U.S. Airlines Expand Internationally

Delta Air Lines recently announced that this winter it will start flying to Accra, Ghana from New York-JFK with a Boeing 767-300ER, becoming the only scheduled airline to do so. And they're not planning on stopping there. "With more additions planned by winter," a statement by the airline reads, "Delta is proud to operate nonstop flights to 12 unique trans-Atlantic destinations not served by any other U.S. carrier." As of now, the destinations out of the 12 that have been announced or currently flown are: Budapest, Hungary; Moscow, Russia; Kiev, Ukraine; Istanbul, Turkey; Athens, Greece; Düsseldorf, Germany; Stuttgart, Germany; Nice, France; Mumbai, India; and Dakar, Senegal. All of these cities will be serviced from JFK by either Boeing 767-300ERs or Boeing 777-200ERs.

Why all of the non-stop routes to far-off cities? The answer: mostly because they're much more profitable than domestic flying. Delta can lose money on, say, Atlanta-Baltimore, because low-cost competitor AirTran flies that route too. Also, flying around the big planes domestically (like the 767) can mean lots of empty seats, which translates into money lost.

So Delta has instead opened up a bunch of international routes, most of which they have no competition on. There are exceptions; for example, Aeroflot flies JFK-Moscow as well, and Delta will compete with American and Continental on the JFK-Mumbai route. But for the most part, Delta will maintain a near-monopoly on many of these routes, many of which have huge demand but no airline (yet) flying it.

Other airlines have followed suit. United Airlines announced last month that it plans to start thrice-weekly service from Washington Dulles to Kuwait City with a Boeing 777 aircraft. The route, as of now, is not flown by anyone. United and other U.S. legacy carriers are looking closely at Delta's expansion abroad and will no doubt expand their international service if it pays off for Delta.

This is occuring, of course, at a crucial time for both airlines. Delta is still struggling through Chapter 11 bankruptcy, and keeps deferring the filing of its reorganization plan. United, on the other hand, has just exited bankruptcy, and the cost advantage it had for the past several years of being the only U.S. major in bankruptcy in fading away. It needs to take a page out of Delta's book and expand abroad as well - but only in the right areas, and in close cooperation and planning with its Star Alliance partners. Right now, the most important area for United to concentrate on is the Asia-Pacific region, where it is by far the dominant carrier.