Delta Air to Unveil Plans For a Low-Cost

[Ty Webb]

Thanks for an insightful post . . . .

Now, other food for thought . . . what if AirTran gets B737-800 aircraft, and also uses the Air Whiskey CRJ200 on the lighter runs . . . .

It could get very interesting.

 

[rjcap]

Here's one to get your brain spinning.

Any possibility the LCC is really a sideshow to get the Delta MEC too sign off on raising the DCI block hour limits from 32% to 49% ??

I beleive Delta has something like 350 a/c. Is 30-40 757's allocated to the LCC really a big deal. Also consider it will take months and months to get this new LCC up and running.

 

[Publishers]

LCC

Regardless of the success of the new offering, the real and more significant question is whether they will be able to hold fares and traffic on the mainline.

I have been at HDQ for Spirit, AirTran, and Delta. They are not the same and there is more to keeping your cost down than by what is an accounting qimmick as much as anything. We are going to put into the new carrier the costs we want to and then proclaim success at taking business basically from us as well as others.

Think about it, one of the people you are going to have an impact on is yourself. In fact, if the customer remains loyal to SWA and the rest, the person you may hurt the most is yourself.

That is why they do not work for the most part.

 

[mad691]

Now, other food for thought . . . what if AirTran gets B737-800 aircraft, and also uses the Air Whiskey CRJ200 on the lighter runs . . . .

I hope that Airtran sticks to the 717. As long as they stick to 1 fleet type then you can play the game. That is why SWA is king and shall be for a long time.

DE part 2 will not compete a whole lot with Airtran. It will go after Jetblue for sure. Since 85% of airtrans revenue is out of ATL, to go after airtran would cancel DAL mainline out. All coach configuration 757s against two class 717 would not work. Delta may go after other Airtran flights out of MCO, which I think Airtran knows about already.

I really do believe(maybe I am nieve)that delta is just trying to make money. Pure and simple. I don't think they are trying to change the scope clause, break contracts. Time is critical here. Most analysts agree the 2003 is a wipe out for the industry as a whole. So cash is #1.

Jetblue has alot going for them at the moment. Great marketing, great customer service, brand new airplanes which bring along safe, reliable, on time service, and the best part for a cheap price. A hub in the #1 O&D market in the US. I think in the month of August Jetblue had a 100% completion factor for the month. Thats pretty good considering they are only 2.5 years old. First impressions are very important and they have made a good one. Delta has a lot cut out for them in the next few months. Things will be interesting for sure.

 

[SpeedBird]

Publisher's quote:

"Think about it, one of the people you are going to have an impact on is yourself. In fact, if the customer remains loyal to SWA and the rest, the person you may hurt the most is yourself."

I have to agree with you on this point. Delta mainline has the greatest exposure for loss with the start-up of the LCC. In addition to your points, there are forecasts of 50-90% growth rates in the low-fare segment of the US market over the next five years. As LCC moves into this segment, there will be enough passenger growth to accomodate the extra capacity they'll bring without putting much stress on their true low-cost competitors who already have a big head start over them.

Meanwhile the mainline operations will have more difficulty finding people to fill their own seats as LCC competes against them for the leisure & frugal business passengers that dominate the entire marketplace for the present time.

 

[flx757]

I hope that Airtran sticks to the 717. As long as they stick to 1 fleet type then you can play the game. That is why SWA is king and shall be for a long time.

While that would be ideal, unfortunately the 717 cannot fulfill that role. Unlike the 737, there is only one varient...the 717-200, which is limited in both range and capacity. AirTran has indicated a desire to operate an aircraft in the 150 seat range with the capability for longer stage lengths than the 717 can provide. Expect an announcement of a new aircraft type within the year.

Even with the addition of another type, AirTran will have no problem "playing the game".

And General Lee has issued his "caution wake turbulence" warning now to both SWA and AirTran. You and your company seem to be banking heavily on the success of this LCC. It might be more prudent to check the security of your own seat belt.

 

[mad691]

"Watch me pull a rabbit out of my hat."

I hope Joe leonard can pull a rabbit out of his hat and get 717-300 but things ain't lookin so good!!

I heard his speech down in FLA on Friday. He really doesn't want another fleet type but you are right he may not have a choice.

 

[Ty Webb]

I do have to agree that DAL's LCC will certainly be competing with itself . . . with such an extensive network as Delta has, it is almost inevitable that it will cause some cannibalism.

As for AirTran . . . some routes definitely need bigger airplanes. In some cases, we have 2 airplanes leaving the same city within ten minutes, both going to ATL . . . we definitely could use a larger aircraft to compliment the 717 and, of course, the RJ's for some of the lighter loads.

I have heard the announcement is coming before the end of this year, but I heard that last year at this time, too, so who knows.

I think we'll probably all need to tighten our seatbelts for the ride over the next year or two, but I feel very good about AirTran's long-term prospects. If we can make money in 2002, when things turn around, we'll make even more. I also think that we really have to give credit where credit is due . . . Joe Leonard and Bob Fornaro really have done an excellent job with AirTran . . . . I made the decision to come here after 9/11 and so far, this company has exceeded my expectations at every turn.

 

[Starshipper]

Growth Constraint for Airtran - Gates?

As much as I enjoy watching Airtran's growth (especially potential addition of 737-800s, ex-TWA 717s and new Air Whisky RJs, etc.) I have to ask about a big restriction on growth at Atlanta - Airtran's base - GATE ACCESS... As far as I know, there aren't many extra gates in Atlanta - I believe Delta has gates in ALL OF THE TERMINALS. With all of the new 717s and potential 737-800s coming on line, how will Airtran manage? I know that the 717s will be replacing Diesel 9s, but excess 717s are expected - right?

I suppose Airtran will need to increase its throughput at the gates - faster turnaround times... I know that 737-800s can be a pain to load and unload as well... Perhaps Airtran will open a new hub - maybe Kansas City - or further expand BWI as a way to increase utilization of the newer aircraft...

So tell me TY, how do you expect to get around the new gate access constraints at ATL? How much more CAN Airtran grow at ATL? I am not sure how well Delta will do with its proposed LCC, but Airtran needs to face up to its own growth constraints as well...

 

[flx757]

I'm not Ty, but will answer with my own opinions. If he has anything to add, I'm sure he will.

Gate constraints at ATL are a concern. One that I'm sure hasn't escaped those that make the decisions at AirTran. I expect a large portion of AirTran's growth in the future will not be in ATL, but in "focus cities" such as BWI, and additional point-to-point type service.

In fact, a quick scan of the recent press releases on the AirTran web site announce new or additional service between these city pairs: PHL-RSW, PIT-MCO, FNT-MCO and CAK-LGA.

That is how AirTran plans to "get around" gate constraints in ATL and "face up" to it's own growth contstraints. As Ty mentioned, the senior management at AirTran has done an excellent job. I'm confident they will "manage". Confident enough to bet my future on it.