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Delta's Next Expansion in Boston Is No Big Deal for JetBlue

By Adam Levine-Weinberg – Updated May 15, 2019 at 8:21AM

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Delta Air Lines will operate 25% more flights in Boston by next March compared to March 2019 -- but investors have known about most of its planned growth for months.

In recent years, a heated rivalry between Delta Air Lines (DAL -0.48%) and JetBlue Airways (JBLU 0.65%) has developed in Boston. JetBlue is the No. 1 airline there, but Delta has been expanding rapidly in Beantown to take advantage of strong travel demand.

Earlier this week, Delta revealed that it will continue its growth at Boston's Logan International Airport later this year and in early 2020. By next March, Delta and its partner airlines will operate more than 150 daily departures from Boston, up 25% year over year. Several media outlets have described this as a big threat to JetBlue in Boston. However, Delta's latest growth announcement is not nearly as significant as it may appear.

JetBlue and Delta duke it out

In the years after the Great Recession, JetBlue capitalized on other airlines' capacity cuts to become the top airline in Boston. By early 2012, it operated just over 100 daily departures at Logan Airport, with plans to grow to 150 daily departures by 2015.

A JetBlue airplane about to touch down

JetBlue is the largest carrier in Boston. Image source: JetBlue Airways.

It took a little longer to reach that goal than expected, but by late 2016, JetBlue had increased its ambitions, declaring its intent to reach 200 daily flights in Boston. By this fall, it will operate nearly 170 daily departures there.

JetBlue's expansion at Logan Airport has taken on more urgency in the past few years, as Delta Air Lines has become a serious rival there. Just two years ago, Delta offered fewer than 90 daily departures in Boston. However, Delta sees Boston as a promising growth market, both because of the size of the metro area and the strength of the regional economy. As a result, it has been adding extra flights and new destinations at a rapid pace since the beginning of 2017.

Delta adds a few more flights

On Monday, Delta announced that it will begin flying twice a day from Boston to Miami this December. Beginning this winter, it will also offer more frequent flights from Boston to various warm-weather destinations, mainly in Florida.

This move builds upon a slew of flight additions that Delta announced in late 2018, including new routes from Boston to several key domestic business markets: Chicago, Cleveland, Newark, and Washington, D.C. The net result, as noted, is that Delta and its international partners will operate more than 150 peak-day departures in Boston by next March, up 25% year over year.

A Delta Air Lines regional jet flying over a cloud

Delta has grown rapidly in Boston in recent years. Image source: Delta Air Lines.

However, back in December -- in conjunction with its previous Boston growth announcement -- Delta Air Lines said that it would operate 152 peak-day departures in Boston by this fall. In other words, the vast majority of the projected 25% increase in Delta's Boston flight schedule was planned (and announced) five months ago. The expansion announced this week was quite modest in scale.

This isn't very surprising. Delta will gain control of five more gates at Logan Airport next quarter, enabling a huge increase in its flight schedule this fall. However, by the end of the year, it will be utilizing its new gates pretty heavily, which will limit its ability to add new routes and extra flights from Boston in 2020 and beyond.

JetBlue is still the top dog in Boston

Delta is a formidable rival to JetBlue in Boston, but JetBlue still has the advantage. JetBlue will have nearly 170 daily departures at Logan Airport by this fall, after adding frequencies on a dozen routes. Its codeshare partners operate dozens of additional daily flights. Thus, JetBlue still has a significantly bigger footprint in Boston than Delta.

Furthermore, JetBlue will gain control of four more gates at Logan Airport in late 2021, when the airport is scheduled to complete a project to connect Terminal B and Terminal C behind security. That will give it 30 gates in Boston, supporting further growth.

JetBlue has already announced plans to expand across the Atlantic in 2021, with flights from New York and Boston to London. Other transatlantic routes will likely follow in subsequent years. Meanwhile, JetBlue is likely to continue adding new domestic routes from Boston, as well as more frequent service on its existing routes.

For the foreseeable future, gate constraints will play a decisive role in the market share battle between Delta and JetBlue in Boston. This year, Delta is getting a significant boost, with five extra gates that will allow it to gain market share. However, the scales will tilt back in JetBlue's favor over the next few years, allowing the low-fare carrier to solidify its lead in this key market.

Adam Levine-Weinberg owns shares of Delta Air Lines and JetBlue Airways. The Motley Fool owns shares of and recommends Delta Air Lines. The Motley Fool recommends JetBlue Airways. The Motley Fool has a disclosure policy.

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