As Profits Soar, Delta Plans International Flight Cuts
As the dollar continues to soar against foreign currencies and the price of oil continues to slump, Delta Air Lines has announced it is significantly scaling back its international network during the fourth quarter of 2015. Certain regions will be impacted more than others, with some areas being cut by as much as 20% and other markets being discontinued altogether.
Amid the imminent route cuts, Delta was able to beat its revenue forecast, posting a profit of $594 million. The fact that Delta's international network makes up about 30% of revenue for the company and the dollar nearly reaching a 12-year high against the euro earlier this week are two significant challenges for Delta with impacts lasting indefinitely. For American travelers, this means that certain countries are now a great value compared to years past. Let's take a look at some of the potential regions and routes that could be affected by the current macroeconomic climate.
Delta currently flies 5 times weekly from JFK to Moscow's Sheremetyevo International Airport on a Boeing 767-400, but given the strength of the dollar, Delta will be cutting service entirely for the winter.
The strong dollar has negatively impacted demand in the Asian market — especially in Japan, where Delta maintains a significant international connecting hub. Delta has stated that it expects to cut Japanese service by roughly 15-20% in the coming months. With such a large portion of service to be cut, expect a mix of both US and intra-Asian service to suffer reductions as well. With numerous Asian destinations served solely via the Tokyo hub, it's quite possible that some of these destinations will lose Delta service completely.
Africa, Indian, and the Middle East
After recently announcing the discontinuation of service between Amsterdam and New Delhi, Delta will no longer serve any destinations in India — one of the largest air transport markets in the world. The airline has stated numerous times that it is no longer competitive in the region because of the increased presence of Gulf carriers and the negative impacts of the strong dollar.
The oil-rich country of Nigeria may soon see decreased service from Delta as well. The volatile global oil market coupled by United Airlines' presence on its Houston-Lagos route has caused a drop in demand for Delta's Atlanta-Lagos service, which was once the only scheduled service between Nigeria and the US. Expect to see either a capacity decrease or schedule reduction on this route by year's end. Although no official announcements have been made just yet regarding service cuts, expect to also see some changes with the airlines' Atlanta-Dubai and Atlanta-Johannesburg flights in the coming months.
What are your thoughts about the impending cuts to Delta's international service?