Delta Air Lines appears increasingly serious about building up Los Angeles, but LAX has humbled many airlines before. The opportunity is real, but so are the limits.

Delta’s LAX Ambitions Grow, But Can It Make Los Angeles Work?

Yesterday, I wrote about Delta’s plan to open a second Delta One Lounge at LAX, noting that it was not just a lounge story but a broader sign of Delta’s growing ambitions in Los Angeles.

Now we have a bit more “color” as industry analysts would say.

Aviation insider JonNYC shared the following memo about Delta’s thinking at LAX:

“Delta has a once in a generation opportunity to accelerate leadership position at LAX. American, historically the leader, stepped back in recent years. AA has shed 10 points of corporate share and has a disruptive six-year terminal renovation underway. Meanwhile, Southwest is pulling back, JetBlue has shrunk to half its former size, and Alaska is shifting its focus to San Diego.

United is the only remaining viable competitor but is limited by gate constraints and sub-par facilities for the foreseeable future.”

That is a very interesting framing, and I think much of it is correct.

American Airlines has certainly pulled back in Los Angeles, and we just saw it cut six California routes, including four LAX routes served by United Airlines. JetBlue is a shell of what it once tried to be at LAX. Southwest remains large, but is not a premium competitor (at least not yet). In California, Alaska is now more focused on San Diego than Los Angeles.

That leaves United, which as the Delta memo points out has a strong LAX operation but remains constrained by facilities and gates. United’s Los Angeles operation is useful, but just a shell of its domestic and international operation in SFO.

So yes, Delta logically sees an opening.

What Actually Works At LAX?

The hard question is not whether Delta can grow at LAX. It can.

The hard question is what kind of growth actually makes sense.

Los Angeles is one of the most important air travel markets in the world, but it is also fragmented, expensive, hypercompetitive, and difficult to dominate. Airlines have tried to “win” LAX for decades. Usually, they end up losing money and retreating to something more modest.

American tried to build a much larger international operation at LAX and failed. East Asia did not work well. South America did not work well. American had the gates, the brand, and the oneworld and joint venture partners, yet it still struggled to make the economics work.

United also has its limits. It was unable to make 2x daily London Heathrow service from LAX work, and it has been many years since United served Frankfurt from Los Angeles. While United has built an enormous transatlantic network from San Francisco, LAX remains London-only for United metal to Europe.

You have to figure that there would be more transatlantic growth if it made financial sense.

Maybe the answer for United is to leave most Europe flying from LAX to Star Alliance joint venture partners like Lufthansa, SWISS, Austrian, ITA and others. And maybe the same logic applies to Delta: let Virgin Atlantic, Air France, KLM, and other SkyTeam partners carry much of the Europe load while Delta focuses its own metal where it has a better chance of making money.

That does not mean Delta cannot or should not fly LAX – London. It appears Delta metal on LAX – LHR is coming back, and that is symbolically important. But Europe from LAX is not where I see the most obvious opportunity for Delta, though it gets the most attention.

Domestic Growth Is Where Delta Can Shine

Where I find Delta’s LAX growth more interesting is domestic.

We are already seeing this with Delta adding Los Angeles – Chicago O’Hare service on June 7. That is a major business market and a route dominated by American and United, with United especially strong on the premium side.

Will Delta stop there?

I doubt it.

American just dropped four LAX routes that United serves: Cleveland, Columbus, Pittsburgh, and Washington Dulles. I am not suggesting Delta will immediately jump into all of those markets, but this is exactly the sort of opening Delta is studying. If American is pulling back and United is the only serious competitor, Delta may decide that some of these routes are worth testing, particularly if they support corporate contracts and loyalty growth in Los Angeles.

Delta needs routes that help make LAX more relevant to local premium customers. That means business markets, high-yield leisure markets, and routes that support Delta’s growing premium proposition at the airport. A second Delta One Lounge, more Delta One-branded domestic flights, and a broader domestic network all fit together.

Delta already offers or markets domestic Delta One on routes like LAX – JFK, Boston, Atlanta, and Washington National. It would not shock me to see more expansion of that concept if the lounge infrastructure and aircraft availability support it. And yes, people will pay for that (I’m raising my hand too).

International Growth Is Trickier

Delta is also growing internationally from LAX, including Hong Kong and Manila. Those are bold moves, though they are certainly more questionable in an era of elevated oil prices.

I understand the logic. Los Angeles is a huge Asian gateway. Delta has lost relevance in much of the Pacific over the years, and LAX gives it a chance to rebuild some of that presence. With Seattle increasingly contested by Alaska and its partners, Delta may see LAX as the better long-term West Coast growth platform (or it may grow in both places as it takes more aircraft deliveries…that remains to be seen).

But longhaul international growth is difficult in the current fuel environment. It is even harder when foreign competitors often have lower cost structures and stronger local brand loyalty.

A route like LAX – Hong Kong may be strategically useful, but will it be profitable? Delta can afford to take some strategic swings, but Los Angeles has a long history of punishing airlines that try to grow too aggressively.

CONCLUSION

Delta clearly sees a major opportunity at LAX. American has pulled back, JetBlue has shrunk, Southwest is not a premium threat, Alaska is focused elsewhere, and United is constrained. That gives Delta room to grow.

But LAX is not easy. American tried and failed to make a much bigger LAX international gateway work. United has built a huge transatlantic network at SFO, but not at LAX. The economics of Los Angeles can be brutal.

I think Delta’s best opportunity may be less about trying to dominate every longhaul market and more about building a stronger premium domestic and selective international network around Los Angeles. More Delta One routes, stronger business markets, and better lounges make sense. Asia is another story…

Can Delta make LAX work where others have struggled?

Maybe.

But LAX has a way of humbling airlines that believe the opportunity is “too good to pass up.”

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