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TheStreet Open House

LAX and Seattle Key Delta's West Coast Strategy

LOS ANGELES ( TheStreet) -- Delta (DAL) said it will increase its capacity at Los Angeles International Airport by 12%, further refining its "four corners" domestic hub strategy.

Even with the increase, which includes new or expanded service to 14 destinations, Delta will remain third among the Big Three carriers at LAX, where United (UAL) has the biggest presence with 17% of the passengers in January, according to airport statistics.

Future partners American (AAMRQ.PK) and US Airways (LCC) could combine into the top LAX carrier, because the former has a 16% passenger share while the latter has 3%. They overlap only on the LAX/Phoenix route, one of the 12 routes where they compete. Currrently, American has 151 daily LAX departures, while US Airways has 17.

Delta's West Coast strategy involves three cities: Salt Lake City, where it operates a hub that serves east-west traffic; Seattle, where it is building international service; and Los Angeles.

"Our four corners are growing international launch points," said Delta spokesman Anthony Black. "We have New York and Atlanta on the East Coast, Los Angeles and Seattle on the West Coast." Delta also relies on midwest hubs in Detroit, Memphis and Minneapolis.

But the approaches differ in the two West Coast cities. "At LAX, we have 11 international partners that we code share with, plus Alaska, and we will expect to have Virgin Atlantic later this year," Black said. "That's 13 partners -- a lot of metal on which to connect passengers." Among the partners are two mainline Chinese carriers, China Eastern and China Southern. From LAX, Delta itself operates just three international flights -- one to Tokyo Haneda, one to Tokyo Narita and one to Sydney.

In Seattle, by contrast, Delta relies on domestic feed from partner Alaska and will fly to seven international destinations -- Amsterdam, Paris, Beijing, Osaka and Narita as well as Haneda and Shanghai, which will be added this summer. "We rely on international partners in LAX and on domestic feed in Seattle," Black said.

The newly announced Los Angeles operations include three daily flights to Seattle and daily service to Nashville, effective April 8. Delta will also add service to San Jose, Costa Rica, in July and will bulk up on western cities, adding flights to San Jose, Calif., and one each to Oakland, Phoenix, Sacramento and Spokane. Service will also be increased to Guadalajara, Puerto Vallarta and New Orleans. Seasonal summer flights will be added to Anchorage, Bozeman and Boston. By summer, Delta will operate 118 peak-day departures to 40 cities, after adding about 65 flights since 2006.

Last year, Alaska relocated to LAX Terminal 6, enabling more convenient connections to Delta operations in Terminal 5 and Terminal 6. Delta expects to begin code-shares later this year with Virgin Atlantic on Los Angeles-London Heathrow, the second busiest international market in the U.S.

Bob McAdoo, airline analyst for Los Angeles-based Imperial Capital, said Delta's new flights in Los Angeles bulk up the operation but do not represent major additions in themselves. McAdoo said it is Seattle that is the key to Delta's West Coast presence. "Seattle is a better hub for jumping off to Asia because, for many destinations, it requires a less circuitous journey than a connection in Los Angeles or San Francisco does."

Also, "a lot of people would prefer to connect to Asia in Seattle, rather than at Narita, because people generally feel more comfortable connecting in their own country," McAdoo said. "So it makes sense for Delta to have non-stop from Seattle to as many (international) destinations as they can get."

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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