Skip to main content

Editors' pick: Originally published Feb. 12.

Among all the enhancements that Delta (DAL) - Get Free Report has made since its 2008 merger with Northwest, perhaps the most dramatic has been its expansion in New York, which has included building two hubs, spending more than $2 billion to expand airport facilities, and forging links with institutions including both the Mets and the Yankees.

Now Delta wants to repeat the transformation in Los Angeles, another major travel market with both daunting logistical challenges and compelling financial potential.

In New York, Delta built two hubs 12 miles apart at congested airports. At Los Angeles International Airport, Delta wants to move to new terminals at another congested airport where it and American (AAL) - Get Free Report  and United (UAL) - Get Free Report all operate hubs. Each of them carried between 16% and 17% of airport passengers in 2015, airport statistics showed.

In Delta's favor, it can work from that New York blueprint.

Last month, Delta signed a letter of intent to rehabilitate LAX Terminals Two and Three and to move there from Terminal Five. Nothing happens unless the airport and the Los Angeles City Council approve the deal.

If they do, "We need to rehab and reconstruct Two and Three to make a first class customer experience -- {which} we did in New York," said Ranjan Goswami, Delta's vice president of sales, West. "We have a great track record of building customer friendly facilities.

With Los Angeles bidding for the 2024 Olympic Games, "Our goal, if we reach agreement, is that this will be done in time for the games," said Goswami, who seemed confident that Los Angeles will win the bidding.

Goswami declined to specify the cost of the improvements, but a source familiar with LAX planning said Delta is prepared to spend "north of $1 billion" to build the facility it wants. Typically, airport improvement projects are funded with fees collected from airlines and their passengers.

A move would give Delta more gates, closer to its partner airlines on the north side of the airport. Delta currently uses 16 gates, including 13 in Terminal Five and three in Terminal Six. It's too soon to say how many gates new terminals would provide.

Besides building facilities, Delta wants to become even better known in Los Angeles. "What being a global carrier really means is being hyper-local," said Goswami. As an example, he said that by sponsoring the Los Angeles Lakers, Delta promotes its presence not only at LAX but also in China, where the NBA has a strong following.

This weekend, Delta will be closely involved with the Grammy Awards, with a series of four events, including a performance Friday night for Delta friends and customers by Leon Bridges, a 2016 Grammy nominee for best R&B album. Delta has been a Grammy sponsor for nine years.

Additionally, Delta announced this week that it has agreed to a six-year extension of its five-year-old deal with AEG, a Los Angeles-based sports and entertainment packager. The deal extends Delta's role as official airline of the Los Angeles Kings hockey team, the Grammy museum and the Staples Center, where Delta will get naming rights to luxury suites.

In a press release, Goswami referred to "our relentless pursuit to become the airline of choice for Angelenos."

Meanwhile, Delta service levels have been rising. But so have American and United service levels.

Delta operates 157 daily departures, up from 50 in 2009. Delta is second to American in LAX capacity and revenue after overtaking United in 2015. Of Delta's 57 destinations, 18 are international, including Shanghai, Sydney and Tokyo Narita. In Latin America, Delta has 14 destinations, more than any other LAX carrier.

On the LAX-New York Kennedy route, Delta operates 10 daily departures, and offers more seats than any other carrier. On the LAX-San Francisco route, it operates an hourly shuttle between 7 a.m. and 10 p.m. using a fleet of Boeing 717s, all built in California. The 717 was the last commercial aircraft produced at the Long Beach, Calif. plant that Boeing acquired in the 1997 merger with McDonnell Douglas.

American, unlike Delta and United, has its sole West Coast hub at LAX. Planned June additions will bring its daily LAX departures to 220, with 70 destinations including Auckland, Sao Paulo, Shanghai, Sydney and Tokyo Haneda.

American is building two new gates at LAX and has said that if Delta moves out of Terminal Five, it could acquire gates there. American currently occupies Terminal Four. It sponsors the LA Clippers and, this week, the Universal Music Group Grammy Showcase.

United has 150 LAX daily departures to 64 destinations including Beijing, Shanghai, Tokyo, Sydney, Melbourne, London Heathrow and six Latin and Caribbean destinations. It sponsors UCLA basketball and football and the Los Angeles Angels and is the official airline of the Emmys, Oscars and Screen Actors Guild.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.