Flies With The Hat On
- Mar 31, 2006
- Total Time
The AJC Reaches out to ASA!
For Delta’s regional carriers, only strongest will survive
Airline says it will cut costs, consolidate after merger with Northwest is complete
By KELLY YAMANOUCHI
The Atlanta Journal-Constitution
Tuesday, October 21, 2008
For Delta Air Lines’ regional carriers, it’s survival of the fittest.
Atlanta-based Delta has been working to improve dismal on-time performance at some of its Delta Connection contract carriers, and it has seen some successes, including from Atlanta-based Atlantic Southeast Airlines. Meanwhile, it has eliminated other Delta Connection contracts, and more cuts could be in store.
Delta and Northwest have nine different regional airline partners; three are subsidiaries. These carriers fly smaller planes on shorter routes or fill non-peak schedule slots, in exchange for a fee. But Delta is trimming the roster and says the best-performing will be most likely to survive.
Delta Connection carriers
• Atlantic Southeast Airlines, a SkyWest Airlines subsidiary
• Chautauqua Airlines, a Republic Airways subsidiary
• Comair, a Delta subsidiary
• Freedom Airlines, a Mesa Air Group subsidiary
• Pinnacle Airlines
• Shuttle America, a Republic Airways subsidiary
• SkyWest Airlines
Northwest Airlink carriers
• Compass Airlines, a Northwest subsidiary
• Mesaba Airlines, a Northwest subsidiary
• Pinnacle Airlines
Atlantic Southeast Airlines, Delta's biggest affiliate carrier in the Atlanta market, is boosting service stats:
• Summer 2007 on-time arrivals: 57.35%
• Summer 2008 on-time arrivals: 75.52%
• Summer 2007 cancellation rate: 4.05%
• Summer 2008 cancellation rate: 1.88%
• August 2007 mishandled baggage: 13.68 reports per 1,000 passengers
• August 2008 mishandled baggage: 8.65 reports per 1,000 passengers
Note: Delta last year took over ASA ground handling operations in a bid to improve on-time and baggage-handling performance.
Delta plans to cut costs and consolidate regional operations after its pending merger with Northwest Airlines, and it has told its Connection carriers that the best performers will survive.
“We have too much lift in Delta Connection. What we’re getting rid of is bad lift,” said Delta Connection senior vice president Don Bornhorst. Between Delta and Northwest’s regional carriers, “If you add everyone up together now you have nine. I think the right answer is going to be along the lines of seven or eight.”
The regional carriers that don’t make the cut have fewer backup plans, because major carriers across the industry have been shrinking schedules.
“For a long time it was a seller’s market for regional carriers — there weren’t enough regional jets for the demand,” Bornhorst said. “We clearly are on the other side of that growth curve now and I would even argue that there’s too many regional jets.”
Delta long tried to improve regional carriers’ performance and took a harder line starting last year.
When Richard Anderson took the helm at Delta in September 2007, Delta Connection’s poor performance was one area he considered for improvement. Bornhorst was named to head Delta Connection shortly afterward.
Delta brought in the chief executives of each of its Delta Connection carriers for a “CEO Summit,” and told the carriers they had to meet standards for on-time performance and other measures.
“We kind of laid down what would be the table stakes for a Delta regional carrier… really laid down the law and said look, here are the minimum requirements you will have to fulfill to be in the Delta Connection program,” Bornhorst said.
Since then, Delta ended a contract with Mesa Air Group’s Freedom Airlines, citing poor performance, and is seeking to terminate another contract operated by Freedom. Mesa received a temporary court injunction blocking Delta from terminating that contract.
Delta also moved to terminate Pinnacle Airlines’ contract for flights out of Atlanta, citing poor performance, but later agreed to continue the partnership.
Delta recorded a $14 million charge in the September quarter for contract carrier early termination fees.
Pinnacle and Mesa had pointed to Delta’s own scheduling of its Connection flights as a contributing factor to shortfalls in their on-time performance.
“A number of times, regional carriers are put in very difficult spot,” assigned to operate out of airports plagued with air traffic congestion, for example, said Regional Airline Association president Roger Cohen. “It’s like you’re a college football team and you get scheduled against USC every week.”
Other carriers also left Delta Connection, and now seven remain. Bornhorst said all have made improvements, but ASA is one of the airlines that has improved the most.
“Maybe the argument can be made that it had the lowest baseline to improve from. They clearly were in the bottom echelon of performance of our Connection carriers,” Bornhorst said. When Bornhorst was named to head Delta Connection last year, he landed at the receiving end of a stream of complaints from governors, mayors and airport officials about ASA’s delays and problems.
Back in August 2007, only 55 percent of ASA flights arrived on time, putting it at the bottom of airlines ranked by the U.S. Bureau of Transportation Statistics. It also had chronically high rates of lost luggage, despite a string of reform efforts over the years.
Brad Holt, who was vice president of flight operations at ASA parent company SkyWest Airlines, took over as president and chief operating officer of ASA in December 2007.
“Obviously we had some work to do,” Holt said.
Employees at ASA had gained a reputation for lacking motivation. But to Holt, the employees are “a dedicated, hard-working group.”
“They were up against a lot of challenges,” Holt said. “Sometimes management has to take responsibility.”
ASA and Delta Connection formed a “reliability council” to find ways to improve operations. The company added automation to streamline flight operations and improved communication processes and maintenance planning, among other changes to remove roadblocks that frustrated employees.
By August 2008, 75.2 percent of ASA’s flights arrived on time — up 20 percentage points from a year earlier.
“We have been very impressed with their turnaround,” Bornhorst said.
ASA, owned by Utah-based SkyWest, is now adding headquarters space to their maintenance hangar at Hartsfield-Jackson International Airport.
But ASA hasn’t been immune to cutbacks at Delta, and its capacity is down about 9 percent over the past year. It is also phasing out its ATR-72 turboprops from its fleet by the end of this year.
Holt said the airline still has improvements to make at Hartsfield-Jackson. ASA is now ranked 13th for on-time performance in the nation, just behind Delta and Mesa.
“We always have to work hard,” Holt said. Although the transformation is well underway, “I don’t think it’ll ever be complete.”