Two years ago, Delta Air Lines (DAL -2.72%) was expanding rapidly in Boston. The onset of the COVID-19 pandemic in early 2020 forced it to pause that growth. However, Delta is now looking to resume its Boston growth plan, boosting capacity to record levels by next summer. That represents mixed news for market leader JetBlue Airways (JBLU -3.59%) and its new partner, American Airlines (AAL -2.46%).
On a growth tear in Boston
Delta has been growing rapidly in Boston for several years. In June 2019, Delta named Boston as its newest hub. By that point, the global airline had already doubled its daily domestic departures from Boston compared to 2013.
A few months later, Delta took over the five gates it did not previously control at Logan Airport's Terminal A. That gave it a total of 21 gates in Boston. It used those extra gates to launch nonstop flights from Boston to four key markets -- Chicago, Miami, Newark, and Washington, D.C.'s Reagan National Airport -- in late 2019. Around that time, Delta announced that it would add several new international flights from Boston in 2020.
This domestic and international growth positioned Delta and its joint-venture partners to operate over 150 daily departures at Logan Airport by March 2020.
Image source: Delta Air Lines.
Of course, March 2020 was exactly when the full force of the pandemic hit the U.S. airline industry. The Boston area fared particularly poorly in the early months of the pandemic, partly due to a late-February conference that became a superspreader event. As a result, by late April of 2020, Delta had slashed its Boston schedule to a barebones operation serving its other hubs.
Returning to growth mode
Over the past year, Delta has gradually rebuilt its schedules in Boston. During the summer of 2021, it operated an average of 84 daily departures from Boston to 38 destinations.
Next week, it will begin offering nonstop flights to Charlotte and Dallas-Fort Worth: two key business markets that also happen to be American Airlines' biggest hubs. And in July, Delta confirmed that it will resume half a dozen routes to the Caribbean -- a key bastion for JetBlue -- in December.
The carrier announced another wave of growth in Boston on Sunday, which will increase its service to 160 peak-day Delta-operated departures next summer. The company says this represents 20%-plus capacity growth over the pre-pandemic peak in October 2019.
First, Delta plans to launch nonstop routes from Boston to Athens and Tel Aviv just in time for Memorial Day in 2022. Second, it will begin offering nonstop flights to Baltimore, Denver, and San Diego next July. That will give it a presence in each of the top 20 domestic markets from Boston.
Image source: Delta Air Lines.
A blessing in disguise for JetBlue and American Airlines?
JetBlue is the top airline in Boston, with 33% market share on domestic routes in 2019. American Airlines was previously the market leader, although it has fallen back to third place in recent years. Delta's growth plans entail moving into markets that both of those airlines have dominated from Boston.
On one level, that's clearly bad news for JetBlue and American. By ramping up capacity to beyond 2019 levels, Delta will put pressure on airfares in Boston, particularly on routes where it hasn't previously competed. Additionally, by filling in the last few gaps in its service from Boston to key business markets, Delta Air Lines will become an even more formidable rival for business travelers.
The silver lining is that Delta's aggressive growth in Boston could help JetBlue and American Airlines beat back an antitrust challenge to their Northeast Alliance. Earlier this year, the two carriers began codesharing and splitting revenue on flights to and from New York and Boston. The goal is to compete more effectively with Delta -- and, to a lesser extent, United Airlines -- by combining JetBlue's local market strength with American's long-haul flights, global route network, and enormous frequent-flyer database.
The Department of Justice and several states have alleged that the JetBlue-American partnership will be anticompetitive. Indeed, in Boston, JetBlue and American Airlines' combined market share exceeds 50%. But if Delta's growth in Boston pushes down fares, JetBlue and American Airlines will have a compelling argument that there is still plenty of competition there, increasing the likelihood that they can continue to work together.
