Delta rival fumes about fares

[canyonblue]

A top union official at Northwest blasted Delta's management over how the airline revamped fares, calling the move "irresponsible" and saying it could lead to more red ink for carriers such as Northwest. Mark McClain, chairman of the Northwest branch of the Air Line Pilots Association, charged that Delta pilots swallowed $1 billion in labor savings last year, only to see airline management use the money to "fund a fare war," according to the Minneapolis Star Tribune. "To make those sacrifices to fund an unproven, questionable business strategy is irresponsibility at its finest," he added. Other airlines — including Northwest — responded to Delta's move with new fare structures of their own. Northwest will release fourth-quarter results today and is expected to show a significant operating loss.

But while Northwest's McClain and others in the industry have criticized Delta's "fare cutting," the reality is Delta's changes only "cut" fares on the airline's most-expensive fares — fares few people were actually buying before the overhaul. Immediately after Delta's fare restructuring, the carrier's Web site was clogged with customers and the airline claims to have set sales records. At least in the short term, Delta's changes already appear to be paying handsome dividends, not to mention making it a more formidable challenger to its discount rivals. And if the other major carriers who have tweaked their fare structures see similar results, it's hard to see how that will will hurt them.

 

[stb]

Painting the kettle black...

In the last year, the airlines tried to raise fares a couple of times but Northwest didn't follow. Thus leaving the fares to the original set price. When they have a sale, Northwest complains. Granted it did come from NW ALPA but it was from NW.

 

[dbrownie]

In the last year, the airlines tried to raise fares a couple of times but Northwest didn't follow. Thus leaving the fares to the original set price. When they have a sale, Northwest complains. Granted it did come from NW ALPA but it was from NW.

I am surprised that he did not blame the pilots.
it is usually our fault.
Dave b

 

[doh]

He is a union official. Only management blames the pilots for all that they have done wrong.

 

[100LL... Again!]

The clock is ticking for union labor in this country. This kind of response proves how threatened they really feel.

 

[General Lee]

The problem was that we were losing a lot of business to Airtran and Jetblue when it came to walk up fares. Ours were in the $1200-1400 range, and their's were in the $500 range. Our planes were full with 10% paying way too much, and 90% paying too little. So, we have just tried to increase the middle paying fare passenger numbers---people who will pay $500 or so without flinching for walk up fares---and will come to us over the LCCs for our FF program and better choice of routes etc. NW and their pilots are mad because they don't have very much LCC competition at all, and they could charge those super high fares without any other choices for the passengers. I read a walk up from MSP to LGA was over $900----and now they have brought that down to $600---still losing revenue. We, on the other hand, have increased the number of walk up fares dramatically---and we, in theory, will make up the difference in VOLUME---and it won't happen right away but it should happen. We were told not to expect positive numbers until late 05 or early 06, and we probably will still have a large loss here for this last quarter, since a lot of our pilot savings and non-union employee savings (which was 10%) was not realized in the 4th quarter. (although our pay cut was late in the quarter--Dec 1st). Our fare cuts were really targeted at Airtran, and the Song product with it's low fares was targeted at Jetblue.


Bye Bye--General Lee

 

[MedFlyer]

The problem was that we were losing a lot of business to Airtran and Jetblue when it came to walk up fares. Ours were in the $1200-1400 range, and their's were in the $500 range. Our planes were full with 10% paying way too much, and 90% paying too little. So, we have just tried to increase the middle paying fare passenger numbers---people who will pay $500 or so without flinching for walk up fares---and will come to us over the LCCs for our FF program and better choice of routes etc. NW and their pilots are mad because they don't have very much LCC competition at all, and they could charge those super high fares without any other choices for the passengers. I read a walk up from MSP to LGA was over $900----and now they have brought that down to $600---still losing revenue.

Bye Bye--General Lee

Scary, but I actually agree with the General's assessment. NW is still clinging to the old way of business largely because NW has the least LCC overlap. Look at NW's three hubs. All three have some LCC exposure (but it's pretty small) while DL has a ton of LCC competition in ATL/SLC. CVG has no LCC's, but neighboring DAY/SDF do which siphons off CVG's traffic. Plus, DL's huge Florida market is under heavy attack (DL continues to lose marketshare in MCO despite Song). DL has no choice but to make these changes.

The big question is whether DL has become efficient enough to sustain this new pricing model. If DL's restructuring doesn't start to gain momentum by this summer, DL will be in big trouble by this time next year.

 

[General Lee]

Medflyer,


Thanks for agreeing. NW does have a hold on MSP (with a small attack from Airtran) and DTW (Spirit is getting larger---adding CUN soon), and very little in MEM. They normally would not have to bring their fares down at all, and they have resisted in fuel surcharges in the past. Well, now they have to lower fares, and I don't think we did it to spite them, but rather to take on our own problems, namely Airtran and Jetblue. As far as getting leaner, our pay cuts will show results soon, but not in the latest quarter, which will still show a large loss. The paycuts went into effect late in the quarter (Dec 1st) for the pilots, and Jan 1st for everyone else. With fuel prices on the rise again, it certainly won't help, but it really will hit USAir twice, with the lower fares and then the fuel prices. Southwest going into PIT and PHL won't help much either.


Bye Bye--General Lee

 

[Fallingbrick]

It’s interesting that NW ALPA would take this position. Anyone recall what NWA did to Sun Country when they began scheduled service in MSP? The fare war with them went way beyond what Delta is doing now.

 

[FLB717]

So General. You loose a little on each ticket, but make up for it in volume. Brilliant!

 

[cfm56-7b]

boohoo