FROM LOS ANGELES, a flight to New York is sometimes cheaper these days than a flight to Chicago, even though it's 2½ hours longer. From Boston, you can fly 2,611 miles to Los Angeles cheaper than 91 miles to Nantucket. Flying coast-to-coast nonstop has rarely been cheaper. Airlines are embroiled in a fare war, with the number of seats on transcontinental routes at an all-time high.
Between Los Angeles and either New York or Boston, several airlines have $317 round-trip fares on June travel dates. Some tickets drop as low as $295 round trip. That's in peak summer season. United, Delta, American, JetBlue and Alaska are battling for market share, mostly from California cities to New York. The fight isn't just in the coach cabin: They're offering deep discounts in premium cabins, too.
Up front, four of the five big carriers offer lie-flat beds, and those seats sometimes go for as low as $1,200 round trip. The same seat to London from New York—a route a bit longer than New York-Los Angeles—could cost at least five times as much.
“It's far more competitive today than it was five years ago and 10 years ago,” says Andrew Nocella, United's chief commercial officer. Coast-to-coast routes are some of the most heavily traveled in the world, attracting premium cabins full of investment bankers, media executives and celebrities. These routes are key to winning contracts from big corporations and loyalty from frequent fliers.
“The amount of business-class demand between New York and Los Angeles is not two or three times as big as the next route, it's 14 or 15 times as big,” says Vasu Raja, American's vice president of planning. Airlines lavish these routes, especially New York-L.A., with the nicest aircraft, the newest products and the best meals. Carriers figure happy coast-to-coast customers stay loyal for trips elsewhere.
Airlines began pumping in more seats last year and had to reduce prices to fill them. These fare wars have hurt profits. “The pricing environment in the transcon market, specifically New York to California, was very bad” for Alaska Airlines and others in the first quarter, says Andrew Harrison, the airline's chief commercial officer. Fares for trips booked seven days or closer to departure fell by 50% for coach seats, he says. “It's not sustainable.” What's bad for airlines is a bonanza for travelers, though airlines say pricing crept back up in recent weeks as the busy summer season approaches.
JetBlue says it also took a hit on first-quarter earnings over coast-to-coast flights. Prices have rebounded some, but the airline is also embroiled in a premium-seat war with American and Delta at New York's Kennedy Airport. “I think it's going to be a very good summer for customers to fly,'' says Marty St. George, JetBlue's chief commercial officer. “There are definitely bargains out there.”
The battle intensified last fall when United shifted its strategy and brought new 787-10 Dreamliners to flights between Newark, N.J., and both Los Angeles and San Francisco. That's on top of service on single-aisle Boeing 757s specially configured with lots of premium seats.
The number of seats United flies each week between Los Angeles and Newark jumped nearly 17% this month compared with May 2018, according to consulting firm Oliver Wyman's PlaneStats database. San Francisco-Newark is up nearly 24%.
Others have added more seats of their own, primarily for New York-Los Angeles. JetBlue's seat count is up nearly 16% in that market and Delta 12%, according to PlaneStats. Delta will go to a schedule of all wide-body 767s at the end of October. ”We are doubling down,” says Scott Santoro, Delta's vice president for Los Angeles.
The number of seats flying across the country in the third quarter last year between Boston, the New York City area and the Washington, D.C., area and airports in the Los Angeles, San Francisco and Seattle areas increased 5% from the same period a year before, according to Oliver Wyman. The total was the highest ever in Oliver Wyman's database, which goes back to 1991.
A postmerger Alaska Airlines risks losing the most from this free-for-all.
United believed some of its customers were going to Delta, American and JetBlue for lie-flat seats because United didn't have enough premium seats. “We were accidentally spilling premium traffic off our aircraft and under-sizing who we were in New York,” United's Mr. Nocella says, “and we decided to stop that.”
Alaska risks losing the most from this free-for-all. It's a hard time for the airline, which acquired Virgin America and its extensive coast-to-coast operation, to be in transition. It's replacing the interiors on aircraft and switching flights from older Virgin America Airbus planes to Boeing 737-900s with twice as many first class seats as the eight Virgin America had.
Alaska also moved a couple of trips a day between New York and Los Angeles to flights between New York and Seattle, its home. The number of seats flown by Alaska from Los Angeles to Newark and JFK each week this month is down 4.5% compared with May 2018, according to PlaneStats. But Seattle-New York is up 47.5%. Alaska's not retreating, just regrouping “while we get our brand and our product right in California,” Mr. Harrison says. It plans to finish its makeover by early 2020.
Coast-to-coast flights account for a full 25% of the airline's capacity, according to Macquarie Research. Other airlines think Alaska is at a disadvantage because it doesn't offer lie-flat beds in first class. Alaska thinks it can carve a niche offering an old-style first-class seat at a cheaper price. “Not everyone wants to fly lie-flat and pay $1,200 to $3,000 each way,” Mr. Harrison says.
He adds that airplanes filled with lie-flat beds may be more of a liability in a recession if businesses cut spending and force travelers back to coach. Other airlines say demand for lie-flat beds on long domestic routes continues to grow significantly. JetBlue now flies its Mint business-class cabin to Seattle and San Diego from New York. It also offers Mint from Boston to Los Angeles, San Francisco, San Diego and Seattle.
American developed a unique plane for its transcon service—a narrow-body A321 with only 102 seats, about half of what the plane could hold. The plane has 10 first class suites, 20 lie-flat business class beds, 36 extra-legroom coach seats and 36 regular coach seats.
American, the world's largest airline, has the fewest seats between New York and either Los Angeles and San Francisco of the five airlines on those routes. It also has the highest average fare. Now American is experimenting with wide-body planes on trips between Los Angeles and Miami, where lots of travelers connect to Latin America.
Transcontinental markets have grown more competitive for airlines, yielding more seats and lower fares for passengers.
Change inweekly seats for the Los Angeles-New York route in May from a year ago
BY SCOTT McCARTNEY