Delta provides a renewed focus for San Jose's Mineta International as passenger growth continues despite recent long haul route cuts

24 June, 2019

Even though Lufthansa and Air China ended long haul flights from San Jose Mineta International in 2018, the airport still posted record passenger growth for the year, and its prospects still remain solid now that Delta Air Lines has declared the San Jose, California, region as one of its newer focus cities.

Despite its stature as one of the fastest growing medium sized US airports (based on annual departing seats of three million to 20 million), San Jose experienced setbacks in 2018 when Lufthansa ended flights to Frankfurt and Air China opted to cut its service to Shanghai.

Both routes had started in 2016, and Lufthansa opted to end service after concluding that it could not rationalise the cost of the route’s commercial viability. The German flag carrier also operates service to Frankfurt from San Francisco International, which is 78km from San Jose and a hub for its trans-Atlantic joint venture partner United Airlines. Previously, the news outlet SFGate had pointed out that the end of subsidies to Lufthansa and the termination of its flights from San Jose happened almost simultaneously.

The main reason for Air China’s suspension was the reduced number of Boeing 787s in its fleet due to aircraft maintenance as a result of issues with the Rolls-Royce Trent 1000 engines that power those aircraft. But its subsidies on the route also ended around the same time and the airline decided to cut its services.

Those cuts were no doubt a setback for the airport, but it does still maintain long haul British Airways flights to London Heathrow, trans-Pacific flights by ANA to Tokyo, and a Hainan Airlines flight to Beijing.

CHART - San Jose's Mineta International airport recorded double-digit year-on-year traffic growth of 10.2%, 15.6% and 14.7% in 2016, 2017, 2018; this has slowed across the first months of 2019, but is still a healthy 9.5%Source: CAPA - Centre for Aviation and San Jose Mineta International reports

San Jose recently won a designation by Delta as a focus city for the airline, joining Austin Bergstrom International and Nashville International as new airports attaining that status from the company. Raleigh Durham and its former hub in Cincinnati are also focus cities for the carrier and it has also recently upgraded Boston from a focus city to a hub.

The criteria for Delta determining which region attains focus city status could be open to interpretation. But one common theme among San Jose, Raleigh, Austin and Nashville is each area’s status as a growing technological hub. Since 2013 the number of tech jobs in the Nashville region had grown by approximately 30%, and Raleigh and Austin’s status as growing tech hubs is well established.

In the past, Delta had stated that Raleigh was a prime candidate for being designated as a focus city due to its accelerating growth rate and strong economy, fuelled by the technology and biotechnology industries. The airline also noted that no airline in Raleigh has more than a 15% market share.

Analysis by CAPA - Centre for Aviation of OAG schedule data shows that Southwest Airlines is San Jose’s largest airline measured by ASK deployment, followed by Alaska Air Lines. Delta currently holds third place position.

CHART - Southwest Airline sis the largest operator at Mineta International airport in San Jose with a third share of ASKs; Delta Air Lines is the third largest carrier with a 12.2% share of ASKsSource: CAPA - Centre for Aviation and OAG (data: w/c 17-Jun-2019)

It would seem logical that Delta is evaluating potential service to some of its other tech-centric focus cities from San Jose. The airport’s largest airline, Southwest, just recently launched daily year-round flights to Nashville and once weekly seasonal fights to Raleigh. Southwest also operates services from San Jose to Austin.

Delta is likely examining whether it can secure key corporate contracts in those markets while offering customers one-stop connections to a global network that is far more robust than those of San Jose’s largest airlines.

There are no indications that Delta has any plans for long haul service from San Jose now that the region has gained focus city status. The airline will take care to ensure that it does not diminish its trans-Pacific gateway in Seattle, but it has added long haul flights from Raleigh to Paris, a hub for its JV partner Air France-KLM.

But this example aside, It is by no means a foregone conclusion that Delta will add any long haul flights from San Jose; it doesn’t offer intercontinental flights from Nashville or Austin. And for now, the likely focus is to bolster its domestic presence.