The price MSP travelers pay for Delta's dominance
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Delta raised some eyebrows among savvy travelers this week for charging $699 to fly one-way from Minneapolis/St. Paul International to Atlanta — in basic economy!
Why it matters: It's an extreme example of what Minnesota-based travel analyst Kyle Potter calls the "hub penalty" that travelers pay for Delta's dominance at MSP.
The big picture: MSP benefits from hosting a Delta hub. It's much easier to fly nonstop or internationally. Delta helps fund upgrades that make it North America's top-rated airport, including paying for one-quarter of the recently completed $242 million terminal renovation.
- Even the airport's stellar snow removal record is in part due to Delta's presence, said Potter, who edits the flight news and deals site Thrifty Traveler.
But Delta's near-monopoly at MSP has also meant higher prices.
By the numbers: Since 2019, the average ticket from MSP has generally run about $15-20 above the national average, according to federal data on domestic fares.
- Travelers in Salt Lake City, Atlanta and Detroit — where Delta is also effectively the only game in town — pay similar markups, Potter noted.
The other side: "There are no penalties associated with hub status," a Delta spokesperson wrote to Axios.
Yes, but: Competition reduces fares, Potter said.
- At MSP, Delta has "loyal customers who are willing to pay more to fly their favorite airline — and if they don't have that, they have a captive audience that doesn't have a realistic alternative," Potter told Axios.
Case in point: The $699 MSP-ATL fare, which Potter spotted on Reddit.
- Commenters noted travelers could drive to Fargo, North Dakota, and fly to MSP to catch the same Atlanta connection for less than half the price.
The intrigue: The unusual fare comes in the same month that low-cost carrier Spirit Airlines, which ran the only other regular daily Atlanta flight, pulled out of MSP.
- The same route on Delta cost $330 on average last spring, according to federal data (and $100 on Spirit).
What they're saying: Delta says the airline can't comment on specific fares, but noted "fares are influenced by a variety of factors that help cover operating costs, including supply and demand dynamics, fuel costs and competitive positioning."
Plus: Jeff Lea, a spokesperson for the Metropolitan Airports Commission, said MSP has a program that "actively recruits air service from a variety of airline operators" to add new routes and flights.
Between the lines: As recently as two years ago, an ascendant Sun Country Airlines looked poised to challenge Delta at MSP, Potter said.
- Around the same time, Delta lowered basic economy fares on routes where it competed with Sun Country — which Potter interpreted as an unspoken message to the smaller airline: "Look, guys, we can play this game all day, and we are going to defend our turf. It's time to get realistic."
State of play: Sun Country remains important to MSP, but it also isn't currently a threat to Delta's market share, Potter said.
- The Eagan-based airline has recently pivoted to delivering packages for Amazon — and making a profit doing it.