Delta's measured response to Southwest's arrival at CVG reflects industry strategy, experts say

Fare wars to root out competition called unlikely
Posted at 6:00 AM, Feb 21, 2017
and last updated 2017-02-21 20:42:15-05

HEBRON, Kentucky -- It's an oft-used expression: "Two's company. Three's a crowd." After a trio of air service announcements at the Cincinnati/Northern Kentucky International Airport this year, will there soon be an odd man out?

Southwest and Frontier both made big splashes in January, but it's Delta's recent counter that has evoked a case of déjà vu. Earlier this month, the airline announced a slew of changes -- upgraded planes, more seats and better flight schedules for passengers flying via CVG.

Delta's been here before, in the much-publicized past, slashing prices on lucrative routes to drive out low-cost competition (cue exits by AirTran and VanGuard).

Industry experts, at this point, don't expect a repeat. At least not yet. CVG is seeing growth -- it's flying high after Southwest's announced arrival with service to Chicago-Midway and Baltimore-Washington come June 4, and Frontier's 60-plus percent seasonal increase. So far, Delta's playing nice.

"I think they have a certain amount of turf, and they want to protect that turf. But the stuff about, 'now that Southwest is coming to town …' I don't think Delta cares enough about that," said Michael Boyd, aviation expert and president of BoydGroup International, a Colorado consulting firm. "It's a different world there now. It just doesn't happen anymore, that a Southwest comes into a market and everybody lowers their fares and goes berserk."

It's been a few weeks since Delta announced its service expansion, in what seemed to be a well-timed marketing blast. The airline overall touted a total seat growth of 6 percent and enhanced service in 13 of the 35 destinations it serves from CVG.

But in terms of total departures, that number is virtually flat.

Delta is actually reducing flights to markets like Nashville, Milwaukee, Memphis, Raleigh and New York-JFK, roughly by one flight a day in each, a analysis has found. It did keep all its current city pairs.

"Some markets lost flights. Some markets gained flights," said CVG's Bobby Spann, vice president of external affairs. "It's kind of a hodgepodge of different things. But Delta's schedule changes were designed to benefit the business traveler.

"The emphasis was not on adding flights at CVG from a macro perspective," he added. "It was about improving their delivery to the market, and the net effect was a 6 percent increase in seats, which is great, because they put seats in markets people want to fly."

Like Atlanta, Chicago, Houston, Orlando and Toronto, which will see additional daily flights, Denver will move to mainline, and all Minneapolis flights will offer first class. Flights to Fort Myers will operate daily throughout the summer, and Seattle service will extend into the fall and spring.

Chicago is a "perfect example," Spann said, of a business target. Prior to the schedule change, the first flight from CVG left late morning. Delta's added daily departure will now take off around 6:30-7 a.m.

"A lot of this is about being more attentive and more focused on the local Cincinnati traveler as opposed to having a hub schedule," Spann said. "Delta has always built its schedule at CVG from a hub perspective, and that means, a lot of times, their first plane out of CVG may not be until 9 or 10 o'clock in the morning, because they're waiting for inbound flights coming in from other markets to feed those flights. They're still running the hub, but they're tweaking some of those markets."

Boyd says Delta will continue to hover around 50-70 flights each day. The airline will operate 82 peak-day departures to 35 total destinations from CVG this summer. It's a far cry from the 604 it had more than a decade ago -- or even the 106 daily nonstops it operated in summer 2014. But the dust is settling.

"It's stable. It's fine. It's a solid market," Boyd said. "Southwest flying into Midway and BWI, that means you're going to have more competition to places on the West Coast and more competition to the deep South, but I don’t think it will necessarily have any major impact on fares.

"Southwest is a one-off. Frontier and Allegiant, they're after impulse traffic, discretionary dollars," Boyd added. "They're not taking passengers away from Delta. I think (Delta's) committed to CVG, there's no question. But they're putting in a bare-bones product, and they care as much as you might think."

There are telltale signs -- if Delta does revert to its old ways. In the more recent past, the airline has offered triple miles to rewards members for travel between markets like Atlanta and Los Angeles, for example, in a 2003 turf war with AirTran, which was later acquired by Southwest, and JetBlue.

"I don’t think Delta's going to be playing those kind of games, if you will," Boyd said.