- Merger with Continental has hurt United's focus, analyst says
- Growth overseas has helped boost Delta's traffic figures
Delta Air Lines Inc. passed United Continental Holdings Inc. to become the second-largest airline in the U.S., topping its rival for the first time since a series of mergers transformed the industry landscape.
Delta now sits behind only American Airlines Group Inc. as the country’s biggest carrier by traffic, a common gauge of carrier size, according to the airlines. Some of Delta’s gain may be chalked up to challenges United in its merger with Continental Airlines, said Adam Hackel, an associate analyst at Sterne Agee CRT.
“The reality is, Delta offers better service and a better product than United,” Hackel said. “My first thought was people probably prefer to fly Delta now.”
United recorded 208.6 billion revenue passenger miles, an industry yardstick of traffic that multiplies the number of passengers by the distance flown, the company said in a statement Monday. Delta recorded 209.6 billion revenue passenger miles in 2015, the Atlanta-based carrier said last week.
Airline traffic is a common way to measure size. Others include revenue and passenger count.
United also said that revenue from each seat flown a mile, a key measurement of airlines, fell more than anticipated in the fourth quarter. The unit revenue dropped by as much as 6.25 percent, more than the previous projection of no more than 6 percent.
American hasn’t released its traffic for December or all of 2015, although it appeared poised to keep its lead. Through November, the airline had recorded 204.7 billion revenue passenger miles.
Representatives for United and Delta didn’t immediately respond to requests for comment.
Delta’s growth at home and abroad in such places as Brazil may have given it an edge over United, Raymond James Financial analyst Savanthi Syth said in September as Delta was gaining ground. Since traffic is calculated with flight distance, growth overseas can bump up an airline’s standing, she said.
While United recorded gains in on-time performance last year, the carrier continues to grapple with the aftermath of its 2010 merger with Continental, Hackel said. The new airline has faced several computer glitches that grounded flights and contended with persistent labor hurdles, such as failing to bring flight attendants of the separate carriers under a single contract.
United has wanted to expand in China and elsewhere but is “still not in a position to do that,” he said. Delta’s smooth merger with Northwest Airlines in 2008, by contrast, probably allowed it to build a new hub for Asian flights in Seattle, he said.