AirTran under Pressure from Delta

[Eagle757shark]

AirTran under pressure from Delta

posted by Jason Garcia on Oct 13, 2008 10:10:01 AM
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AirTran Airways is facing growing competition from arch-rival Delta Air Lines, as Delta tries to use the slumping economy to squeeze the smaller AirTran, according to an industry report out today.
A review of airline schedules by the stock-research firm Credit Suisse finds that Delta is scheduling more flights on AirTran routes out of Atlanta, where both airlines have hubs. The review finds that Delta has scheduled a 10 percent year-over capacity increase in markets where it competes with AirTran during the first quarter of next year, compared to only a 4.4 percent increase in non-AirTran markets.
"It is becoming increasingly evident that Delta has identified the worsening macro backdrop as an opportunity to crack down on" AirTran, Credit Suisse analysts Daniel McKenzie and Bryan Brokmeier write in a note to investors. The intensified competition will make it harder for Orlando-based AirTran to boost revenue by raising fares and fees, they write.
Credit Suisse had previously said AirTran was well-positioned to benefit from domestic capacity cuts by other airlines, as the low-cost carrier can make money on routes that legacy airlines deem unprofitable. "However, we now need to see competitive pressure from [Delta] ease to become more comfortable" with AirTran's ability to increase revenue in a poor economy.
AirTran is scheduled to report its third-quarter financial results Oct. 23.

 

[filejw]

Lets see, Anderson, NWA, um wonder where that idea came from....

 

[another cfii]

Rather see lots of Citrus than a little bit of Luv in ATL

 

[ACL65PILOT]

Yes, DAL and the new team are done giving away markets. Expect that to go in to full force in the next six month.

 

[ACL65PILOT]

I agree. I do not think that DAL will kill them, just bother them.

 

[NuGuy]

I agree. I do not think that DAL will kill them, just bother them.

Agreed. They want what Spirit is in DTW, and what Sun Country was in MSP.

Nu

 

[fool737700]

Rather see lots of Citrus than a little bit of Luv in ATL

You will see a lot of LUV there someday!!!!

 

[Noserider76]

You will see a lot of LUV there someday!!!!

Thanks Mr. Kelly. That's no problem. If they can find some gates they can battle it out with Airtran to see who has the lowest cost structure, or buy them and let Delta compete with a higher cost company.

 

[ACL65PILOT]

Only if they can acquire AAI the way they want to, That would be for DAL to bring them to CH11 in the next year or so, and then snatch them up in a fire sale.

 

[Scope out RJ's]

You will see a lot of LUV there someday!!!!

Said the southwest737700fool!:laugh:

 

[Eagle757shark]

Thanks Mr. Kelly. That's no problem. If they can find some gates they can battle it out with Airtran to see who has the lowest cost structure, or buy them and let Delta compete with a higher cost company.

If Southwest wants a few gates to come into Atlanta, they will get them. They don't need AirTran to come into Atlanta. Right now AirTran and Delta should be glad Southwest is more interested in Denver. But I imagine as a way to fulfill their route network they will eventually make a move into Atlanta. They only need a few gates to get things started. By the way, that new international terminal that is being built will eventually open up many more gates in Atlanta in a few years. Next time you taxi out, notice that the taxiways near the tower are closed. That is because they are extending the train to prepare for the new terminal.

 

[ACL65PILOT]

No Kidding...

 

[stall022]

Thanks Mr. Kelly. That's no problem. If they can find some gates they can battle it out with Airtran to see who has the lowest cost structure, or buy them and let Delta compete with a higher cost company.

Don't be so sure about no gates, 2011 is just around the corner. I would bet that Southwest already has a bid in for gate space.

If that's not enough space, there is also a new 31 gate "South Gate Terminal" being build between rwy 10/28 and 9/27

http://www.manhattanconstruction.com/projects/wip/atlanta/mhj_international_terminal_full.htm


http://atlanta.bizjournals.com/atlanta/stories/2008/03/03/daily8.html

The Atlanta City Council on Monday unanimously approved a construction budget of $1.2 billion with a contingency reserve fund of $168 million to build the new international terminal at Hartsfield-Jackson Atlanta International Airport.

The Maynard Holbrook Jackson Jr. International Terminal was designed by Atlanta Gateway Designers, a joint venture between Gresham, Smith & Partners and Duckett Design. Located on the east side of the existing facilities, the new terminal will be constructed by the Holder Construction Group LLC, Manhattan Construction Co., C. D. Moody Construction Co. and Hunt Construction Group Inc. Construction is expected to be completed by 2011.

The 1.2 million-square-foot international terminal will have 12 new international gates (16 domestic) and a 1,100-space parking facility when finished in 2011. Hartsfield-Jackson will have a total of 40 international gates when the new terminal comes online.
The new terminal also eliminates the baggage recheck process. Currently, international passengers must claim their luggage, go through U.S. Customs, recheck their luggage and then reclaim it once again. The new terminal will allow international passengers to exit the existing building directly into a general meeting area.

In a traffic twist, the first terminal access to Hartsfield-Jackson via Interstate 75, the east side of the airport, is part of the plan. It will link up with the main terminal at Concourse E via underground train. The new international terminal will also have a two-level roadway system and curb front to separate departing and arriving vehicle traffic.

Last year, more than 9 million international travelers came through Hartsfield-Jackson. But more than 13 million international passengers are expected to come through the Maynard Jackson International Terminal by 2015.

 

[Noserider76]

If Southwest wants a few gates to come into Atlanta, they will get them. They don't need AirTran to come into Atlanta. Right now AirTran and Delta should be glad Southwest is more interested in Denver. But I imagine as a way to fulfill their route network they will eventually make a move into Atlanta. They only need a few gates to get things started. By the way, that new international terminal that is being built will eventually open up many more gates in Atlanta in a few years. Next time you taxi out, notice that the taxiways near the tower are closed. That is because they are extending the train to prepare for the new terminal.

I never had any doubt they would come to ATL sooner or later. I expect them to be in every large city eventually. I don't think it will be a problem at all for Delta as they've been competing with SWA successfully for years. From what I've read the large majority of the recent city pairs they've added have been money losers. I'm sure they're looking at options to try and change that.

In my opinion it's also only a matter of time before SWA starts international operations. The big carriers on the other hand are running much leaner than a few years ago (Exhibit A - my piddly paycheck) and won't be easy to push around like US Air of the late 90s. The fact is Delta will have to be able to compete with everyone, everywhere, all the time if they want to be consistently successful over the long run.

 

[ACL65PILOT]

If they come to ATL it will be after AAI's demise or it will be the demise of AAI. There is no way that two LLC can compete for that market share in and out of ATL.

 

[ngsp]

aai and luv both do really well out of bwi.

 

[zman]

If they come to ATL it will be after AAI's demise or it will be the demise of AAI. There is no way that two LLC can compete for that market share in and out of ATL.

Have you been to Chicago Midway, many airlines have pulled out of that airport, AAI and SWA are still are strong in their operations there. It wouldnt be good at all for Delta to have two strong LCC's in their hub.

 

[qxdash8]

Glen H. came to my new hire class in March. He was asked if we (DAL) were worried about LUV coming to ATL. His response was that we would much rather have LUV in ATL than Airtran. He stated that SW was much more rational in how they ran their airline then Citrus. Personally I don't see SW in ATL unless Airtran in gone. Trying to compete angaints both DL and AAI in ATL is a whole different ball game compared to UA and F9 in DEN.

 

[ACL65PILOT]

Agreed.
Also I would prefer SWA. With the Wright Amendment going away it would mean more flights to DFW.

 

[scarlet]

Airtran has the lowest ASM than any airline out there, that is why DL hates competeing with them !!!

Dl should have started when AAI had 40 airplanes not 150....

AAI has hundred or two running the airline=DL has 1,000s??? How many VPs and Directors does DL have?

 

[qxdash8]

What Glen was getting at is that AAI has operated irrationally over the years which is why DL doen't like competing with them. These are his words not mine - I don't have any specifics but I thought it was an interesting comment.

 

[qxdash8]

As I understand - post BK DL has much fewer "VP's and Directors" than it use to. Virgina Ave is a much quiter place these days.

 

[ACL65PILOT]

That it is, and not many of the remaining ones are pilots.

 

[ACL65PILOT]

Airtran has the lowest ASM than any airline out there, that is why DL hates competeing with them !!!

Dl should have started when AAI had 40 airplanes not 150....

AAI has hundred or two running the airline=DL has 1,000s??? How many VPs and Directors does DL have?

The guys running the farm were too worried about bleeding the company that competing back then. Times are a lot different.

 

[scarlet]

Yeah try putting 2 50 seaters in a city for Airtrans one 717?

about 2800/hour for a 50 seat DL pays for RJ
Plus Fuel DL pays... ?? It is not cheap. Airtran tried RJs to those cities and it was better to just fly the 717.

 

[Secret Squirrel]

The guys running the farm were too worried about bleeding the company that competing back then. Times are a lot different.

What is different? The economy is tanking, lots of credit concerns, businesses cutting back on their budgets, a softening international demand because of a rising us dollar, and you guys are spending BILLIONS of dollars to try and merge your company? It is not a done deal by any stretch of the imagination and the benefits of the merger could be YEARS away if they ever do come true (look at US Air, they are still week even without the labor strife and they had the benefit of CH11). It is still the courting faze where they are putting on happy faces to get government approval. You might want to be careful laughing at somebodies burning house when smoke is coming out of your own.

 

[Eagle757shark]

If they come to ATL it will be after AAI's demise or it will be the demise of AAI. There is no way that two LLC can compete for that market share in and out of ATL.

Wrong, we do it in Philadephia. You speak as if this is some special turf here in Atlanta. By your post you have some hard on for the demise of AirTran. Atlanta is a city that someday may become apart of Southwest's route structure. Southwest and AirTran co-exist in many cities around the country and do just fine (BWI, MDW, MCO, TPA, FLL) to name a few. AirTran was hit hard this year by the fuel crisis. But now that fuel is below $90 dollars a barrel, AirTran is lean enough to be around a long time. By the way, as of 10/10/2008 at www.airtran.com investor relations and earnings, you will see that AirTran is projecting a profit of $37 million dollars for 2009.

 

[Ualexpress]

Glen H. came to my new hire class in March. He was asked if we (DAL) were worried about LUV coming to ATL. His response was that we would much rather have LUV in ATL than Airtran. He stated that SW was much more rational in how they ran their airline then Citrus. Personally I don't see SW in ATL unless Airtran in gone. Trying to compete angaints both DL and AAI in ATL is a whole different ball game compared to UA and F9 in DEN.

Funny, that is the same thing that AirTran management said about Delta pre bankruptcy and during bankruptcy.

 

[ACL65PILOT]

No AAI and LUV cannot compete together in ATL. It will be the death nail in AAI in ATL.
I believe that USA has international out of PHL. Different feed, O and D and markets. Kind of like F9, LUV, and UAL out of DEN.
DAL and AAI can compete. DAL and LUV can compete, but putting LUV in ATL with DAL and AAI, will lead to one being thinned out.

 

[Murphy]

Glen H. came to my new hire class in March. He was asked if we (DAL) were worried about LUV coming to ATL. His response was that we would much rather have LUV in ATL than Airtran. He stated that SW was much more rational in how they ran their airline then Citrus. Personally I don't see SW in ATL unless Airtran in gone. Trying to compete angaints both DL and AAI in ATL is a whole different ball game compared to UA and F9 in DEN.

Aren't you guys trying to get rid of Glen?