Delta's taking the path of Pan Am by trying to become a long-haul carrier

[DCMartin]

Reuters
Delta eyes premium routes, service to survive-WSJ
Monday August 16, 12:28 am ET

NEW YORK, Aug 16 (Reuters) - The chief executive of Delta Air Lines Inc. (NYSE:DAL - News) may add more longer-haul routes, spend more on customer service and amenities and cede some U.S. market share in a bid to help ensure the No. 3 U.S. airline's survival, the Wall Street Journal said on Monday.

In discussing the plans of Gerald Grinstein, the chief executive, the newspaper cited people familiar with his thinking and accounts of recent discussions among senior management and investors.

"Our aim should be to become a long-haul carrier," Grinstein told employees this summer, according to several people who were present, the newspaper said. Asked whether that idea sounded like the last, failed strategy of now defunct Pan Am in the 1980s, Grinstein said, "No, that's the future," the newspaper said, citing the people.

The shift in strategy would take place as Atlanta-based Delta tries to negotiate $1 billion of concessions from its pilots, and staunch a near $4 million a day cash drain in the first half of this year.

Delta, which ended the half with $2 billion of cash, last week said it is tapping its cash reserves to pay expenses, and said it expects its cash balance to fall at a level consistent with the first half decline.

Analysts have said the carrier might need to file for Chapter 11 bankruptcy protection as soon as this autumn.

Grinstein believes Delta can -- much as Starbucks Corp. (NasdaqNM:SBUX - News) has for coffee -- charge more than low-cost carriers, maybe 10-15 percent more, by providing better service, at a time security concerns have made flying less pleasurable, the newspaper said.

Counter to longtime industry conventional wisdom, Grinstein is suggesting that Delta abandon some U.S. routes into regional hubs, and expand routes and amenities for flights across the Atlantic, the United States and to Latin America, the paper said.

Seventy percent of Delta passengers connect through one of its U.S. hubs, but many of the flights lose money, it said.

Grinstein has also criticized Song, Delta's low-fare airline-within-an-airline launched last year.

At recent meetings, he called Song and the former Delta Express "mistakes," joking that he would like to add "Swan" before Song's name, the newspaper said, citing unnamed people present at recent meetings.

Delta shares closed Friday at $3.41, after earlier falling to $3.38, their lowest level in more than 20 years.

Grinstein is suggesting that Delta abandon some U.S. routes into regional hubs

I wonder which hubs he's talking about.

he called Song and the former Delta Express "mistakes," joking that he would like to add "Swan" before Song's name

Wow, thats a big friggin surprise. Im glad he has a sense of humor about it.

 

[shon7]

I think that will be the plan.

Mainline -- larger jets for Longhaul.
Domestic flying -- mostly via regional jets.

With the regional feed DAL would not be losing their O & D to other carriers.

 

[~~~^~~~]

I wonder which hubs he's talking about.

I keep hearing "Dallas," nothing official, but makes sense with American and Southwest in town.

 

[michael707767]

I keep hearing "Dallas," nothing official, but makes sense with American and Southwest in town.

SLC is gone too.

 

[8vATE]

Grinstein has also criticized Song, Delta's low-fare airline-within-an-airline launched last year.



At recent meetings, he called Song and the former Delta Express "mistakes," joking that he would like to add "Swan" before Song's name, the newspaper said, citing unnamed people present at recent meetings. Delta shares closed Friday at $3.41, after earlier falling to $3.38, their lowest level in more than 20 years.



Only a matter of time before the "General" comes on spouting his holy perspective.....
Maybe he should suggest changing the topic of the thread to something other than "Delta's taking the path of Pan Am".....

 

[FL000]

From the Wall Street Journal today:

http://forums.flightinfo.com/showthread.php?p=395596#post395596

 

[House_X]

How are they going to get more slots in Asia and Europe? The Asian and European markets are even more competitive than here in the states. United and Northwest have all the slots in China and Japan locked up in terms of US carriers. Europe...forget it...too many European carriers. Yes, they are going down the same path as Pan-Am...everyone knows how that story ended.

 

[Jungle_Jet]

DL becoming another PA? Those who refuse to remember the past are condemned to repeat it.

One wonders if after DL goes under, will some rich playboy purchase the name and copyright, slap them on some well-aged 72's and fly cut rate flights out of former Air Force bases and remote carribean islands?

All I have to say is that the abosolute worst treatment I ever received while non-reving or js'ing was from DL. In fact, if I took the top ten worst experiences, eight easily involved DL. And if I listed the top 50 reasons our customers come to us for charter service, 35-40 of those reasons involve shoddy service from DL.

In fact, from our prespective the best that could happen would be DL to continue along their current path, as that seems to be the best thing for our business.

 

[~~~^~~~]

DL becoming another PA? Those who refuse to remember the past are condemned to repeat it.

All I have to say is that the abosolute worst treatment I ever received while non-reving or js'ing was from DL. In fact, if I took the top ten worst experiences, eight easily involved DL. And if I listed the top 50 reasons our customers come to us for charter service, 35-40 of those reasons involve shoddy service from DL.

Delta's employees are among the best in the business. The problem is that the Company can not make a profit at 80% plus load factors and any airplane with 80% plus loads ( figure 100% at peak times ) is miserable. Gate Agents have time to be pleasant at 70% loads, 100% capacity stretches any system.

Pilots paid 58% to 100% more than their industry peers are stuck demanding other employee groups take pay cuts to below market averages to offset the pilots' way above market ( even after concessions ) compensation package.

Management has a role to play in this, but the Delta pilots are strangling their own golden goose. For years they have been told they are the best pilots on the planet and by golly, they believe it. Reality is that they are average pilots, Delta may be a below average airline and that pride simply comes before the fall.

Pan Am's mistake was insufficient feed for their long hall operations. Pan Am's percieved arrogance had much to do with why the US government refused may of the routes that Pan Am needed to fill 747's.

The Pan Am pilots did try to do the right thing on many occassions. For one, they fought alter ego Pan Am carriers by putting Ransome ( Pan Am Express ) on their seniority list.

However, the real reason for Pan Am's failure was lack of a domestic feed system. It appears Grinstein wll use DCI in that role and the Delta MEC will have to try to secure jobs for around 1,500 pilots. The RJDC has a well aimed and armed torpedo targeted at ALPA's jets for jobs protocols if they should surface on the DAL property. What a perfect storm....

 

[Palerider957]

Fins is right:

Adding to Pan Am's woes was a complete lack of feed, VERY high cost for codeshare. The final nail in the coffin was Flight 107, destroyed over Lockerbie.

Let's hope never to repeat the last event, with ANY carrier.