For many years, United has differentiated itself from both Delta and American with its global route network. The airline simply operates on a different level when it comes to the scope of its international network, especially across the Pacific.
We know that Delta is trying to grow across the Pacific, as we’re seeing the airline pursuing a “once in a generation” growth opportunity in Los Angeles (LAX). The airline has just launched flights from there to Hong Kong (HKG), and Manila (MNL) flights are expected as of 2027 as well. Just how big are Delta’s aspirations across the Pacific, though? Well, bigger than we may have expected…
Delta wants to become leading US carrier across Pacific
Leslie Josephs at CNBC had an interesting interview with Peter Carter, Delta’s new President (who recently replaced Glenn Hauenstein), at the current IATA AGM, in Rio de Janeiro, Brazil. One of the main topics involved Delta growing across the Pacific, where he shared the following aspirations:
“We want to become stronger, better, faster in the trans-Pacific, and we want to become the leading U.S. carrier” across the Pacific, Carter told CNBC in an interview here during the International Air Transport Association’s annual meeting. “Ultimately … the real goal is to become the leading global carrier, which is a pretty audacious goal.”
The U.S. air travel market — the world’s largest — is mature, meaning there’s little room for significant annual growth. “Really, when we think about the future, it’s all about international,” Delta’s Carter said.
The other noteworthy thing here is the comments from United CEO Scott Kirby, which can only be described as rather competitive, along with Carter acknowledging how United is increasingly becoming a competitor (Delta executives have historically taken the approach of basically not acknowledging United by name):
On the sidelines of the same conference, Kirby said he has “a lot of respect for Delta, and what they have done, and I take it as a huge compliment that Delta is beginning to acknowledge that they have an equal that they’re worried about and trying to compete with us.” When asked what he wants to beat Delta on, Kirby replied: “Everything.” Carter said in the interview that Delta can’t rest on its current success. “We always have to be hungry to win, and I say that because I know United is out there competing against us and replicating the playbook a little bit,” he said. “Bring ’em on.”
Will Delta more than double its transpacific capacity?
Admittedly airline executives make all kinds of questionable claims with words like “leading,” “premium,” etc., so perhaps things shouldn’t be read into too literally.
However, I think suggesting that Delta will become the leading carrier across the Pacific lays out some pretty clear aspirations… and that will require quite the ramp-up.
Doing some very rough math, it looks like Delta’s Pacific revenue last year was around $2.8 billion, while United’s Pacific revenue was around $6.9 billion. So if Delta actually wants to surpass United in terms of size, it’ll need to grow its Pacific revenue by roughly 150%, and that represents a lot of new service. Now, a few points:
- I’m sure someone will be along shortly to point out that Delta has better margins across the Pacific than United; that’s true, because the carrier’s network is so much smaller, and United’s Pacific strategy is much more about building a portfolio of routes that make the airline appealing overall, rather than each and every route being mega profitable
- Delta acknowledges that some of its “leading” position across the Pacific will come from its joint venture with Korean Air, and admittedly that’s a bit larger of a transpacific joint venture than United has, with All Nippon Airways
- It’s interesting to see Kirby and Carter be so direct with their competitor commentary, with Kirby saying he wants to be better than Delta at “everything,” and Carter saying “bring ’em on”
- United has the major structural advantage of having a mega hub in San Francisco (SFO), the most lucrative West Coast market for Asia, where the airline has a ton of connectivity, and I don’t think Delta can fully replicate that success in Los Angeles, and splitting things with Seattle (SEA) doesn’t help either
Anyway, it’ll be fascinating to see what comes next. Beyond the new Hong Kong route that was just added and the Manila route that has theoretically been announced, what more could we really see? We have reason to believe that Delta’s LAX strategy includes adding flights to Seoul Incheon (ICN), flying year-round to Auckland (AKL), and possibly upping Shanghai (PVG) flights to daily. We also know that Delta is at least considering flights to Singapore (SIN).
However, that still leaves Delta a long way from matching United’s Pacific network. So either Delta has a lot more growth planned across the Pacific, it’s relying a lot more on Korean Air to make it “leading” than it’s suggesting, or this is just a lot of talk. Also, are you really a global airline if you don’t fly to Greenland or Mongolia? 😉
Bottom line
We’ve known that Delta wants to grow across the Pacific, especially with the airline seeing a lot of potential at LAX. However, the extent to which the airline plans to grow is quite something, as it claims it wants to be the “leading” airline across the Pacific, beating out United. United currently has around 2.5x the Pacific revenue that Delta has, so Delta has quite a bit of catching up to do.
It remains to be seen how literally means that it wants to lead across the Pacific, and to what extent it’s using Korean Air as a crutch to make that claim.
The trash talking associated with this is quite something as well, with United CEO Scott Kirby saying he wants to beat Delta at “everything,” and Delta President Peter Carter telling United to “bring ’em on.”
What do you make of Delta’s goals across the Pacific?
