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Interesting take on Song

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NYRANGERS

Well-known member
Joined
Jun 13, 2002
Posts
592
Hot Flash - February 3, 2003

Delta's "Song"
Leading Lots of Folks In The Wrong Direction
Except, Maybe, Delta

Delta's Song: The exception that has nothing to do with the rule.

The cackle among much of the media today is that "legacy carriers" are dead, and the alleged hordes of low-fare, point-to-point carriers are taking over.

That thought process has given rise to United's alleged plan to start a "low cost carrier" within itself, the result being a dual identity airline with Jekyll & Hyde service products. Now that Delta's doing the Song deal, it's a near certainly that it will embolden the top folks at United and their Rasputin outside advisors to go full-throttle with their low-fare surrogate. And possibly down the tube, unfortunately.

Different Strokes For Different Airline Systems. We covered this before. (Go There) Song is just a hyper-thyroid version of Delta Express. And Delta Express was established to carry a demonstrable, and identifiable segment of Delta's existing traffic base - i.e., fare sensitive Florida traffic. It's like shifting the low fare coach seats to another airplane, running the traffic nonstop and thereby making better use of hub assets at ATL and CVG.

We'd point out again that Delta established Delta Express with little or no gurgling about "beating Southwest." It was designed to enhance Delta's traffic flows, not burn down Southwest headquarters in Dallas. And regardless of what the media attributes to this "new" Delta entity, its immediate and primary traffic is already in place. It doesn't need to "take on" or "fight" jetBlue or Southwest. In short, Song makes sense for Delta's existing traffic base. Unlike MetroJet or Continental Lite, it doesn't compete with its mainline.

Getting Past The Name. The only thing that everybody seems to agree on is the name. Song - it's weird. Reminds one of a Chinese dynasty. Or something on the showroom floor at the local Hyundai dealer. But it does fit in with other recently-established airlines - Tango, Buzz, Go, Jazz, and now Song. Put them together and it sounds like the music format of a very confused New Age radio station. What's the next new airline gonna be? Waltz? Disco? Lambada? Cotton-Eyed Joe?

Separating Markets, Not Confusing Them. Name identity aside, in a very real sense, Song/Delta Express represents a very old and very sound marketing idea - separate your consumer segments without confusing your customers. American did it in the 1950s with its "Royal Coachman" service. It wasn't anything "royal" but, boy, it sure was "coach" - they crammed 80 seats on some DC-6s and launched them on multi-stop late night transcons. The original National Airlines did it, too, with "nickel flights" - clapped-out Constellations flying in the wee hours with fares five cents higher than the bus to Florida. (Probably with the same ambiance, too.) The objective then was the same as Delta's today.

Pied-Pipering United. But much of the mainline media does not understand the fundamental differences between what Delta is doing, and what United is thinking about inflicting on itself. Delta has the route system and Florida market presence to make this separation of its existing markets work, United does not. United certainly does not have any material parts of its route system where point-to-point service can work on a large scale - as proven by the first 12 months of the United Shuttle. But it could be a real disaster if they attempt a hub-and-spoke system using two product identities.

Nevertheless, the Delta Song program will likely only encourage United to go ahead with its low-fare experiment. In a sense, that could make United, not jetBlue, Song's first competitive victim - without even directly competing with it.

Final Point: Song Could Be A Winner. Looking to the future of this entity, we first have to get past a blizzard of real sappy PR stuff, like this ditty, right off the Song website:

"Just as a song is the harmonious composition of distinct yet related elements, our Song will be in harmony with each individual's self-expression."

Oh, pluh-leez. It's an airline, not a 60's San Francisco love-in. At a $99 fare, what's to self-express, already? The customer wants a seat to West Palm, not psycho-analysis. So, the first suggestion: give second thoughts to the ad agency who dreams up this goo.

Now, the second suggestion: ignore the folks who're saying Song won't work. Given the way the carrier and its direction are structured, the concern expressed by some analysts might better be applied in the direction of jetBlue, which is a fine airline, but may be severely challenged by this Delta product.

Cutting through the obvious comments about how Song will have higher labor costs than jetBlue and Southwest, the fact is that the Florida market is ultimately finite, and the battlefield outcome will be determined by levels of brand loyalty. At risk of annoying the peanut gallery of rearview-mirror analysts who are cooing around low-fare start-ups like they once did around dot coms, here's a prediction: Song apparently has the management, the product, and the structure to more than compete. If it's done right, and if it's done with lights-out customer service (frills do no equate to good service, by the way - employees do) the entire low-fare Florida market could be in for a real competitive battle.

In short, the name doesn't matter. Song could get the fat lady singing for some of its competitors.

Low-cost airlines included.

© 2003 The Boyd Group/ASRC, Inc.
 
Could Delta pay different pilots wages ?

I realize Delta pilots will fly the Song, but what keeps their pay from being equal to or lower than JetBlue. Seems like the company would want something much lower to compete.? Seems like perfect timing that tonight news said thay are hinting about pay cuts.

\Dow Jones Business News
Delta May Move for Talks With Union to Cut Pilot Costs
Wednesday February 5, 4:34 pm ET
By Nicole Harris, Staff Reporter of The Wall Street Journal


ATLANTA -- Delta Air Lines Inc.'s chief executive suggested for the first time that the No. 3 airline is moving toward talks with its pilots' union about cutting expenses.
ADVERTISEMENT


Speaking at the Goldman Sachs Annual Transportation Conference, Leo F. Mullin said Delta was watching the moves of other airlines at it relates to labor costs. "We're hanging out there with a hugely expensive pilot contract," he said. "We're going to have to have some conversations to see what we can do about it. We'll see how those go."

Faced with an industrywide financial crisis made worse by the terrorist attacks of 2001 and the rise of low-fare competition, the nation's airlines have been trying to cut their costs. Delta's pilots currently fetch the highest pay in the industry but, as other airlines go to their labor groups for significant concessions, Delta faces pressure to do the same to remain competitive.

Mr. Mullin's statements come as Delta rivals such as United Airlines and US Airways, both operating under Chapter 11 bankruptcy-court protection, have already won wage concessions from key labor groups.

US Airways has cut its labor costs by more than $1 billion a year, or about 27%. Meanwhile, United is currently negotiating for $2.4 billion in labor savings, or a 34% reduction. That is on top of the interim wage cuts -- valued at $840 million on a yearly basis -- the carrier has already won. On Tuesday, AMR's American Airlines asked its unions to agree to permanently cut pay and benefits and revise work rules to lower costs by 25%, as the airline struggles to recover financially.

Delta has a considerable labor advantage over rivals because most of its workers are nonunion. As such, the airline is able to unilaterally impose changes in work rules, pay and benefits for its flight attendants and airport- gate agents without lengthy labor negotiations. But Delta's more than 9,000 pilots are represented by the Air Line Pilots Association. The airline and the union wrangled over its current contract in 2001, when ALPA threatened to strike and many pilots staged a job action. Under the contract, the pilots are slated to get a 4.5% raise in May.

Karen Miller, a spokeswoman for the Delta pilots union group, said Delta management hasn't yet approached the union to talk about concessions. "At this point we have received no request from management for concessions," she said. " We're always open to listening to management's concerns but, until they come to us with something specific, we're not going to speculate as to what they're planning."

A Delta spokesman declined to elaborate on Mr. Mullin's remarks.
 
Tomorrow morning at 9am ET there will be a press conference at JFK (gate 2 terminal 6) covering the unveiling of JB's new tail scheme for the year and our newest aircraft named "Song Sung Blue"...
 
BLUE BAYOU said:
Tomorrow morning at 9am ET there will be a press conference at JFK (gate 2 terminal 6) covering the unveiling of JB's new tail scheme for the year and our newest aircraft named "Song Sung Blue"...


Not so sure that naming an airplane is a great counter to Delta's new gig, but who knows.;)
 
Blue Bayou,

Great, then you will be up to a huge 31 total aircraft!! We will have 36 757's by the end of the year, providing more seats with better entertainment systems---(I heard your A320's have to be straight and level to get good reception on your TV's---a problem our 757's will not have) to more NYC airports--3--- which gives the good people of NY and NJ a better choice!!!! I saw your CEO on Cavuto on FOX and he said that Song will only provide a 12% more capacity lift than what they have now. (Express) Hmmmm. Our Express 737's had 119 seats, and our Song 757's will have 199 seats. 12%??? 80 extra seats is 12%? Wrong. Regardless, we will keep our marketshare---probably grow it--and steel customers from Jetblue. Don't get me wrong, I think you guys are very good at what you do, but we have to do it too. It won't help you that Song will be out there. And, I know that you guys are paying for your A320's---but I did learn that you have a deal with Airbus that allows you to pay NO INTEREST for the first 3 years. Well, those three years are almost up, and when they are---it will become harder to be profitable. And then the only green you might see is the lime green livery of 6 757's in front of you ready to takeoff at FLL for all three NYC airports, and BOS, BDL, and IAD etc.....

Bye Bye---General Lee:cool:
 
General Lee said:
And then the only green you might see is the lime green livery of 6 757's in front of you ready to takeoff at FLL for all three NYC airports, and BOS, BDL, and IAD etc.....


Time out for a second, General...

NYRANGERS,

As I said before, I didn't think my earlier post was gloating. This is gloating. One is a shared chuckle, the other is trash talk. See the difference?

Sorry to interrupt your rant, General. Carry on.
 
Jeff G said:
Time out for a second, General...

NYRANGERS,

As I said before, I didn't think my earlier post was gloating. This is gloating. One is a shared chuckle, the other is trash talk. See the difference?

Sorry to interrupt your rant, General. Carry on.

Why are you bringing me into this? However I do think there will be some good natured competition between our two airlines.

I think operating out of LGA will be a great convienience for the good people of NY. If we can offer a good product, there is no reason for people who are closer to LGA or EWR to drive to JFK. However if they choose to we fly out of there also;)

I think your airline will soon discover (like we did) that there is no such thing as brand loyality anymore. A good price, good service, and on time reliablilty is all the consumer wants these days. Not to mention Skymiles to any of our many internationl destinations.

I think there is room for both airlines and I truely wish you prosperity and a great flying career.

I wish you well, and fly safe.

NYR (they lost tonight )
 
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NYRANGERS said:
Why are you bringing me into this? However I do think there will be some good natured competition between our two airlines.

You answered your own question! LOL

Just didn't want you to miss the irony.

I think there is room for both airlines and I truely wish you prosperity and a great flying career.

Bingo! That's really it. It's not winner take all; there's more than enough room for both. The 12% growth referred to market growth, not Delta capacity growth, and nobody's found the bottom yet. We can all stay employed moving snowbirds for a very long time. You won't see a fare war because now everyone can make money at these fares and keep growing the market.

Best of luck, guys. Last one over CAMRN is a rotten egg. And no fair flying M.85 either...
 
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