JonnyKnoxville
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Delta 'playing hardball' with regional affiliates
USA TODAY - In the Sky Blog
June 11, 2008
Delta plans to terminate its regional flying contract with Pinnacle Airlines as of July 31, Reuters reports. Delta is doing so"ostensibly because the regional carrier failed to meet minimum on-time arrival standards," The Salt Lake Tribune writes. Pinnacle, however,called Delta's actions "wrongful" and says that Delta instead created unrealistic operating schedules for its flights. Pinnacle says it will "pursue appropriate remedies," which could include a lawsuit. "But, really, the courthouse is not the way you enhance a longer-term relationship. Ideally, we'd like to talk it out with Delta and find asolution to this," Pinnacle spokesman Joe Williams tells the Tribune.
The Minneapolis Star Tribune calls Delta's move "a major setback for Pinnacle, which long has wanted to diversify its flying beyond Northwest Airlines. Pinnacle now flies 129 jets supplied by Northwest, and it operates out of Northwest's three domestic hubs, including the Twin Cities. Last year, Pinnacle arranged its own financing to acquire 16 large regional jets for the contract with Delta," the paper writes.
For Delta, this is not the first time it has made such a move. The Memphis Commercial Appeal notes that "shortly after Delta announced this spring that it was cutting staff and flights, it alerted Mesa Airlines that its contract with Mesa-owned Freedom Airlines would be terminated, saying Freedom had failed on key indicators. Mesa won apreliminary injunction May 29 in federal court in Atlanta, temporarily stalling Delta." Like Pinnacle, Mesa also pointed the finger at Delta for causing problems with flight schedules.
Some analysts suggest Delta may be trying to pare contracts with partners so that it can funnel flights to Comair, its wholly owned regional subsidiary. "Delta is looking for a way to cull its feeders and bring operations in-house," David Field, U.S. editor ofAirline Business magazine, tells the Commercial Appeal. In his own Left Field blog, Field says Delta "denies ... it is playing dirty, but it is playing hardball." He adds Delta appears to be on to "an interesting way to write contract: write it so that no matter what the other guy does, he'll be in breach of contract. That, it seems, may be what Delta is doing with its regional contracts. That's one interpretation you could put on Delta's aggressive campaign to end its flying deals with two regional airlines, Mesa and Pinnacle," Field writes. For its part, Delta says it's just trying to hold its partners to operational standards that are acceptable to its customers.
As for Delta-Pinnacle, the Commercial Appeal adds the "issue is compounded by the fact that Delta is pursuing plans to buy Northwest Airlines, by far Pinnacle's largest partner." Forbes.com says "the biggest problem" for Pinnacle "may be what this terminated contract will mean for the contract Pinnacle has with its largest customer, Northwest Airlines. Delta is set to merge with Northwest pending regulatory approval and could the merge could bring cloudy skies for Pinnacle." Standard & Poor's airline analyst Jim Corridore is quoted by The Harrisburg (Pa.) Patriot-News as saying the"news shows how a Delta-Northwest merger may hurt Pinnacle" in the longrun.
Others predict Delta may not stop with Pinnacle. "With Delta believing it has found reasonable early-out flexibility at both Mesa and Pinnacle, we wonder if similar efforts aimed at its Republic and SkyWest flying may be forthcoming," JP Morgan's Jamie Baker wrote in a research note Tuesday, according to The Wall Street Journal.
http://www.usatoday.com/travel/flights/item.aspx?type=blog&ak=51191630.blog&csp=34
USA TODAY - In the Sky Blog
June 11, 2008
Delta plans to terminate its regional flying contract with Pinnacle Airlines as of July 31, Reuters reports. Delta is doing so"ostensibly because the regional carrier failed to meet minimum on-time arrival standards," The Salt Lake Tribune writes. Pinnacle, however,called Delta's actions "wrongful" and says that Delta instead created unrealistic operating schedules for its flights. Pinnacle says it will "pursue appropriate remedies," which could include a lawsuit. "But, really, the courthouse is not the way you enhance a longer-term relationship. Ideally, we'd like to talk it out with Delta and find asolution to this," Pinnacle spokesman Joe Williams tells the Tribune.
The Minneapolis Star Tribune calls Delta's move "a major setback for Pinnacle, which long has wanted to diversify its flying beyond Northwest Airlines. Pinnacle now flies 129 jets supplied by Northwest, and it operates out of Northwest's three domestic hubs, including the Twin Cities. Last year, Pinnacle arranged its own financing to acquire 16 large regional jets for the contract with Delta," the paper writes.
For Delta, this is not the first time it has made such a move. The Memphis Commercial Appeal notes that "shortly after Delta announced this spring that it was cutting staff and flights, it alerted Mesa Airlines that its contract with Mesa-owned Freedom Airlines would be terminated, saying Freedom had failed on key indicators. Mesa won apreliminary injunction May 29 in federal court in Atlanta, temporarily stalling Delta." Like Pinnacle, Mesa also pointed the finger at Delta for causing problems with flight schedules.
Some analysts suggest Delta may be trying to pare contracts with partners so that it can funnel flights to Comair, its wholly owned regional subsidiary. "Delta is looking for a way to cull its feeders and bring operations in-house," David Field, U.S. editor ofAirline Business magazine, tells the Commercial Appeal. In his own Left Field blog, Field says Delta "denies ... it is playing dirty, but it is playing hardball." He adds Delta appears to be on to "an interesting way to write contract: write it so that no matter what the other guy does, he'll be in breach of contract. That, it seems, may be what Delta is doing with its regional contracts. That's one interpretation you could put on Delta's aggressive campaign to end its flying deals with two regional airlines, Mesa and Pinnacle," Field writes. For its part, Delta says it's just trying to hold its partners to operational standards that are acceptable to its customers.
As for Delta-Pinnacle, the Commercial Appeal adds the "issue is compounded by the fact that Delta is pursuing plans to buy Northwest Airlines, by far Pinnacle's largest partner." Forbes.com says "the biggest problem" for Pinnacle "may be what this terminated contract will mean for the contract Pinnacle has with its largest customer, Northwest Airlines. Delta is set to merge with Northwest pending regulatory approval and could the merge could bring cloudy skies for Pinnacle." Standard & Poor's airline analyst Jim Corridore is quoted by The Harrisburg (Pa.) Patriot-News as saying the"news shows how a Delta-Northwest merger may hurt Pinnacle" in the longrun.
Others predict Delta may not stop with Pinnacle. "With Delta believing it has found reasonable early-out flexibility at both Mesa and Pinnacle, we wonder if similar efforts aimed at its Republic and SkyWest flying may be forthcoming," JP Morgan's Jamie Baker wrote in a research note Tuesday, according to The Wall Street Journal.
http://www.usatoday.com/travel/flights/item.aspx?type=blog&ak=51191630.blog&csp=34
