NEW YORK — On the eve of inaugurating its new $1.4 billion Terminal 4 at John F. Kennedy Airport in this major eastern seaboard travel hub, Delta Air Lines CEO Richard Anderson said in doing so, the airline is placing the “last piece of the puzzle” in becoming a “preeminent carrier” in combination with its industry business partners.
“This is a watershed event for Delta. Terminal 4 is a very major step forward for Delta. It’s a $1.4 billion investment. It is the largest international terminal in the United States, in the largest international airport in the United States,” he said Thursday, referring to the event that he said marks a critical turning point for the carrier.
The T4 facility offers service to 100 cities worldwide, has around 100 check-in kiosk capabilities throughout the facility and has an arrival hall that can handle 3,000 passengers per hour, among other features.
Delta, the Port Authority of New York and New Jersey and Schiphol Group financed the T4 expansion project jointly. Earlier this year, the carrier announced it would continue expansion at JFK with a $175 million project that will add 11 gates and 75,000 square feet to T4’s Concourse B.
The inauguration of the new JFK terminal is one of several events on the company’s checklist, which also includes wrapping up the purchase of a 49 percent stake in Virgin Atlantic from Singapore Airlines announced late last year. That transaction is expected to clear all legal regulatory hurdles by the third quarter, when Delta will reportedly become the second-largest carrier in the world, Anderson said.
During a news conference held for members of the media flown into New York from around the globe to witness today’s inauguration of the T4 facility, Anderson fielded questions about nearly every market the carrier serves, including San Juan, where it has had a presence since Jan. 10, 1953.
Specifically, Anderson was pressed about the recent management change at the Luis Muñoz Marín International Airport, which is now being run by Aerostar Airport Holdings.
“San Juan is a very important city for Delta, it’s a very good place to do business,” Anderson said. “The privatization of the airport has not had any effect on our plans for the airport, but it has been good and we were involved in the process.”
Nicolás Ferri, vice president of the Latin America and Caribbean region for Delta Air Lines, said later in the day that the carrier has always had a good relationship with LMM’s operators, so the expectation remains the same.
“For us, this [the management change] has not been a major event. These things happen and we have very good relationships with all of the operators. We consider ourselves good business partners,” said Ferri. “We were part of that process, supported it when we were called to do so, and gave our opinion when it was necessary. But the truth is that service at the San Juan airport has always been good for us.”
The NY-PR-LatAm connection
Puerto Rico plays a vital role in Delta’s success in the New York market, home to nearly 900,000 people of Puerto Rican descent, a full 27 percent of the Latino population living in this city.
In May 2012, Delta tripled the number of flights it operates between JFK and San Juan, which coupled with the routes to Atlanta, pushes the total number to 56 weekly flights out of LMM.
This summer, a fourth daily flight between JFK and San Juan will further expand options for Delta’s customers, who will also benefit from increased international access through the T4 facility.
“Delta has had significant build up from JFK to Latin America and the Caribbean and we should continue that investment. Those regions are quite strong and quite robust in terms of economic growth and tourists,” Anderson said.
Delta’s capacity in the region has more than doubled since 2003, from 7.1 billion available seat miles in 2003 to 17 billion in 2012. Meanwhile, passenger revenue grew from $600,000 in 2003 to $1.8 billion in 2012, Ferri noted.
“We’re expecting a 7 percent growth in capacity this year for the Latin American market,” Ferri told reporters.
This year, the carrier is marking its 15th anniversary of nonstop service between the United States and Costa Rica, El Salvador, Guatemala, Panama, Peru and Venezuela.
Building on partnerships
Aside from its impending deal with Virgin Atlantic, Delta is also looking to cement its partnership agreements with other carriers worldwide, including Air France, KLM, GOL in Brazil and Aeromexico in Mexico, to keep the rhythm going on its global network expansion.
Delta’s business relationships could potentially open the door for new routes to Puerto Rico, something Gov. Alejandro García-Padilla’s is actively pursuing in countries like Brazil and Mexico.
“We would look forward to cooperating with the government of Puerto Rico and our partners at GOL and Mexico in expanding our service to Puerto Rico,” Anderson said.
Refinery fuels bottom line
In speaking with reporters, Anderson also discussed the benefit the carrier has reaped from its acquisition last year of a refinery complex from Phillips 66 located south of Philadelphia, for $150 million.
Through its subsidiary Monroe Energy LLC, Delta has gained access to pipelines and transportation assets to deliver jet fuel to its operations throughout the Northeast, including its hubs at LaGuardia and JFK. Delta buys 3 million gallons of jet fuel per year and spends $12 billion on it.
The refinery is now providing 80 percent of the fuel used for the U.S. operation, gaining the ability to push prices below diesel prices, Anderson said.
“This modest investment, the equivalent of the list price of a new widebody aircraft, will allow Delta to reduce its fuel expense by $300 million annually and ensure jet fuel availability in the Northeast,” Anderson said upon announcing the deal. “This strategy is aligned with the moves we have made to build a stronger airline for our shareholders, employees and customers.”