General Lee
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Delta can't afford to fly
Fare hikes were not enough, so several flights from SLC will
be cut
By Paul Beebe
The Salt Lake Tribune
Article Last Updated: 01/05/2008 12:26:34 PM MST
With jet fuel prices refusing to retreat from record
heights, Delta Air Lines is doing more than just raising
fares, and some of the measures will hit Salt Lake City
travelers this month.
On Tuesday, Delta will end nonstop service from its Salt
Lake City International Airport hub to airports in
Birmingham, Ala.; Des Moines, Iowa; Fayetteville, Ark.;
Memphis, Tenn.; Milwaukee; and Sioux Falls, S.D. The airline
cited high fuel prices, its biggest single expense.
Later in January, Delta will trim one flight a day to
another 12 airports, including Washington Dulles in
Virginia, Vancouver International in British Columbia,
Kansas City, Omaha, as well as destinations in California,
the Pacific Northwest and the Midwest. In total, Delta is
cutting its Salt Lake capacity - the number of seats
available to passengers - by 3 percent this year.
The action is part of Delta's larger goal to trim
systemwide domestic capacity this year by 5 percent, cancel
or reduce flying some aircraft and cut an unstated number of
jobs to offset fuel prices that climbed nearly 60 percent in
2007 and may have wiped out the carrier's operating profit
in the final quarter of the year. Also contributing to a
lesser extent is a slight softening of demand for domestic
travel.
Delta hopes the actions will save $400 million in 2008
and allow it to hang on to the financial recovery that began
after huge losses and cutthroat competition from low-cost
airlines drove it into bankruptcy in 2005.
"Given this, we are adjusting domestic capacity to
reduce flying at off-peak times and to long-haul
destinations that are served infrequently and can be better
served via [other Delta hubs]," spokesman Anthony Black said
in an e-mail.
Capacity will be scaled back "with minimal customer
impact," Black said.
Others aren't so sanguine. Many Delta flights are
already crowded. Drawing down the supply of available seats
could make its aircraft even fuller. And that's likely to
push fares higher. Moreover, some destinations that have
been a nonstop flight away will be harder to reach.
"One never likes to lose any airline service, but with
fuel prices as high as they are, it's not a surprise," said
Michael Marnach, executive director of the Sioux Falls
airport. The loss means 10,000 annual South Dakota travelers
will have to find another way to reach Salt Lake or bypass
the city altogether, he said.
If there is a common denominator, it's that all
the affected routes are served with a mix of 50-, 70- and
76-seat gas-guzzling Bombardier regional jets that Delta and
others say are inefficient to fly on long-haul routes where
demand is limited.
"They are more costly on a per-seat basis. A majority of
the agreements Delta has with its regional partners [such as
SkyWest Airlines] calls for the cost of fuel to be passed
from the partners to Delta. The high cost of fuel has
reduced the number of markets where a regional jet can make
money," said Michael Boyd, an airline consultant in
Evergreen, Colo.
The cuts mark a turnaround from past airline practice.
When demand for travel flagged, airlines often kindled
interest in flying with fare cuts or promotional packages.
That's changed. Now, airlines park some of their planes to
bring down costs and pack the remaining aircraft with
passengers. Delta, for instance, intends to ground 35 of its
regional jets in the first quarter.
"We think . . . one of the best ways to manage the
fuel crisis is actually not to fly the aircraft," Ed
Bastian, Delta's president and chief financial officer, told
analysts last month.
While capacity cuts may shore up Delta's finances,
consumers will feel the pinch of higher ticket prices. Major
airlines, including Delta, successfully raised fares 17
times in 2007, said Rick Seaney, chief executive officer of
FareCompare.com, a Dallas-based online travel site.
"With oil slipping over the $100 per barrel mark today
and legacy airlines continuing to drastically reduce
capacity, consumers should brace themselves for continued
airfare hikes in 2008," Seaney said Wednesday.
Whether Salt Lake travelers can expect more capacity
trims is unclear. In his remarks to analysts last month,
Bastian said Delta would take more steps to reduce the
supply of domestic flights if fuel prices don't stabilize.
Black said the airline "will continue to invest in new
services and destinations" from Salt Lake.
"It's really hard to know. The wildcard we're dealing
with is the cost of fuel. We may see future decreases until
oil prices can level out," airport spokeswoman Barbara Gann
said.
In June, Delta will begin flying from Salt Lake to
Paris. The airline's first transatlantic route between Utah
and France is another element of the carrier's capacity
plans. While domestic capacity will fall this year,
international capacity is expected to increase at least 15
percent. Delta will add more than 20 new international
routes this year as it continues to expand its overseas
flights, where profits are higher and competition from low-
cost carriers is less.
"It's literally a retreat from the domestic market,"
said George Hamlin, managing director of Airline Capital
Associates, a Virginia-based firm that forecasts airline
trends.
Bye Bye--General Lee
Fare hikes were not enough, so several flights from SLC will
be cut
By Paul Beebe
The Salt Lake Tribune
Article Last Updated: 01/05/2008 12:26:34 PM MST
With jet fuel prices refusing to retreat from record
heights, Delta Air Lines is doing more than just raising
fares, and some of the measures will hit Salt Lake City
travelers this month.
On Tuesday, Delta will end nonstop service from its Salt
Lake City International Airport hub to airports in
Birmingham, Ala.; Des Moines, Iowa; Fayetteville, Ark.;
Memphis, Tenn.; Milwaukee; and Sioux Falls, S.D. The airline
cited high fuel prices, its biggest single expense.
Later in January, Delta will trim one flight a day to
another 12 airports, including Washington Dulles in
Virginia, Vancouver International in British Columbia,
Kansas City, Omaha, as well as destinations in California,
the Pacific Northwest and the Midwest. In total, Delta is
cutting its Salt Lake capacity - the number of seats
available to passengers - by 3 percent this year.
The action is part of Delta's larger goal to trim
systemwide domestic capacity this year by 5 percent, cancel
or reduce flying some aircraft and cut an unstated number of
jobs to offset fuel prices that climbed nearly 60 percent in
2007 and may have wiped out the carrier's operating profit
in the final quarter of the year. Also contributing to a
lesser extent is a slight softening of demand for domestic
travel.
Delta hopes the actions will save $400 million in 2008
and allow it to hang on to the financial recovery that began
after huge losses and cutthroat competition from low-cost
airlines drove it into bankruptcy in 2005.
"Given this, we are adjusting domestic capacity to
reduce flying at off-peak times and to long-haul
destinations that are served infrequently and can be better
served via [other Delta hubs]," spokesman Anthony Black said
in an e-mail.
Capacity will be scaled back "with minimal customer
impact," Black said.
Others aren't so sanguine. Many Delta flights are
already crowded. Drawing down the supply of available seats
could make its aircraft even fuller. And that's likely to
push fares higher. Moreover, some destinations that have
been a nonstop flight away will be harder to reach.
"One never likes to lose any airline service, but with
fuel prices as high as they are, it's not a surprise," said
Michael Marnach, executive director of the Sioux Falls
airport. The loss means 10,000 annual South Dakota travelers
will have to find another way to reach Salt Lake or bypass
the city altogether, he said.
If there is a common denominator, it's that all
the affected routes are served with a mix of 50-, 70- and
76-seat gas-guzzling Bombardier regional jets that Delta and
others say are inefficient to fly on long-haul routes where
demand is limited.
"They are more costly on a per-seat basis. A majority of
the agreements Delta has with its regional partners [such as
SkyWest Airlines] calls for the cost of fuel to be passed
from the partners to Delta. The high cost of fuel has
reduced the number of markets where a regional jet can make
money," said Michael Boyd, an airline consultant in
Evergreen, Colo.
The cuts mark a turnaround from past airline practice.
When demand for travel flagged, airlines often kindled
interest in flying with fare cuts or promotional packages.
That's changed. Now, airlines park some of their planes to
bring down costs and pack the remaining aircraft with
passengers. Delta, for instance, intends to ground 35 of its
regional jets in the first quarter.
"We think . . . one of the best ways to manage the
fuel crisis is actually not to fly the aircraft," Ed
Bastian, Delta's president and chief financial officer, told
analysts last month.
While capacity cuts may shore up Delta's finances,
consumers will feel the pinch of higher ticket prices. Major
airlines, including Delta, successfully raised fares 17
times in 2007, said Rick Seaney, chief executive officer of
FareCompare.com, a Dallas-based online travel site.
"With oil slipping over the $100 per barrel mark today
and legacy airlines continuing to drastically reduce
capacity, consumers should brace themselves for continued
airfare hikes in 2008," Seaney said Wednesday.
Whether Salt Lake travelers can expect more capacity
trims is unclear. In his remarks to analysts last month,
Bastian said Delta would take more steps to reduce the
supply of domestic flights if fuel prices don't stabilize.
Black said the airline "will continue to invest in new
services and destinations" from Salt Lake.
"It's really hard to know. The wildcard we're dealing
with is the cost of fuel. We may see future decreases until
oil prices can level out," airport spokeswoman Barbara Gann
said.
In June, Delta will begin flying from Salt Lake to
Paris. The airline's first transatlantic route between Utah
and France is another element of the carrier's capacity
plans. While domestic capacity will fall this year,
international capacity is expected to increase at least 15
percent. Delta will add more than 20 new international
routes this year as it continues to expand its overseas
flights, where profits are higher and competition from low-
cost carriers is less.
"It's literally a retreat from the domestic market,"
said George Hamlin, managing director of Airline Capital
Associates, a Virginia-based firm that forecasts airline
trends.
Bye Bye--General Lee
