Delta Air Lines Goes for a Latin Flair

Delta knows that much of Continental's recent success has resulted from building international capacity at its hub at Newark Liberty International Airport, like Hartsfield a major airport that once failed to capitalize on its international potential.

Last August, Delta hired Glen Hauenstein, an architect of Continental's expansion, as an executive vice president. Continental is currently the No. 2 U.S. carrier to Latin America and the Caribbean, with service to 77 destinations in 23 countries.

Delta has looked south before. Fifteen years ago, the carrier made a tentative deal to become a 45% partner in a revived Pan American World Airways, which would serve Latin America from a Miami hub. The deal collapsed when Delta pulled out at the last minute, citing higher-than-anticipated costs.

The world today is a different place. In particular, Sarvis cited two changes. First, Atlanta's Hispanic population has skyrocketed in recent years, creating strong demand for nonstop travel to Latin America. At the same time, Delta's decision to phase out low-fare subsidiary Song has freed up jets for international service. Some of Song's 48 Boeing 757s will be used on short-haul routes to markets including Bogota, Columbia; Quito and Guayaquil in Ecuador, if approved; and Liberia.

Could Make Sense

AMR (AMR Quote) unit American Airlines dominates Latin America from its Miami hub, long a crossroads for connecting passengers between Europe and Latin America. Miami's strengths include not only a broad array of international connections, but also plenty of local traffic to and from Latin America.

"We are a very formidable competitor in Latin America," American CEO Gerard Arpey said during a conference call last week. "Miami, both [for] its geography and community of interest in south Florida, positions us much more strongly than any other U.S. carrier." But Miami can't match Atlanta's domestic connections. From Miami, American offers 253 daily departures to 97 destinations, most of them international.

Fort Lauderdale, Houston and Charlotte also compete with Atlanta for international traffic. In Fort Lauderdale, privately held Spirit is the largest international carrier, with nonstop flights to a dozen Caribbean destinations. "On a 100-seat airplane to the Caribbean, we can fill 50 or 60 seats with local traffic, while Delta has to fill 80 with connecting traffic, which is always very competitive and very price-sensitive," Baldanza said.