General Lee
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Delta Air’s New York LaGuardia Swap Makes American ‘Vulnerable’
By Mary Schlangenstein and Mary Jane Credeur - May 17, 2011 9:01 PM
Delta Airlines is poised to take over about half of the flight slots at New York’s LaGuardia airport, widening its advantage over AMR's American Airlines in the world’s busiest aviation market.
Delta may double its daily LaGuardia departures under a trade giving it most of the slots held by USAirways Group (LCC) which has said a final agreement may come within weeks. The move would help Delta win more full-fare corporate passengers, for whom frequent flights are important.
“For the first time in perhaps its 80-year history, American is facing a truly serious contender for the business traveler at LaGuardia,” said Henry Hartevelt, analyst in San Francisco.
“American Airlines is vulnerable.”
More New York growth would amplify Atlanta-based Delta’s gains from the 2008 purchase of Northwest Airlines, which helped push its share of LaGuardia passengers to 29 percent at the end of 2010, from 22 percent five years earlier. American slid to 21 percent from 24 percent in the same period.
Airlines prize corporate fliers because they typically buy last-minute tickets at the highest prices. A first-class, round- trip flight today from New York to Chicago is $668, according to Delta’s website, more than twice the price of a discounted coach seat next month.
American is trying to counter Delta with $30 million in New York terminal upgrades, mostly at LaGuardia. That compares with the $1.3 billion spent on the new American terminal that opened in 2007 at John F. Kennedy airport for international flights and the $1.2 billion project under way there for Delta.
"Win New York"
“The charge to me was, ‘You win New York,’” said Art Torno, who was named American’s vice president for New York last year. “That means win a disproportionate share of high-value, premium customers. I believe we’ll win New York.”
The region lacks a dominant carrier, with traffic spread among LaGuardia, Kennedy and New Jersey's Newark. United and Continental airlines, which merged in October, led the area with 27 percent of passengers in 2010, according to the Port Authority of New York and New Jersey. Delta had 20 percent, and Fort Worth, Texas-based American had 13 percent.
Delta has ramped up daily departures from the New York area by 55 percent since 2005, while American’s departures are down 7.3 percent.
Regulators Balk
The LaGuardia push began evolving in August 2009, when Delta proposed ceding slots at Washington's Reagan National to US Airways in exchange for more New York flight rights from the Tempe, Arizona-based carrier. U.S. regulators balked, forcing new talks among the airlines and federal officials.
US Airways President Scott Kirby told employees this month an accord may be close. Delta declined to comment on the timing of any deal, said Joseph R. Perone, a spokesman.
“We’re confident our position will continue to strengthen,” Perone said.
Completing the slot exchange as originally proposed would as much as double Delta’s share of LaGuardia departures to 51 percent, counting regional partners, and push its portion of flight slots to 49 percent, according to a U.S. Transportation Department assessment in May 2010.
“ Nobody has had that at LaGuardia in years,” said Daniel Petree, dean of Embry-Riddle Aeronautical University’s College of Business in Daytona Beach, FL.
Delta’s original proposal envisioned spending $40 million to link its current terminal to one now housing US Airways, gaining as many as 11 gates.
‘Fill Them Up’
A successful swap won’t necessarily give Delta an insurmountable advantage, said Jay Sorensen, a former Midwest Airlines executive who now runs consultant IdeaWorks in Shorewood, Wisconsin. Flight limits at LaGuardia ensure that supply always trails demand, helping all its carriers, he said.
“I don’t know that anyone can really hurt someone else at LaGuardia,” Sorensen said. “Whoever operates flights at LaGuardia will fill them up handily and at a better-than-average price.”
Delta shareholders have suffered less than AMR investors, with the stock sliding 46 percent through yesterday from its bankruptcy exit on April 30, 2007. AMR fell 74 percent in that period, the most among the six biggest U.S. airlines. It is the only large carrier projected by analysts to post a 2011 loss.
American identified New York as one of its most important U.S. markets in 2009, along with Dallas-Fort Worth, Miami and Los Angeles for its effort to attract premium passengers.
“Competition for American became pretty significant, and the folks in Dallas took a long time to really react,” said Sunil Mahtani, executive vice president at Ovation Travel in New York. “Now that they see they’ve lost ground and that they no longer are the 800-pound gorilla in this market, they are looking to make big strides in winning New York back.”
To contact the reporters on this story: Mary Schlangenstein in Dallas
Wait, maybe that Moline rumor with Southwest was False? It's probably Branson.
Bye Bye---General Lee
By Mary Schlangenstein and Mary Jane Credeur - May 17, 2011 9:01 PM
Delta Airlines is poised to take over about half of the flight slots at New York’s LaGuardia airport, widening its advantage over AMR's American Airlines in the world’s busiest aviation market.
Delta may double its daily LaGuardia departures under a trade giving it most of the slots held by USAirways Group (LCC) which has said a final agreement may come within weeks. The move would help Delta win more full-fare corporate passengers, for whom frequent flights are important.
“For the first time in perhaps its 80-year history, American is facing a truly serious contender for the business traveler at LaGuardia,” said Henry Hartevelt, analyst in San Francisco.
“American Airlines is vulnerable.”
More New York growth would amplify Atlanta-based Delta’s gains from the 2008 purchase of Northwest Airlines, which helped push its share of LaGuardia passengers to 29 percent at the end of 2010, from 22 percent five years earlier. American slid to 21 percent from 24 percent in the same period.
Airlines prize corporate fliers because they typically buy last-minute tickets at the highest prices. A first-class, round- trip flight today from New York to Chicago is $668, according to Delta’s website, more than twice the price of a discounted coach seat next month.
American is trying to counter Delta with $30 million in New York terminal upgrades, mostly at LaGuardia. That compares with the $1.3 billion spent on the new American terminal that opened in 2007 at John F. Kennedy airport for international flights and the $1.2 billion project under way there for Delta.
"Win New York"
“The charge to me was, ‘You win New York,’” said Art Torno, who was named American’s vice president for New York last year. “That means win a disproportionate share of high-value, premium customers. I believe we’ll win New York.”
The region lacks a dominant carrier, with traffic spread among LaGuardia, Kennedy and New Jersey's Newark. United and Continental airlines, which merged in October, led the area with 27 percent of passengers in 2010, according to the Port Authority of New York and New Jersey. Delta had 20 percent, and Fort Worth, Texas-based American had 13 percent.
Delta has ramped up daily departures from the New York area by 55 percent since 2005, while American’s departures are down 7.3 percent.
Regulators Balk
The LaGuardia push began evolving in August 2009, when Delta proposed ceding slots at Washington's Reagan National to US Airways in exchange for more New York flight rights from the Tempe, Arizona-based carrier. U.S. regulators balked, forcing new talks among the airlines and federal officials.
US Airways President Scott Kirby told employees this month an accord may be close. Delta declined to comment on the timing of any deal, said Joseph R. Perone, a spokesman.
“We’re confident our position will continue to strengthen,” Perone said.
Completing the slot exchange as originally proposed would as much as double Delta’s share of LaGuardia departures to 51 percent, counting regional partners, and push its portion of flight slots to 49 percent, according to a U.S. Transportation Department assessment in May 2010.
“ Nobody has had that at LaGuardia in years,” said Daniel Petree, dean of Embry-Riddle Aeronautical University’s College of Business in Daytona Beach, FL.
Delta’s original proposal envisioned spending $40 million to link its current terminal to one now housing US Airways, gaining as many as 11 gates.
‘Fill Them Up’
A successful swap won’t necessarily give Delta an insurmountable advantage, said Jay Sorensen, a former Midwest Airlines executive who now runs consultant IdeaWorks in Shorewood, Wisconsin. Flight limits at LaGuardia ensure that supply always trails demand, helping all its carriers, he said.
“I don’t know that anyone can really hurt someone else at LaGuardia,” Sorensen said. “Whoever operates flights at LaGuardia will fill them up handily and at a better-than-average price.”
Delta shareholders have suffered less than AMR investors, with the stock sliding 46 percent through yesterday from its bankruptcy exit on April 30, 2007. AMR fell 74 percent in that period, the most among the six biggest U.S. airlines. It is the only large carrier projected by analysts to post a 2011 loss.
American identified New York as one of its most important U.S. markets in 2009, along with Dallas-Fort Worth, Miami and Los Angeles for its effort to attract premium passengers.
“Competition for American became pretty significant, and the folks in Dallas took a long time to really react,” said Sunil Mahtani, executive vice president at Ovation Travel in New York. “Now that they see they’ve lost ground and that they no longer are the 800-pound gorilla in this market, they are looking to make big strides in winning New York back.”
To contact the reporters on this story: Mary Schlangenstein in Dallas
Wait, maybe that Moline rumor with Southwest was False? It's probably Branson.
Bye Bye---General Lee
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