Austin is an interesting market for airlines. Southwest has the largest presence at the airport, but it’s also a place where the “big three” US carriers have tried their luck at expansion, despite limited gate space.
A few years ago, we saw American make a big push there, only to retreat. For well over a year now, Delta has been expanding significantly in Austin. The airline has just announced its latest route additions there, and I’m curious to see how this plays out in the long run.
In this post:
Delta adds new routes & flights from Austin
In the coming months, Delta will be adding three new routes out of Austin-Bergstrom International Airport (AUS). The airline will fly to Columbus (CMH), Denver (DEN), and Kansas City (MCI), in addition to increasing frequencies to Indianapolis (IND) and San Francisco (SFO).
With this latest expansion, Delta will serve nearly 30 destinations from the airport, “reinforcing its role as Austin’s leading global carrier” (in other words, not Southwest).
Beyond these latest additions, Delta flies to Austin from all of its hubs — Atlanta (ATL), Boston (BOS), Detroit (DTW), Los Angeles (LAX), Minneapolis (MSP), New York (JFK), Salt Lake City (SLC), and Seattle (SEA).
Delta also serves Austin year-round from Cincinnati (CVG), Indianapolis (IND), Jacksonville (JAX), Las Vegas (LAS), McAllen (MFE), Memphis (MEM), Midland/Odessa (MAF), Nashville (BNA), New Orleans (MSY), Orlando (MCO), Panama City (ECP), Raleigh-Durham (RDU), San Francisco (SFO), and Tampa (TPA). Then there are seasonal routes from Cancun (CUN), Palm Springs (PSP), and San Jose del Cabo (SJD).
What’s also interesting is that we’re increasingly seeing Delta position Austin as a key access point to facilitate connections to its entire network. Going back a year, Delta exclusively approached Austin as a point-to-point market.
Will Delta’s Austin expansion succeed?
The airline industry is a funny business. Airlines expand into markets for all kinds of reasons, even if the service isn’t necessarily directly profitable:
- Sometimes airlines expand for competitive reasons, to keep other airlines out of a market, and view it as part of a larger network strategy
- Sometimes airlines are also willing to lose money in a market for an extended period of time, thinking that once they reach a critical mass of service, it will become profitable
- Sometimes airlines expand largely as a loyalty program play, where they believe having a dominant position in a market will pay off in terms of credit card and other loyalty revenue
For a couple of years, American massively tried to expand its presence in Austin, operating flights to over three dozen airports. Then the airline totally undid that growth, and now Austin is a market where American almost exclusively just flies to other hubs. American had reportedly been losing money on that expansion all along.
So, how will this play out for Delta? First of all, it’s worth acknowledging that Delta has more of a strategic benefit to growing in Austin, since the airline doesn’t otherwise have a hub in the region, unlike American in Dallas (DFW), and United in Houston (IAH), both of which are under 200 miles away. The geography makes a lot of sense for Delta.
I could see merit to Delta growing in Austin in the long run, though the challenge is that the airport doesn’t currently have much space to grow, and is highly congested. So it’ll never become a mega hub, like what American and United have in Texas.
So I’m not sure what to think about how this will play out. My guess is that Delta will continue slowly but surely expanding in Austin, and that it could be a market the airline is increasingly focused on, just due to the geography.
But whether or not the market becomes profitable for the airline remains to be seen. Delta is willing to stick things out for a long time, as long as the airline views it as part of a larger strategy. And I do think that Delta views this as an important strategic interest.
That being said, Delta is also most successful in its fortress hubs, and rarely performs that well (relatively) in markets where it doesn’t have a first place position. In Austin, Delta is second to Southwest by a long shot, and I can’t think of any other Delta focus city where it trails Southwest by such a margin.
Bottom line
Delta is continuing to expand in Austin, with three new routes, which will mean the carrier serves nearly 30 destinations from the airport. It’s interesting to see Delta’s continued expansion in Austin, following American’s retreat.
Admittedly Delta has more strategic benefit from Austin, given it doesn’t otherwise have a hub in Texas, unlike American and United. Whether Delta can profitably go up against Southwest remains to be seen, though…
What do you make of Delta’s Austin expansion?
I'm curious as to when Delta will begin to fill in the gap with more Texas routes, like Lubbock, El Paso, Amarillo, Corpus Christi, etc.
I guess they feel that they need more critical mass for connections before making a play on those routes, which will probably carry less origin-destination traffic than Southwest (who's been in those intra-Texas market for decades) does.
This. I would imagine that a lot of Southwest’s traffic is regional. Delta won’t become the key player in Austin unless they better serve the local market.
AUS is overhyped. Their housing market is collapsing and tech is fleeing the area.
Who knows what will happen to the economy in the ten years to complete all the expansion. AUS is low yield city as well. Virgin Atlantic had to axe their AUS route.
This is temporary. It got to be too much of a fad and that bubble burst. But it's far from permanent. It's still a state capital, a research hub that houses a major university, and it's still in a lovely area of Texas. It will do fine in the long term. I remember when Miami was filled with condos in foreclosure and when you could buy a house in Temecula, CA for $80k. Now they're $1.2M. Austin still has potential to grow a lot.
what is with you using my screen name, "Julie"?
hell, if your name is Julie, great. But you usually just use this screen name to say random sh*t and troll normal users.
"AUS is low yield city as well. Virgin Atlantic had to axe their AUS route."
Even though Austin's economy is slowing down, they are certainly not a "low yield city," particularly internationally.
Also, I wouldn't take much from Virgin's exit. They had to park multiple 787s due to Rolls-Royce issues (for the third time), and the instant they pulled out of Austin, British Airways came in and filled that capacity with a second flight.
Well, I suppose AUS can make for a good mini-hub that fills in the gaping hole in DL's map that was made when they unceremoniously pulled out of DFW three decades ago. Really, it can make DL more viable in the Lone Star state; UA has Houston, AA has DFW, WN has basically the whole state and DL has been out in the cold. With AUS, they can at least get a consolation prize and...
Well, I suppose AUS can make for a good mini-hub that fills in the gaping hole in DL's map that was made when they unceremoniously pulled out of DFW three decades ago. Really, it can make DL more viable in the Lone Star state; UA has Houston, AA has DFW, WN has basically the whole state and DL has been out in the cold. With AUS, they can at least get a consolation prize and one that serves a fast growth region. My opinion is that DL is being very shrewd to approach AUS in the way it is. I can see it working out better for them than SEA, for example (which they do have to keep fighting for).
As for Bergstrom, if DL needs more space, I'm sure that they can expand as needed. It takes time, of course, but there is real estate unlike what some other airports are dealing with.
and yet DL is the 2nd largest carrier at DFW, DAL, HOU and AUS. They do quite well in other carrier hubs on top of their strength hubs. There are multiple routes from other carrier strength markets including to/from NYC and LAX where DL more than carries its weight
and this growth is undoubtedly related to the assignment of gates between now and when the new terminal opens in 5ish years. DL is not...
and yet DL is the 2nd largest carrier at DFW, DAL, HOU and AUS. They do quite well in other carrier hubs on top of their strength hubs. There are multiple routes from other carrier strength markets including to/from NYC and LAX where DL more than carries its weight
and this growth is undoubtedly related to the assignment of gates between now and when the new terminal opens in 5ish years. DL is not going to go from a single digit number of gates to double digit number of gates without being able to grow the market now. The question is how AUS carves up gate assignments between now and 2030ish
IF DL is building up Austin, I wonder if VS will return to Austin or perhaps AF/Kl to compete against BA's 2 daily flights. Seems to me that the lack of international European nonstop is a major hole in this build up strategy.
What are you talking about? KLM has flown nonstop to Austin for years now.
of course AUS can work as a DL hub. It is a large enough city and is strategically located to serve as the hub in the south central part of the US that DL needs.
AA threw a bunch of capacity into AUS in violation of its pilot contract in order to try to block DL from growing AUS and it was AA that paid the price. As it often does, DL sat back and...
of course AUS can work as a DL hub. It is a large enough city and is strategically located to serve as the hub in the south central part of the US that DL needs.
AA threw a bunch of capacity into AUS in violation of its pilot contract in order to try to block DL from growing AUS and it was AA that paid the price. As it often does, DL sat back and watched until the embers of AA's fire cooled before acting.
WN is struggling to make its core network work; they don't have the resources to engage in a fight w/ DL. DL has a pretty strong track record of winning business from WN.
DL is the only carrier that has built 2 new hubs (BOS and SEA) over the past 10 years and has succeeded at both and its core network even while paying its employees industry leading wages.
And it is clear that DL has no fear of taking on UA by adding DEN service; this is the 3rd route in months where DL is taking on a major UA route. Kirby loves to talk about how UA and DL are in the same camp and the two will divide up the industry but DL clearly has no interest in being UA's bestie or letting regulators know that DL and UA are in any way collaborating on anything.
I would think it comes down to whether Delta can get enough business/media-related traffic between AUS and its hubs, some of which (NYC/BOS to name two obvious ones) Southwest doesn't really serve/compete on. That's the one area Delta can probably do best with since leisure travel, low fares, and intra-Texas flying will likely always be Southwest's game.
Why are you attacking Tim before noon? :)
Darlin’, Delta in Austin is like a debutante at a rodeo — bless their ambition, but it’s just not gonna work.
Why? Because some internet rando says so?
Well, that's hardly a corroborative reason, now is it.
If they can (in cooperation with AM and LATAM, since DL doesn't like using its own metal when JV partners are available) create a north-south connecting hub, it would help them tremendously with a large chunk of the country - since for many, it isn't super logical to go to Latin America via Atlanta or LAX. Of course, competing with AA and UA (and WN to an extent) but nevertheless.
Yes, that's another area where maybe Delta could have some success- one-stop connections to various Latin America destinations that Southwest doesn't and likely never will serve.
Only issue with that is the AM JV has been rejected by the DOJ and DOT and will sunset in a couple months, and there isn't much South America demand from Austin for non-Mexico, but will be something to monitor long-term
"since DL doesn't like using its own metal when JV partners are available"
False. Delta's agreement with labor stipulates metal reciprocity for joint venture partners, on both a network and per-departure basis. If a j-v partner adds anything to the specified regions, Delta has to add something with its own metal (above a certain gauge) as well.