Please ensure Javascript is enabled for purposes of website accessibility

Delta Fights Back Against American Airlines and JetBlue in Boston

By Adam Levine-Weinberg - May 18, 2021 at 8:25AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The airline giant is adding several new routes from Boston to counter the new JetBlue-American Airlines alliance.

In recent months, American Airlines (AAL 1.53%) and JetBlue Airways (JBLU 1.28%) have announced a slew of new routes serving New York and Boston as part of their new Northeast Alliance. The primary goal of this partnership is to help both airlines compete better with Delta Air Lines (DAL 1.56%).

Despite this ongoing expansion by two key rivals, Delta remains the clear leader in New York. On the other hand, the buildup by American and JetBlue threatens its recently created Boston hub. Last week, Delta responded with its own growth plan in Boston as it tries to maintain its position there.

JetBlue and American Airlines fill in the gaps in Boston

JetBlue became Boston's largest airline more than a decade ago, as it capitalized on growth opportunities that became available as rivals retrenched during and after the Great Recession. Its status as the city's largest airline made it popular with many business travelers there, despite JetBlue's reputation as a leisure-focused carrier.

As of four years ago, JetBlue served 39 of the top 50 destinations from Boston. But that still left room for Delta Air Lines to start building a competing hub in Boston, particularly because its hub-and-spoke network allows it to offer one-stop service from Boston to hundreds of destinations around the world.

A Delta Air Lines plane parked on the tarmac

Image source: Delta Air Lines.

Together, JetBlue and American Airlines make a much more formidable rival to Delta in Boston. The partnership immediately gave American Airlines customers dozens of new nonstop flight options in Boston, while giving JetBlue customers broad one-stop market coverage.

Moreover, the airlines have announced numerous new nonstop routes from Boston this year. American Airlines is launching service to markets including Columbus, Ohio; Indianapolis; Cincinnati, St. Louis, and Toronto. Meanwhile, JetBlue is adding nonstop flights to cities such as Milwaukee, Kansas City, and San Antonio -- not to mention its long-awaited entry into the London market. With these moves, the two airlines combined will fly nonstop to at least 46 of the top 50 markets from Boston by next summer.

Delta tries to catch up

For the most part, Delta Air Lines has focused on rebuilding service at its four "interior" hubs (Atlanta, Detroit, Minneapolis-St. Paul, and Salt Lake City) this year. It has been slower to resume service at coastal hubs like Boston, although it has announced new nonstop flights to several tourist markets, including Reykjavik and Rome.

Delta got more aggressive last week, announcing new nonstop routes from Boston to Charlotte and Dallas-Fort Worth: American Airlines' two biggest hubs. Those are the two busiest routes from Boston that Delta doesn't serve today. It will also launch nonstop flights to Toronto.

Meanwhile, Delta is upgrading to mainline service on its new Airbus A220 fleet for flights to Cincinnati, where it faces new competition from American. Lastly, it will switch back to Boeing 757s with flat-bed seats in the premium cabin for Boston-Los Angeles flights to better compete with the amenities offered by JetBlue and American Airlines on that route.

A rendering of an Airbus A220 in Delta's livery

Image source: Airbus.

Delta's disadvantage

These moves will contribute to Delta Air Lines' continued relevance in Boston, but the full-service airline is still likely to lose ground to JetBlue and American over time. Indeed, even before accounting for their planned growth, JetBlue and American together carry over half of the passenger traffic in Boston and offer many more nonstop flight options than Delta.

Importantly, JetBlue has addressed its two key weaknesses with respect to Delta in Boston. First, the arrival of longer-range A321LR and A321XLR aircraft will allow JetBlue to expand into Europe, starting with London. Second, the American Airlines partnership allows JetBlue to offer Boston-based customers the same kind of global access that Delta Air Lines provides.

Delta Air Lines' biggest problem in Boston is simple: it has much less at stake there than JetBlue. Boston is the only major city where JetBlue is the top airline: a position that usually confers significant unit revenue advantages. By contrast, Delta dominates many of its hub markets (but not Boston). Additionally, while Delta has funneled some connecting traffic to Europe through Boston, it can serve that demand equally well via other hubs: especially New York.

If necessary, JetBlue will fight a war of attrition to win in Boston -- with American Airlines' help -- because losing isn't an option. Delta has lots of good options for profitable growth. That's a great position to be in, but it makes a costly fight for supremacy in Boston seem unwise.

Adam Levine-Weinberg owns shares of Delta Air Lines and JetBlue Airways and is long January 2022 $10 calls on JetBlue Airways. The Motley Fool recommends Delta Air Lines and JetBlue Airways. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Delta Air Lines, Inc. Stock Quote
Delta Air Lines, Inc.
$34.49 (1.56%) $0.53
JetBlue Airways Corporation Stock Quote
JetBlue Airways Corporation
$9.06 (1.28%) $0.12
American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
$15.22 (1.53%) $0.23

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.