Delta Air Offers Buyouts to Trim Jobs Amid 4% Capacity Cut

[WorldTraveler]

FWAAA,
obviously none of us know how it will all play out... but what you don't seem to want to admit is that DL already is aggressively price competitive in markets where it has had low fare competitors for years... and the result is clear that those LFCs have stayed about the same size - less than 20% market size - and based on DOT data, DL still commands revenue premiums.
Meanwhile, AA and CO both feel the need to be at least somewhat competitive with WN's prices even though WN uses different airports.
The network carriers do very much know how to protect their markets - and DL which has had one of the largest direct competitive situations has done a very good job of keeping FL in check.
DEN- the largest success story for WN in a network carrier hub - came in the midst of a costly 3 way battle in which UA - in the midst of its BK - decided to not be price competitive with the lowest fares. We'll see news shortly but all the indications are that it will be F9 who is pushed out of DEN - or at least significantly in their impact on the market.
FL's costs are lower than WN's... no one expects that WN will lower prices when they come to ATL... they'll push the value of their free checked bags, but again that is not near as big of an advantage as alot of people think in a market where DL has millions of passengers a year that receive exemptions to DL's charges.
I fully expect that AA WILL defend its N. Texas market - they've said they plan to return to DAL. But they also cannot possible put in enough capacity at DAL or lower prices at DFW to keep WN from gaining some passengers.... there are significant geographic advantages of each airport and unlike MDW vs ORD, DAL is closer to a large pool of business and wealth that is not true in MDW....
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Bottom line is that you and others contiue to HOPE that WN will somehow significantly hurt DL in ATL while believing there will be no impact on AA in DFW... both are mere fantasies... DL has figured out how to defend its turf and the Dallas market presents huge opportunities for WN.....
I am very comfortable in saying that WN will command a much higher share of the combined DAL/DFW market in 5 years than I am in believing that WN will grow its presence in ATL much beyond what FL has already established in a market that has been stimulated for many years by lower fares than WN will offer... and as much as you and I both want to reduce this to an ATL/DFW discussion/comparison of WN to AA/DL, there are still a whole lot of new opportunities that WN has and they will prioritize each of those opportunities along w/ what they can do in N. Texas and ATL....
WN has been as successful as it has because it makes good decisions about where to grow its revenue base... and has largely not gotten into costly pissing matches with other carriers.
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Why you want to throw history out for AA/DL or WN, don't know but I'm quite certain that all carriers will build on what they have learned to do well, not make changes that introduce greater risks w/ little chance of success.

 

[eolesen]

This conversation is taking place in at least two threads right now... I'll resound in the DL thread started by Southwind...

 

[WorldTraveler]

Delta has been granted a dormancy waiver by the DOT to NOT operate DTW-HND until June 1, 2012.

DL's request was supported by AA which will likely also seek a waiver and opposed by UA and HA.

From the DOT order:
Decision: We have decided to grant the request of Delta for a dormancy waiver until June 1, 2012.
When we selected Delta’s Detroit-Haneda proposal, we did so because we concluded that Delta’s proposal would provide important public interest benefits. Significantly, we noted that Delta’s service would provide a large central and eastern U.S. catchment area with convenient access to Haneda through a proven U.S.-Asia hub. Following a brief startup delay, Delta introduced and operated this new service. Then, within a month of that introduction, a catastrophic natural disaster with a comparably catastrophic aftermath occurred in Japan and seriously disrupted traffic. In light of these extraordinary circumstances, we do not find Hawaiian’s or United’s objections, including their proposals for a replacement U.S.-Haneda service, proposals that were previously considered and not selected in the 2010 proceeding, sufficiently compelling as to cause us to now forgo the anticipated public benefits of Detroit-Haneda service. We recognize that these benefits might be somewhat delayed under the flexibility we are granting Delta and that there might be some cost in terms of permitting available bilateral rights to go temporarily unused. However, on balance, we have determined that, in the circumstances presented, those costs do not outweigh the value of preserving the anticipated benefits of Detroit-Haneda service and therefore do not warrant replacement of Detroit with an alternative U.S. gateway for Haneda service.
We will therefore grant Delta relief, until June 1, 2012, from the 90-day dormancy condition applicable to its Detroit-Haneda slot pair. Specifically, we will require that Delta resume Detroit-Haneda service no later than June 1, 2012. We point out, however, that given the limited opportunities that currently exist at Haneda and the interest of other carriers, delay beyond that date might not be in the public interest and any future request for relief would be critically evaluated accordingly."

Of course, this means that DL's finances will not be dragged down by operating a poor performing route throughout the winter while still allowing DL to maintain two of the 4 slots currently held by US carriers at HND.
DL appears willing to continue to operate LAX-HND alongside LAX-NRT where it has the largest revenue share among US carriers.
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DL also reported that it expects all of its global regions to show solid RASM growth for the quarter that ends tomorrow and expects - along with almost all of the rest of the industry - to show operating profits for the quarter when DL reports in a couple weeks.
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Any word on the number of voluntary packages that have been requested by DL employees?
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Given that DL has deepened its original route cuts, it would appear that they have more than enough employees willing to take packages in order to pull down lower performing routes during the usually slow winter.
Many of the route cuts take effect in September which I would bet coincides with the dates when the first batch of employees will leave DL.
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It would appear that DL's network flexibility is indeed closely tied to its ability to rightsize its workforce to reflect economic realities.
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It should once again be noted that voluntary programs encourage medium to high cost employees to leave instead of the usual bottom seniority employees in the industry, giving DL an advantage in cost control.