFK Airport.

However, Delta has one killer advantage over American and United: superior customer service. United is still recovering from turbulence caused by its recent merger with Continental, while American hit some minor bumps during its bankruptcy proceedings, and is about to engage in a complicated merger with US Airways. Delta's stability and track record of strong customer service performance will probably make it the airline of choice for New Yorkers, especially business travelers.

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  • Report this Comment On June 03, 2013, at 8:46 PM, herbfar wrote:

    Delta's edge in customer service? Not as far as this passenger is concerned. Let's start with our present trip from JFK to Madrid. At the outset, a more than 40-minute wait to speak to a customer service rep on the phone, finally abandoned. Next was an interminable crowd at check in, even though we were flying business elite. The next indignity was a mob scene to go through baggage check. The airline did not even have sufficient personnel to queue up passengers waiting to get through.

    The terminal itself -- who would have thought a more than 10-minute walk would be needed to arrive at our gate and that no one was checking in business elite, so-called, passengers.

    On the plane, the cabin crew was unsmiling and uncommunicative. The only verbal interchange was about menu choice, without a smile. And then, the food. Beef and scallops that were so overcooked they were unsliceable with a knife, dry, tough and tasteless.

    The final indignity. Two of our three bags, labeled "priority" were not loaded onto our flight. There we were in Madrid without our child's baby seat. Delta knew they had not loaded the bags because they informed Madrid.

    Here we are one day after the flight without the missing bag and baby seat. The Delta office closes at noon in Madrid. Therefore, the bags, which supposedly and hopefully arrived yesterday at 5PM, could not be forwarded to us that day. Lord only knows when we will receive them.

    Whose idea is this of superior customer service to business elite customers, no less the rest.

    In addition to all the snafus, to this moment Delta has made no effort to contact us, despite having our phone numbers and emails.

    Adios, Delta and good riddance, except for our now dreaded return in a month.

  • Report this Comment On June 04, 2013, at 12:22 AM, flyer1234 wrote:

    I just had a Delta flight from JFK to LAX... the best customer service that I've ever had on a major airline. The Delta agent even upgraded my wife and I to Business Class for free... it was awesome!!!

  • Report this Comment On June 04, 2013, at 7:59 AM, Tyeward wrote:

    I have my doubts about an all out war between the two in the NYC area. All major airports in the NYC area are slot restricted. Tactically speaking, United does have the advantage due to the fact that they are the undisputed carrier out of Newark and is able to offer more nonstop destinations than Delta out of JFK. Due to the slot swap between USAirways and Delta, Delta is now the predominant carrier out of LGA. The draw back to LGA is that it´s not only slot restricted, but it´s also perimeter restricted with few exceptions. Being able to offer more destinations and being able to out frequency the competition are not really the same thing. JFK and LGA combined, Delta does have the ability to out frequency United on destinations they both serve. Because of LGA´s restrictions, those destinations are limited. That actually gives United the upper hand on long haul and ultra long haul destinations, and transcon. Offering more frequencies sometimes doesn´t work all that well, not unless you know that you have good passenger demand. If you don´t then it´s useless because you are just burning up money on operations. From what I understand, United and Delta both do a pretty good job in NYC. What I am more interested in seeing is how the New American is going to use Philadelphia. Most people scoff at it, but it´s literally just down the street. It will be interesting.

  • Report this Comment On June 05, 2013, at 8:33 PM, 1949Steve wrote:

    "United is still recovering from turbulence caused by its recent merger with Continental"

    Yea, I believe that you have that all wrong. What you meant to say was the Continental is still recovering from it's merger with United.

    There hasn't been a problem with Continental's Customer Service for a least 15 years. The same can not be said of United.

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