Delta Is Soaking up ‘Spillover Demand’ From 737 MAX Operators
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
Delta Air Lines is benefitting from the grounding of the Boeing 737 MAX, picking up unmet demand at competitors by accelerating its own growth, says one Wall Street analyst.
The Atlanta-based carrier is growing capacity faster than its 3% target for the year due to a “uptick in demand as a result of the grounding of the 737 MAX,” says Cowen analyst Helane Becker in a report today.
“Delta is benefiting from artificially low capacity growth and spillover demand from competitors impacted by the grounding of the MAX,” she says.
The airline grew capacity by 4.3% year-over-year in the first half, and is expected to grow another 3.9% in the second half – numbers that could put its annual increase above 4% – according to Diio by Cirium schedules data.
MAX operators American Airlines, Southwest Airlines and United Airlines have all dialed back 2019 growth plans due to the grounding of Boeing’s troubled aircraft. American has cut its expected capacity increase by half a point, to about 2.5%. Southwest has trimmed its capacity growth by up to two points to 2-3%, and United by a full point to 4-5%.
American and Southwest have both temporarily suspended routes due to the grounding. These moves are in addition to the thousands of flights already removed from their schedules as they grapple with the ground of the MAX.
Southwest has removed the 737 MAX from its schedules through Oct. 1, but executives have said they will likely be extended. American and United have both removed the aircraft from schedules through early September.
Regulators have yet to say when they expect the 737 MAX to return to the skies. European officials have reportedly found issues with the aircraft’s autopilot system, potentially adding to the list of items Boeing must correct before the MAX is re-certified.
Delta continues to take delivery of new Airbus and Boeing aircraft, including the new Airbus A220 and its last Boeing 737-900ER. The airline had nine A220s on property at the end of March, a type that it is using to expand at some of its coastal hubs and focus cities.
Delta declined to comment on the Cowen report.
Featured image courtesy of Delta Air Lines.
Welcome to The Points Guy!
Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new card in the first three months of card membership. Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants in the first three months of card membership.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Earn 50,000 Bonus Miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new Card in your first 3 months.
- Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants with your card within the first 3 months of membership.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees