Delta Air Lines Inc., based in Atlanta since 1941, is promoting itself as New York City’s “hometown carrier” with mojitos in Manhattan and sponsorships of the Yankees and Mets baseball teams.
Plastering the Delta name across sports stadiums, the Tribeca Film Festival and the Bronx Zoo, the world’s largest airline seeks to build on its 70 percent increase in flying at John F. Kennedy International Airport since 2005.
No carrier dominates New York, the biggest U.S. aviation market and a gateway for the overseas business-class fliers who are airlines’ most-profitable customers. Delta is counting on New York to pay off once U.S. air travel recovers from a 13- month slide, the U.S. industry’s worst slump in seven years.
“JFK is a double-edged sword because there are so many delays and it’s so competitive,” said Michael Boyd, an airline consultant at Boyd Group in Evergreen, Colorado. “But you have to have a New York presence. Delta can win by getting it so that when people think of flying in New York, they think of Delta.”
Winning more international fliers at JFK and other hubs is pivotal for Delta. Higher overseas fares helped Delta collect an average of 12.04 cents for each passenger flown a mile in 2008. For JetBlue Airways Corp., which is the biggest carrier at JFK and doesn’t fly to Europe or Asia, the figure was 9.42 cents.
“There’s money on the table and market share to be had because nobody owns New York,” said Gail Grimmett, Delta’s senior vice president of New York operations, a job created this year. “We want to be New York’s hometown carrier.”
New York is among the most-fragmented U.S. metro areas for air travel, with traffic spread among three large airports — JFK, LaGuardia and New Jersey’s Newark Liberty. They handled 106 million passengers last year, 18 percent more than Atlanta’s Hartsfield, the world’s busiest, based on airport data.
Delta and its regional partners flew 17 percent of New York travelers, behind Continental Airlines Inc.’s 24 percent. The tally includes Northwest Airlines, which Delta bought in 2008. By comparison, Delta’s share was 73 percent in Atlanta.
“New York is up for grabs,” said Hunter Keay, an analyst at Stifel Nicolaus & Co. in Baltimore, who recommends buying the shares. “Given the size and breadth of Delta’s network, they are in the driver’s seat.”
To cement that impression with New York travelers, Delta is slapping its brand on everything from newsstand ads to the zoo to the James Beard Foundation, which bestows the culinary awards carrying its name.
Delta became the “official airline” of the Yankees this year, deepening its New York commitment amid a streak of losses that may reach seven quarters when it reports results July 22. The carrier has sponsored the Mets for a decade.
On Fridays, Delta hosts a happy hour at Pershing Square near Grand Central Terminal. Patrons can sip the Mile High Mojito sold on flights and set their glasses on coasters with the name of Yankees All-Star shortstop Derek Jeter, who is part of an airline charity fundraiser.
Adding a New York accent to Delta, which traces its roots to a crop-dusting service founded in rural Georgia in 1924, is part of the carrier’s plan to boost overseas flying.
Delta focused on international routes after exiting bankruptcy in 2007. Those flights will be half of its capacity by 2010, double the share of five years earlier, Glen Hauenstein, executive vice president of network planning, said in December. The 70 percent jump in JFK seating capacity came as Delta’s overseas service there rose to 49 cities, up from 20.
Any expansion now would face headwinds from the recession that dragged down Delta’s first-half international traffic by 9.1 percent. The airline hasn’t said what routes would be affected by a 15 percent cut in overseas flying starting in September.
The number of passengers at New York’s airports on all flights, domestic and international, fell 12 percent in the first quarter, exceeding the 10 percent nationwide drop reported by the U.S. Transportation Department.
Competing in New York also exposes Delta to flight delays that can increase costs. Newark, LaGuardia and JFK ranked first, second and fourth in 2008 for the worst on-time arrival rates, according to the Transportation Department. Chicago’s O’Hare was No. 3.
While JetBlue opened an $875 million terminal at JFK in October, Delta operates from 49-year-old facilities after plans for new quarters were shelved by the Sept. 11 terrorist attacks in 2001.
Tarpaulins over some Delta counters at JFK collect rainwater from a leaky roof, said consultant Boyd. “It really is an abomination,” he said.
Talks are under way with Delta about “planning configurations and cost estimates” for new space, said John Kelly, a spokesman for the Port Authority of New York and New Jersey, which runs the region’s airports and paid for 90 percent of the JetBlue terminal.
Grimmett said Delta isn’t discussing how much it might spend at JFK beyond the $52 million in recent baggage-handling improvements and painting. Nor would she give details on the seven-year tie-ups with the Yankees and Mets.
Sponsorships such as Delta’s typically cost $1 million to $4 million annually, and the Yankees and Mets would be at “the higher end” of the range, said Bill Chipps, editor of the IEG Sponsorship Report in Chicago.
While Delta also sponsors its hometown baseball team, the Atlanta Braves, it dropped the Atlanta Falcons football team last year as it shifted attention to the Yankees and Mets.
The New York deals brought Delta the Yankees’ charter- flight business, displacing Continental, as well as 36,000 square feet of premium seating to entertain clients at the new ballparks the city’s teams opened this year.
“We were very intentional about the space we chose, that it would help us target the premium business traveler,” Grimmett said.