July 26 (Bloomberg) -- For New York business travelers bound for Chicago, there’s a new shuttle in town.
Opening another front in the competition for high-fare corporate passengers, Delta Air Lines Inc. is operating hourly flights between New York and Chicago, courting consumers by offering three times the usual number of frequent-flier miles.
The jockeying adds a Midwest leg to the East Coast shuttle flights from New York to Boston and Washington. Delta began its service in June after shifting operations to O’Hare airport from Chicago’s Midway, putting the world’s largest carrier in a head-to-head matchup with American Airlines and United Airlines.
“Chicago is one of the most important routes from New York, and Delta’s primary target is to steal people from American,” said Brett Snyder, a former United and America West Airlines manager who runs the CrankyFlier blog and works as a consultant. “American responded with the triple points because they don’t want even one single flier to switch to Delta.”
Airlines prize business travelers because last-minute fliers pay the highest fares. On AMR Corp.’s American, a walk-up round-trip ticket from its O’Hare hub to New York’s LaGuardia airport tomorrow may run $449, according to the carrier’s website. That ticket bought a month in advance is $178.
Hourly frequencies mean more choices for passengers flying between O’Hare, the second-busiest U.S. airport, and LaGuardia, New York’s largest airport for domestic travel. Delta has 11 daily flights, compared with 17 for American and 18 for UAL Corp.’s United, which is based in Chicago.
“I can literally show up a half-hour before and get on that plane,” said Jack Ablin, chief investment officer at Chicago’s Harris Private Bank, which oversees $55 billion. “I like the convenience of being able to change my schedule with impunity.”
New York is the nation’s busiest aviation market, and O’Hare and LaGuardia are each other’s top destination by domestic passengers, according to the Bureau of Transportation Statistics. Customers spurred Delta’s shift to the larger Chicago airport from Midway, said Kent Landers, a spokesman for the Atlanta-based airline.
“They preferred O’Hare,” Landers said. “It’s about delivering the top business markets for New York, and Chicago is one of them.”
Delta offered the triple-points promotion to “increase awareness” of the new Chicago service, Landers said. Fliers can earn 4,400 miles for a New York-Chicago round trip through August. The usual total is about 1,470.
United matched the offer, and Fort Worth, Texas-based American began a similar promotion 16 days later.
“It’s mission critical that you’re competitive on all fronts -- price, mileage programs, services, frequencies,” Jim Carter, vice president of American’s Eastern sales division, said in an interview. “We obviously feel very strongly about our investment in this market between New York and Chicago. Chicago has always been a very critical market for us.”
American and United spotlight their more-frequent flights and their use of Boeing Co. MD-80 and Airbus SAS A319 jets, respectively, which have 120 or more seats. Delta’s Embraer ERJ-175 regional jets carry 76 passengers and have less bin space.
“We compete vigorously in the Chicago-to-New York market,” said Michael Trevino, a spokesman for United, which is merging with Continental Airlines Inc., the operator of a hub at New Jersey’s Newark Liberty airport.
East Coast Shuttle
Shuttle flights on the Washington-New York-Boston axis date to the 1960s, when Pan American World Airways and Eastern Airlines began hourly service. Delta bought the Pan Am routes about 20 years ago, and US Airways Group Inc. acquired Eastern’s shuttle around the same time.
Delta uses its Delta Shuttle unit for the Chicago service, offering perks found on East Coast trips such as free morning coffee, bagels and newspapers, and wine, beer and snacks in the evening. American and United both have hourly service between Chicago and New York without differentiating the flights by serving free food and alcohol in coach as Delta does.
Adding O’Hare to Delta’s shuttle operation is a “smart move” because travel demand is reviving, said CrankyFlier’s Snyder, who is based in Long Beach, California.
Airlines are regaining the pricing power they lost during the recession. Domestic yields, or average fare per mile, rose each month this year through June after falling every month in 2009, according to the Air Transport Association trade group.
“The shuttle service is at the whims of the economy and business travelers,” Snyder said. “It can be a real moneymaker when things are looking up.”
Ablin, 55, the Chicago banker, flies to New York every six weeks on American using an American AAirpass card, which works like a debit account and deducts the fare for each flight. Buying last-minute tickets lets him avoid fees to change flights, and he has elite frequent-flier status that often earns him first-class upgrades.
He said he would consider using Delta or United if American’s New York-Chicago flights were full or if the others would honor the airline’s AAdvantage loyalty program.
“I don’t want to end up in the middle seat all the way in back of the plane, paying for trail mix,” Ablin said.
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