Airlines are fighting for the 1pc at LAX
U.S. airlines would love to get their hands on passengers like Danielle Claman Gelber.
The television producer flies an average of about once a month from Los Angeles to New York and other points East and for now is loyal to one carrier: American Airlines. She gushes about the amenities and the service in American's unique first-class cabin. But every time she checks her bags at LAX, American's rivals get a chance to woo her away.
Airlines are fighting for business at Los Angeles International, the largest destination airport in the U.S., renowned for wealthy, celebrity passengers paying full fare and the highly lucrative New York-to-L.A. route. LAX is one of a handful of major U.S. airports where no one carrier dominates -- each of the four biggest airlines now holds market share between 14 percent and 18 percent. At Hartsfield-Jackson Atlanta International, by contrast, Delta Air Lines Inc. claims 74 percent of passengers.
To court the most desirable passengers, the airlines have been rolling out amenity-laden cross-country flights, lie-flat business-class seats, vented compartments that can house a pet and a slew of more flights. Delta runs special flights to woo the Hollywood crowd. Up next are fancy new terminals: Delta, United Airlines and Southwest Airlines Co. are spending more than $1.3 billion renovating facilities there.
"L.A. is very attractive real estate," said Stephen Van Beek, vice president of aviation consultant ICF International. "It's the latest competitive battle on the West Coast and we're still figuring out who the winners and losers are going to be and how they try to carve up those markets." The stakes shouldn't be underestimated. Flights between L.A. and New York's Kennedy will produce almost $1 billion in revenue this year, more than any single route in the U.S., according to the U.S. Bureau of Transportation Statistics.
LAX is the second-largest U.S. airport in terms of passen- gers, behind only Atlanta, according to Airports Council International. It's the largest in terms of people who start or end their trip there, as opposed to connecting to another flight.
Nearly 70.7 million travelers moved through LAX last year, a 6 percent increase from 2013 and a record. More than 19 million were on international flights, also a record. And good news for the airlines: Despite the stepped-up competition, ticket prices are generally holding steady or even rising, according to data from OAG, an aviation research company.
"It's important because it's one of the largest generators of corporate traffic," Andrew Nocella, American's chief marketing officer, said of LAX. "It pulls more than its weight in terms of the quality of revenue it contributes to the system."
The flight that Gelber, an executive vice president for Wolf Films, took is part of American's exercise in pampering customers on the L.A. to New York route. "It's beautiful; it's exquisite; it's incredible," Gelber said of American Airlines' first- class cabins. Last year the carrier gambled on adding a first-class cabin on 17 planes flown on two transcontinental routes including L.A. to New York. The aircraft are the only ones for U.S. flights with three cabins, for first, business and coach.
Delta runs invitation-only flights to special events, such as the South by Southwest festival in Austin, Texas, and the Sundance Film Festival in Utah. "It is a critical market for Delta to be in, and for us to earn customer preference in," said Ranjan Goswami, Delta's vice president for sales on the West Coast. Along with posh services like private check-in, airlines are also adding new destinations from LAX or increasing the frequencies of existing routes. Delta departures are up 17 percent from a year earlier, while American's have risen 7.6 percent and Southwest's, 2.5 percent. United's departures have slipped 20 percent as it replaced some smaller planes with fewer, larger ones.