Song

[Palerider957]

General:

Thanks for clarifying the 777 issue, there have been a lot of rumors on that (and the fate of the MD's).

As for contract talks, they seem to be going well, although I don't have an inside track.

When we actually do start to hire again (probably in the late fall, early spring), I'm hoping we take on a bunch more of the furloughees--as long as Momma D recalled them at a rate that woudn't leave us in smoking hole. I think that would be an all around good thing for ASA/Delta and there is some talk of it.

Good luck!

P.S. I took the jump seat to SRQ on a DAL MD-80 yesterday, the crew were very welcoming (and perverts at heart--like an airline pilot should be!!). Anyway, a postive experience.

 

[FlyDeltasJets]

That's easy . . . . . new rug, cap those teeth, loose the bifocals, get a different trainer, and start hanging out at Malone's.

Heh-heh.


I agree, but with a 13 million dollar compensation package, I'll bet he's doing ok with the ladies!


Some of your post is kind of fluffy, but I will respond to those with substance.


No, I would:

3) Develop a new focus. "Everything else is just a bus" with the play on words showing the difference in quality while exploiting support for American-made Boeings. I would emphasize, service, quality, efficiency and economy.

Well, my slogan would be "Don't fly anything built by the cheese eating surrender monkeys", but your point still stands!




I woud re-vamp the pricing ala AWA.

I am not ready to concede that revamping pricing is a good idea. We made billions before 9/11 using the old pricing model. I spoke the other day at length to our VP of network mgt and route planning (I can be a pest!) and came away very impressed with the man and with the technology we are using for yeild management. Our RASM is among the idustry leaders, and it continues to improve. Would it improve more with a simplified fare stucture? To be honest, I don't know. But I am reassured that real experts are studying this as we speak.


I would have examined selling gourmet food (these are things that I was advocating long before any of them were adopted, if you care to do a search from last year!). I would continue to invest in technology, as they are doing.

It would not surprise me to see some cnanges to mainline service (food, etc) like you suggest. I believe that whatever works on Song will eventually be implemented at mainline.



4) I would cede some of the bottom-tier customers to AirTran, JB and SWA. It is not worth it to hemmorhage money to try to keep the bottom customers. Face it- leave the bottom tier to them, and focus on the other 2/3's. Give thm a superior product, treat them like customers, not patients. Earn their business.

You were doing ok up until here. I don't mean to be rude, but I'm afraid this idea displays a lack of knowledge of industry economics. Study after study have shown that price is BY FAR the number one purchase driver for airline tickets. If your price is higher than the competition, you will lose too much of your business to remain profitable. More room? Ask AMR and TWA (with their "comfort class") how well that works. Better food, seats, and service? How's that working for Midwest? The airline graveyard is littered with airlines who thought that people would pay extra for better service. They don't. Unless service is glaringly bad, people will still flock to the lowest price. The bottom tier that you mention is not the 1/3 of the travellers, it is 99% of them.

It has been shown time and time again throughout airline history that, although an airline may "hemmorhage" money by matching ticket prices, they will lose FAR more money if they don't.

There are some customers that will never ride on AirTran. There are some customers that will never ride on Delta, and it is not worth it to match LCC prices at huge losses, not when you don't have to.

That's just the point. They do have to, or they will lose far more.



5) Many other things, invented by other employees far more talented than myself. I would do my **CENSORED****CENSORED****CENSORED****CENSORED**dest to put forth an atmosphere that encourages people to think, to find better ways to do their jobs, and reward them for their successes.

Again, this is a little fluffy. If it makes you feel better, I agree with you on some of those points, but they were more wishes than strategies, and not really worth a big discussion.


What was worth discussing is your idea that Delta (and other airlines) are accepting these losses simply to "protect market share." That is incorrect. They are doing so to minimize their losses. If market share were their motivation, the desert would not have any parked airplanes, and Delta would not be 15% smaller.

Price is king. Right now, a variety of factors (including the growth of lcc's) have set prices below that at which established carriers with mature costs can profit. However, they have no choice but to match those prices, or watch ALL of their revenue drop off. In the meantime, they must reduce costs, which is where we are today. And unfortunately for all of us, the largest cost and easiest one to address is employee wages and benefits.

I wish I had the General's optimism. I'm afraid that if things don't change, it will get worse. For all of us. The lcc's are not immune to the market forces, even though they are currently benefitting from them.

 

[Cardinal]

Losing money with no end in sight, in an attempt to regain marketshare is a dinosaur tactic . . . a holdover from the early days of deregulation. It doesn;t work against LCC's that are making money.[/B]

It seemed to work against Legend. You can still snag some china of theirs on eBay once in a while...

 

[NYRANGERS]

Durring bad times Major airlines loose big money. In up swings they can make big money.............


Delta on average flys around 300,000 pax a day, give or take 50,000. A $10 fare increase is a gain of around $3,000,000 a day or $1.095 billion a year. A few dollars one way or the other can make or break a major airline. Airlines like Air Tran who fly much much less pax only realize small gains or losses. Durring bad times they can show profits (ie. $2 million a quarter). Durring good times they cannot make up much of a difference.

Durring good times Delta can profit the same $ value that Air Tran nets in a year.

Looks like the up turn is comming...................

 

[Skank]

Heck, no airline is perfect. As long as you can be proud to put on that blue (or green or whatever) uniform and go to work, then who cares what the other guy thinks?

 

[Ty Webb]

It seemed to work against Legend. You can still snag some china of theirs on eBay once in a while...

I said against LCC's that are making money, Champ.

 

[Ty Webb]

Durring bad times Major airlines loose big money. In up swings they can make big money.............[/i]


The problem is the downswings can put them down, for good. The history books has a lot more failed airlines than successful ones. UAL is still pretty likely to be liquidated, and USAirways may not be out of the woods yet, either. Only time will tell.

You yourself said it best:

A few dollars one way or the other can make or break a major airline. .

But you erred here:

Airlines like Air Tran who fly much much less pax only realize small gains or losses.

Your entire post leaves me wondering if you have any understanding of the most basic business principles. . . . sure, we're not going to show profits in the billions, but we don;t have billions of shares outstanding, either! Smaller profits divided over a smaller pool of investors.

In terms of relative size, Delta would have to show profits in the hundreds of billions, if AirTran were to make a billion dollars. In terms of relative size (or the number of shares outstanding) AirTran can do equally well or better. Look at the charts for SWA and DAL and you tell me which one would have made you more money as an investor.

Durring bad times they can show profits (ie. $2 million a quarter). Durring good times they cannot make up much of a difference.

You have got to be kidding, right? When DAL charges more, we get more pax paying more money, not less! Why don't you read our 10-Q from the second quarter of 2001 and see for yourself?

Here's a suggestion- use this down time to educate yourself about how the industry works. Read some quarterly and annual reports cover to cover. Make some comparisons. You'll see that the stuff you have posted here is clearly just wishful thinking posted as fact.

Looks like the up turn is comming...................

Hope you're right, but I think it's still wishful thinking on your part.

 

[Flying Freddie]

Associated Press
Delta Pilots Balk at Pay Cut Request
Wednesday May 14, 9:37 am ET
By Harry R. Weber, AP Business Writer
Delta Airline Pilots Union Balks at Company's 22 Percent Pay Cut Request


ATLANTA (AP) -- The Delta Air Lines pilots union is balking at a 22 percent wage-reduction proposal that is part of a companywide cost-cutting campaign.
In a memo distributed to pilots Tuesday night, the union's economic and financial analysis committee said the nation's third-largest airline needs to cut costs to survive but noted employees have already made sacrifices.

"Labor did not create this problem, and the E&FA team does not endorse management's specific proposal," the memo said. "The team has concluded, however, that all stakeholders, including labor, need to be part of the solution."

The union's financial team linked Delta's problems to a drop in revenue and new debts -- not to what it pays its pilots. The union leaders stopped short of calling for the proposal to be rejected, but said their data should be considered when members make a decision.

"Labor costs as a percentage of total expenses have been fairly flat," the memo said. "Expenses have not changed very much. Although it appears there has been a recent spike in labor expenses relative to total revenue, the main cause of the relative percentage increase in labor expenses is the reduction in revenue, not the increase in expenses."

The union said it is still gathering input from pilots before deciding on a course of action.

Last month, Delta told pilots it wants to cut their hourly wages by 22 percent, cancel pay raises due over the next year and reduce some benefits.

In addition to the pay cut for pilots, Delta wants to reduce the company contribution to a family savings plan for pilots from 3 percent to 2 percent. It also is proposing comprehensive negotiations focusing on work rules, benefits and further discussion on pay rates in the fall of 2004 or sooner, depending on the financial condition of the company.

Chief executive Leo Mullin has said Delta will use deep salary concessions agreed to at American Airlines as context for its talks with its own pilots.

Delta lost $466 million in the first quarter on top of $1.3 billion it lost last year.

Atlanta-based Delta has laid off 16,000 employees since the Sept. 11 attacks. It has also furloughed more than 1,000 pilots and said earlier this month it would furlough an additional 200 pilots this year because of a drop-off in travel due to the war in Iraq. It also plans to reduce capacity by 10 percent and will remove 12 MD-11 aircraft from service.

The pilots' union represents 9,000 Delta pilots.

 

[General Lee]

Posted from TY Webb:

"Here's a suggestion- use this down time to educate yourself about how the industry works. Read some quarterly and annual reports cover to cover. Make some comparisons. You'll see that the stuff you have posted here is clearly just wishful thinking posted as fact."

Jeez, this guy is ruthless. He sure is cocky, telling a furloughed pilot what to do on his downtime. His new name should be "Ty Almighty."

Come on Ty, you cannot be serious? You have all of the answers. You are in all of the boardrooms. You know exactly what you are talking about, right? Wrong. I haven't seen any major profits or major losses for Airtran because you fly for a smaller carrier. I am not making fun of your company, I am just stating the facts. The problem with Delta during bad times is that we have many fixed costs with huge hubs that need to be paid in good times and in bad. During bad times, we tend to lose more because of those costs. In good time, like the late '90's, we were making billions and those costs were easily covered. We just had a major fuel spike before and during the war that added on to those costs. We also had to pay a lot more than you did for security costs because we had to install 798 new cockpit doors on all of the mainline planes plus all of the ASA and Comair planes. Our costs are a lot more than yours, but then again we are a lot bigger than your airline. To say that economic recovery is no where to be seen is being overly pessimistic. Maybe you should sit down in your down time between your continuous duty overnights to Ft. lauderdale and review the history of airlines and the economic cycles they go through. Every ten years or so there is a huge downside, and then it climbs again. Some airlines make it, and some don't. The economy is starting to show signs of recovery, and the war being over will help. To deny that is closed minded, and I think you like being closed minded when it comes to your biggest competition---Delta. We are in better shape than every other Major, and times can only get better, which will speed our recovery along. I never said we were going to be 100% tomorrow, but we are starting to rise again. It may take a while, but it will happen again. Your airline, on the otherhand, better start looking for new areas to start hubs, because ATL is already capped for you. And another thing, lay off our furloughed pilots---give them a break, won't you? Do you like throwing rocks at people when they are down? Are you insecure? Sounds like it. I bet you drive a P.T. Cruiser.

Bye Bye---General Lee

 

[SWA/FO]

Go Ty...let 'em have it!! jetBlue is going to rock song's World.

 

[trainerjet]

Reading the spirited debate ongoing on this thread, as an outsider, I see holes in both side's arguments. However, the largest hole seems to be the General's fixation with Air Tran's "hubs". Any industry observer can clearly see that Air Tran is focusing all future growth in 3 areas, none of which even remotely suggests a new "hub". On the contrary, they are moving away from the hub concept. They are adding frequency to existing markets, they are adding flights to their "focus" cities (with no intention of making them "hubs"), and they are moving to more point-to-point service. All of which will, more than likely, serve them well.

I believe that Song may well have some negative impact on jetBlue, but until proven otherwise, I believe it will have a much larger negative impact on Delta.

 

[General Lee]

Trainerjet,

Why is Song having a negative impact on Delta? Delta has put Song on routes that will thrive and take market share from Jetblue. But hey, Song has only just started, so we should wait and see how they do. From what I have heard it has done very well. As far as hurting Delta, it is actually helping Delta. Song frees up seats that normally might be used to connect through ATL or CVG, so we can fill those seats with passengers connecting through one of our hubs. For example, if a passenger wants a low fare from BOS--TPA, they could either fly nonstop on Song or fly thru ATL and then onto TPA. By flying nonstop on Song, that leaves that seat from ATL-TPA open, allowing Delta to charge someone more money in Peoria who wants to go to TPA thru ATL. The communities with no LCC service, like Peoria and Des Moines, have more expensive tickets because that is the only way they are getting to TPA from those cities. It's all about keeping the fares higher through the hubs, and allowing the cheaper fares to go nonstop on Song, with a good experience to keep them from going to Jetblue or Southwest.

As far as Airtran going from point to point, that is good and that is sort of what Song is up to. Airtran really doesn't have a choice in the matter, since ATL gate space is limited now and expansion is also limited. Airtran's current point to point strategy is not affecting Delta---they have added a lot of city pairs that are below our radar screen --like MCO--DAY on Saturdays, LGA--Akron, LGA--Newport News, and BWI--Fort Meyers. Good for them.

SWA/FO,

First of all, Ty flies for Airtran, not Jetblue. Secondly,
Song's entertainment (when brought on line fully in OCT) factor might eat away at some of your growth, too. The fares will be about the same, and for longer flights out of MCO, some passengers might choose to fly back into BOS instead of your Manchester, NH because of the better planes, better food, better entertainment, and better frequent flyer program. We shall see, but adding more LCC's with a better product is not good for you either. Hey, we got this idea from Jetblue, and we saw the need to fight rather than retreat. We won't be replacing all of mainline with Song because we don't have to. The huge hub passengers mainly come from smaller towns that are brought in by our huge feed system comprising of RJ's and smaller mainline jets. We aren't diluting our product, we are just creating a buffer to affect the LCC's. We shall see if entertainment and perks wins out in the end.

Bye Bye--General Lee

 

[Flying Freddie]

Ty,
Is there any truth that Joe Leonard is hinting for pay cuts from the Pilot group? Just asking, not trying to get anyone upset.

 

[trainerjet]

General,

I didn't say Song was having a negative impact on Delta. If that's what you read, that's not what I meant. What I was saying is that I think that Song has the potential to have more of a negative impact on Delta than it does on jetBlue. Just my opinion.

Ty,

It seems that Flaming Freddie is at it again. I would simply ignore him.

 

[General Lee]

Trainerjet,

Well, our management doesn't think so, and Fred Reid was quoted in saying that he hopes to expand the presence of Song. I don't think he thinks there will be a problem, and he has all of the "numbers." I think they want to do whatever possible to stop Jetblue's growth and marketshare. I think they see the great product Jetblue offers, and wants to copy it. Atleast they are being proactive here, unlike other Majors. We shall see.

Bye Bye--General Lee

 

[trainerjet]

General,

I will admit there is something to be said for being proactive. Like you say, we will see. I wish you good luck. I hope things turn around for everyone, and everyone sees better days ahead.

 

[SWA/FO]

Did I say Ty works for jetBlue? no. I said "let 'em have it Ty"

In time SWA will be in GA. Its only a matter of time.

I just wonder about all this attention DAL is giving to jetBlue while Air Tran is growing in their backyard. Looks like a two front war to me? Lots of promises made about Song's TV's...I hope they can deliver by Oct.?

Has DAL lost market share in SLC to SWA, jetBlue & Frontier? yep.

 

[Blue Dude]

I think they want to do whatever possible to stop Jetblue's growth and marketshare. I think they see the great product Jetblue offers, and wants to copy it. Atleast they are being proactive here, unlike other Majors.

Your first sentence says it all. I think that's exactly what Delta's motivation is. It sure as heck isn't making a profit; that's only incidental to your main goal. Your second sentence describes how you intend to go about it. Which makes your third sentence contradictory. This is not proactive. This is the same old, same old: try to kill off a troublesome competitor to preserve your markets. "Proactive" means being innovative. Taking JetBlue's model and putting a different paint job on the airplane isn't proactive, it's just more aggressive than the other majors can be at the moment.

Your flaw is in thinking that JetBlue will have to sit there and take it. I think you're in for a surprise. This may cost you far more than it costs us.

 

[BLUE BAYOU]

I think Song will be successful IF it differentiates itself as a new airline, separate from Delta. Instead, they're confusing customers who show up booking Delta Flight 2451 JFK-PBI and wonder why their plane is Lime Green. Then they receive outstanding service from the inflight crewmembers and wonder, well, why can't the rest of Delta be like this??? The kicker, after all the song and dance from the inflight crewmembers, their show is washed by the flight deck crew who remind all passengers that the Song flight is flown by professional Delta pilots.

 

[General Lee]

SWA/FO,

Hmmmm. It was interesting that you had Ty and jetblue in the same sentence. Maybe I misunderstood you...?? So, Southwest is coming to GA, huh? Maybe Savanah or Macon, but probably not ATL. Sorry Herb and Company, but there are no more gates in ATL for you---and it will be years until another terminal is built. You can have Macon.

Yes, we know Airtran is in our backyard, and they have been doing well lately, which is good for them. But, they have very little room to expand anymore. Yes, they will be starting some A320 service (via Ryan Air) in the near future, but will have to give up some of their 717 space in the process. Maybe you aren't familiar with ATL, but Airtran has 1/2 of the C concourse, (the other half swarmed by ASA/Comair), and the very end tip of the D Concourse for it's Air Wisconsin RJ's. There really isn't any more room. They might try to get some gates at the E concourse, but that has customs and I think the airport authority would rather have mainly 777's and 767ER's there. As far as Airtran expanding their point to point and small mini-hub service at BWI etc, I think they should go right ahead. Their BWI mini-hub is probably affecting you guys at Southwest more than it is affecting us. We know Airtran is in ATL, and we respect them. It is just that they are at a loss when it comes to extra expansion. We on the other hand can swap things around and move a 737 from here to there and stick a 757 into that slot etc. We are adding ATL--HNL service on a 767-400 on Aug. 1st for example. We added that larger plane by probably moving a 757 out of ATL and putting it on the Song network. We have that flexibility. Airtran doesn't have enough extra gates to add A320's and keep the same number of 717's or DC-9's at the current gates. I doubt we will sell them any gate space. We are handling that "front" fairly well in this "war" as you call it.

Have we lost market share in SLC you ask? Probably a bit. Southwest has come in and now competes with us on SLC--LAX, LAS, OAK (Skywest competes on that one), PHX (Skywest again---although my friends have told me they have jumped on some of those and they were 1/2 full), BOI, RNO, PDX, and SEA. I think Southwest is doing fine on those routes, but Delta has major connection traffic from all corners, and the last time I flew in to SLC everything seemed pretty full. Frontier is really not a factor, becasue we have more flights to DEN from SLC than they do. Jetblue has almost no affect on us in SLC. They have one late night flight from JFK (that returns as an all nighter back to JFK) and one flight to Long Beach. I have heard that they will be cutting that LGB flight. I am pretty sure that Delta is still the major player at SLC, with help from Skywest ofcourse. Southwest might be a player there, but not as much as we are.

See you in Georgia SWA/FO---someday??? Come jump on us and see the wonderful people of ATL!!! (PS--unfortunately we do not fly naked---and that is a good thing, trust me)

Bye Bye--General Lee