Delta To Announce More JFK Service; Execs Focused On Revenue By Steven Lott 06/16/2006 07:51:11 AM
Delta next week plans to unveil a new round of New York Kennedy international expansion plans, The DAILY has learned, partly because of strong results from new flights started this summer.
The carrier earlier this year started an aggressive push to operate the largest international hub at JFK with flights to more than 30 destinations in Canada, Europe, Latin America and the Caribbean. Many of the new routes were launched in the past six weeks. Chief Operating Officer Jim Whitehurst told The DAILY in New York that Delta's planners generally hoped that about 80% of the new routes would be a success, but he said the new services are "exceeding that goal by a fair margin." He added that bookings for the rest of the summer are "well beyond" expectations, giving the carrier enough confidence to add more JFK service. "We're not done yet," Whitehurst said.
The new unannounced service is expected to start in the fall or winter, and it's not clear which aircraft will be used. Whitehurst was in New York to kick off a marketing campaign promoting the airline's refreshed BusinessElite class. The actual seat has the same frame, but the airline has increased the recline and added new leather covers and cushioning. The airline also is installing an upgraded inflight entertainment system. Whitehurst admits the carrier shouldn't have removed amenities from passengers in recent years and is now moving quickly to improve the international product.
The first four reconfigured Boeing 767-300ERs are flying on international routes -- including 11 new transatlantic routes launched since March -- with four more 767-300ERs scheduled for completion by monthend. Delta's remaining 67 international-configured -300ERs, -400ERs and 777-200ERs will be retrofitted by April 2007.
The new product is part of a large campaign to boost Delta's revenues, which are lagging compared with those of other major carriers. This summer, Whitehurst is focused on "revenue, revenue, revenue," he said. Delta's unit revenue adjusted for stage length has "underperformed" the industry by a double-digit margin. In 2004, Delta's adjusted RASM was 13 points below the industry average, but Whitehurst said the carrier closed the gap to seven points in April. The carrier's internal goal is to close the gap to six points, but Whitehurst believes it will beat that target.
Delta is also leading the way to higher fares. Late Wednesday, Delta raised most of its domestic business fares by $50 one way and its SimpliFare cap to $699. "While passenger volumes at these levels are comparatively modest, they do represent the most inelastic end of the demand spectrum," said JP Morgan analyst Jamie Baker.
At the industry level, he estimates the business fares generate 6%-8% of domestic revenue, implying perhaps as much as a 0.5% domestic revenue increase as a result, if other airlines match.
The carrier earlier this year started an aggressive push to operate the largest international hub at JFK with flights to more than 30 destinations in Canada, Europe, Latin America and the Caribbean. Many of the new routes were launched in the past six weeks. Chief Operating Officer Jim Whitehurst told The DAILY in New York that Delta's planners generally hoped that about 80% of the new routes would be a success, but he said the new services are "exceeding that goal by a fair margin." He added that bookings for the rest of the summer are "well beyond" expectations, giving the carrier enough confidence to add more JFK service. "We're not done yet," Whitehurst said.
The new unannounced service is expected to start in the fall or winter, and it's not clear which aircraft will be used. Whitehurst was in New York to kick off a marketing campaign promoting the airline's refreshed BusinessElite class. The actual seat has the same frame, but the airline has increased the recline and added new leather covers and cushioning. The airline also is installing an upgraded inflight entertainment system. Whitehurst admits the carrier shouldn't have removed amenities from passengers in recent years and is now moving quickly to improve the international product.
The first four reconfigured Boeing 767-300ERs are flying on international routes -- including 11 new transatlantic routes launched since March -- with four more 767-300ERs scheduled for completion by monthend. Delta's remaining 67 international-configured -300ERs, -400ERs and 777-200ERs will be retrofitted by April 2007.
The new product is part of a large campaign to boost Delta's revenues, which are lagging compared with those of other major carriers. This summer, Whitehurst is focused on "revenue, revenue, revenue," he said. Delta's unit revenue adjusted for stage length has "underperformed" the industry by a double-digit margin. In 2004, Delta's adjusted RASM was 13 points below the industry average, but Whitehurst said the carrier closed the gap to seven points in April. The carrier's internal goal is to close the gap to six points, but Whitehurst believes it will beat that target.
Delta is also leading the way to higher fares. Late Wednesday, Delta raised most of its domestic business fares by $50 one way and its SimpliFare cap to $699. "While passenger volumes at these levels are comparatively modest, they do represent the most inelastic end of the demand spectrum," said JP Morgan analyst Jamie Baker.
At the industry level, he estimates the business fares generate 6%-8% of domestic revenue, implying perhaps as much as a 0.5% domestic revenue increase as a result, if other airlines match.
