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Delta management......not so good.

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NYRANGERS

Well-known member
Joined
Jun 13, 2002
Posts
592
What's Delta's big problem?

Opinions vary widely as to why the airline lost out at D/FW

10:57 PM CDT on Thursday, September 9, 2004

By CHERYL HALL / The Dallas Morning News

Do you remember when American and Delta stood glove to glove, duking =
it out for supremacy at D/FW?

Atlanta-based Delta Air Lines Inc. was once a true contender for the =
business traveler at Dallas/Fort Worth International Airport. But it
long ago sank to the level of a sparring partner.

In Delta's farewell announcement Wednesday, management said the
airline lost nearly $1 billion here in the last three years.

So what happened?

My theory is that Delta's demise began when we all got hooked on
AAdvantage miles.

But Hal Brierley, an expert in consumer loyalty programs, argues that =
Delta's frequent flier plan had enough muscle to counter American's.

"Delta scheduled itself into oblivion," says Mr. Brierley, who helped =
create American Airlines Inc.'s AAdvantage and worked with United
Airlines on its loyalty program for 12 years.

"Anybody in his or her right mind quit flying Delta when it started
flying regional jets to New York. All you had to do was look out the
window and see that they had 40 regional jets and two big planes, and
you knew Delta was doomed," he said.

When did we stop flying Delta and why?

Routed through Atlanta

"When I couldn't get anywhere unless I went through Atlanta, and they =
were always late getting there," answers Karyl Innis, chief executive
of Dallas-based Innis Co., a management training company.

Headhunter David Westberry, managing director of Korn/Ferry
International, never quit flying Delta, but his cumulative miles tell
the story: 2.7 million American miles compared with 750,000 on Delta.

"I moved here in '83, and American always had more flights out of
here," says Mr. Westberry, who values time more than points. "But the
AAdvantage program clearly made American a more dominant player in this =
market. There's also a lot of loyalty to American because it's based
here."

Bill Everitt began avoiding Delta about 10 years ago as his Brook Mays =
Music Co. expanded to markets outside Texas.

"Nonstop jet service to my required destinations was more frequent,
more cost-effective and time-efficient with Southwest and American," he =
says. "When I booked with Delta, I ended up being routed through the
busy Atlanta or Cincinnati airport, where the connections became
problematic and the plane usually switched from a jet to a
puddle-jumper affiliate airline."

Some say miles are a devalued currency since they've become so
difficult to cash in, but they're still collecting them.

Susan Byrne, chairman of Westwood Holdings Group, flies more than
100,000 miles a year and has more than 6 million miles in her
AAdvantage account. "Unless I quit working now and live to be 150 years =
old, I will never be able to use them all."

For some, the question isn't American vs. Delta at D/FW. It's American =
vs. Southwest Airlines and Love Field.

"My schedule demands frequency, dependability and service-oriented
flight attendants," says Leslie Ann Crozier, principal of Crozier &
Henderson Productions Inc., who averages six flights a week.

Forget the miles

And Mona Carpenter, corporate travel manager for 7-Eleven Inc., says =
forget the miles. "We're looking for the best fares available
regardless of the airline."

Tom Buxton, whose research marketing team flies a total of 1.5 million =
miles a year, chooses Southwest whenever possible – even though the
Buxton Co. headquarters is in Fort Worth and just minutes from D/FW.

"All of us would rather have a tooth pulled than fly American," says =
Mr. Buxton, who regrets his executive platinum status. "Prices are too =
high, and service is almost always below standard. Try and change a
ticket on short notice and see what that will cost you."

Bob Pearson, who's flown 5 million miles on American, also loves the =
miles, not the airline.

"While their customer service leaves a lot to be desired, the
AAdvantage program is a powerful draw," says the principal of the
executive search firm Pearson International Inc. "It probably will
become even more expensive to fly AMR with no competition."

Paula Lambert flew Delta a month ago when her travel plans changed
abruptly. Her ticket was 25 percent cheaper than if she'd flown
American.

There is one universal: Not a single frequent traveler I queried is
content with the status quo.

Asked what needs to happen after Delta leaves D/FW, most say they hope =
more low-cost carriers take its place.

"The vacancy could make it much more attractive for the next
generation of carriers to fly here more," says Mr. Brierley. "We may
get more Frontier flights or JetBlue. So we actually could come out
ahead."

E-mail [email protected]
 
And from another newspaper...

Sunday, September 12, 2004

Delta's problems loom large
Editorial

The good news is Northern Kentucky and Greater Cincinnati benefited last week from Delta Air Lines Inc. efforts to restructure the company to stave off Chapter 11 bankruptcy.

The bad news is that benefit could be temporary, because Delta still has major financial hurdles to overcome, including gaining concessions from its pilots union. Delta pilots are the highest paid in the airline industry.

One airline analyst last week told the Enquirer that the plan is a "long-term step in the right direction, but (Delta's) ability to avoid bankruptcy over a period that now appears to be weeks rather than months rests solely on its ability" to get pilot concessions.

Delta wants $1 billion in concessions from pilots, including knowing how many are planning to retire. Delta has debt of more than $20 billion, and the company was dealt another blow Friday when a group of bondholders said they would not renegotiate the terms of that debt.

Our hope, for Greater Cincinnati's sake, is that the company can find a long-term solution that keeps its substantial presence in this region firmly entrenched. Atlanta-based Delta operates its second-largest hub at Cincinnati/Northern Kentucky International Airport. The restructuring announced last week all but closed the airline's Dallas hub, eliminating 2,000 jobs there and cutting daily flights to Dallas from 254 to 21. The restructuring did not cut any of the company's 8,000 jobs in Greater Cincinnati, but that doesn't mean this region has completely avoided the company's pain.

The 18-month restructuring plan calls for eliminating as many as 7,000 jobs company-wide, including a 15 percent cut in management costs, which could mean some job losses here. Delta has been among the airlines hardest hit by financial troubles since the Sept. 11 terrorist attacks three years ago. It has lost more than $5 billion in those three years, and had tried to cut losses before by eliminating 16,000 positions since 9/11.

While our region gained 29 flights and five destinations last week in the restructuring, the reality is that job, salary and benefit cuts could occur here if the company's efforts to stem its losses are not successful. Delta stock took a hit this week, closing Friday at $3.82 a share, down 10 cents.

Long accused of having expensive fares here, last month Delta rolled out a cheaper business fare structure called SimpliFares, which it hopes will keep consumers from driving to Louisville, Dayton, Columbus or Indianapolis to save money on flights. Officials have hinted that the plan could be rolled out throughout the company.

These are tough times in the airline industry. While drastic cost-cutting measures are painful in the short term, we hope the long-term reward is that Delta can regain its health outside the courts and continue to be a key member of Greater Cincinnati's business community.
 
I don't see where this is an indictment of DL management. It's more an indictment of DFW not being large enough to support a hub for two major airlines. Sure they could have gone into a capacity war with AMR and thrown a ton a planes at DFW. It would have just meant bigger losses. AMR wasn't going to abandon DFW.

The smartest thing DL management could have done was to abandon DFW about ten years ago. CAL abandoned DEN when they realized there was no way DEN could support two major carriers. AMR abandoned BNA and RDU when they realized they couldn't compete in the South vs. DL at ATL.
 
MedFlyer said:
I don't see where this is an indictment of DL management. It's more an indictment of DFW not being large enough to support a hub for two major airlines. Sure they could have gone into a capacity war with AMR and thrown a ton a planes at DFW. It would have just meant bigger losses. AMR wasn't going to abandon DFW.

The smartest thing DL management could have done was to abandon DFW about ten years ago. CAL abandoned DEN when they realized there was no way DEN could support two major carriers. AMR abandoned BNA and RDU when they realized they couldn't compete in the South vs. DL at ATL.
Four points to remember about Delta's "quality" management:

1. Leo (Harvard MBA, McKinsey, ex super-banker) spent $2+ billion cash on a stock buyback just 2 years ago that has evaporated into thin air

2. Secret retirement funds/benefits for senior management only - great way to build employee trust when they have the ball$ to ask employees for cutbacks at the very same time as secret retirement funds are being set up offshore... Hypocrites?

3. Leo and others leave with huge golden parachutes and are NOT held accountable for huge mistakes as nearly the entire management team leaves with huge severence packages - Leo is sipping tea on the porch of his Nantucket mansion...

4. Fuel hedging debacle....

Hmmmm. Sounds like inspiring management to me.
 
Last edited:
Heavy Set said:
Four points to remember about Delta's "quality" management:

1. Leo (Harvard MBA, McKinsey, ex super-banker) spent $2+ billion cash on a stock buyback just 2 years ago that has evaporated into thin air

2. Secret retirement funds/benefits for senior management only - great way to build employee trust when they have the ball$ to ask employees for cutbacks at the very same time as secret retirement funds are being set up offshore... Hypocrites?

3. Leo and others leave with huge golden parachutes and are NOT held accountable for huge mistakes as nearly the entire management team leaves with huge severence packages - Leo is sipping tea on the porch of his Nantucket mansion...

4. Fuel hedging debacle....

Hmmmm. Sounds like inspiring management to me.
What's that got to do with DFW?

No doubt the things you list above were boneheaded management mistakes, but even if none of those things had happened, DL would still be hemorraghing cash.
 
With 202 RJ flights/day and only 52 mainline flights out of DFW, you would have thought that DFW was incredibly profitable. After all, aren't those RJs just hugely profitable, self financing and let's not forget comfortable?
 
MedFlyer said:
What's that got to do with DFW?

No doubt the things you list above were boneheaded management mistakes, but even if none of those things had happened, DL would still be hemorraghing cash.
Simple. It's indicative of the fact that Delta's management is just NOT WITH IT despite the high-paying salaries. Have you seen AirTran or JetBlue's managements making gaffs like this lately? Nope. The fact that Delta's DFW position was allowed to deteriorate is not surprising...
 

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