US and DL trade blows on new hub routes

[usair_begins_with_u]

Anyone see the irony?? Uair in BK because their costs are too high and now they are starting fare wars...

 

[Furloughedagain]

Delta, through "Simplifares" as their answer to "Go-Fares". With the closure of DFW there is tremendous excess capacity in the Delta Connection system.

The New York expansion (both JFK and LGA) is part of the reallignment of Comair flying/ASA. (they're pulling Comair out of the west-coast markets)

I sincerely doubt it is an intentional attack on US Airways. I believe they're simply taking advantage of a vacuum in the competitive marketplace. It also gives Charlotte customers access to the JFK international operation.

This is Delta -- the company that flies 767s from ATL to JAX and SAV. If they wanted to attack US Airways in Charlotte I think it would be a lot more aggressive than 3 50 seaters a day.

 

[BoeingBoy]

Aviation Daily

Delta, US Air Go After Each Other's Top Hubs
By Steven Lott
10/08/2004 08:42:35 AM

If battling low-cost carriers did not put enough pressure on US Airways and Delta, the two network airlines yesterday each announced plans to launch new service to the other's chief hub.

Delta unveiled plans to start three daily flights from New York LaGuardia (LGA) to US Airways' Charlotte hub on Dec. 1. On Jan. 31, Comair will launch one daily flight from New York Kennedy to Charlotte. Both routes will be operated with 50-seat CRJs flown by Comair. The airline claims the service is part of Delta's overall plan to add point-to-point Connection flights to key cities from New York. US Airways offers nine daily flights from LGA to Charlotte on weekdays.

Only hours after Delta's announcement, US Airways said it would launch four daily nonstop flights between Washington National (DCA) and Delta's Atlanta hub this winter. The service will start Feb. 6 and will be operated by MidAtlantic with its new 72-seat Embraer 170s and an introductory $98 roundtrip fare. Even though there is plenty of capacity between the cities, US Airways said the flight "fits well into our transformation plan to leverage our strengths on the East Coast."

Delta offers 17 daily flights on the DCA-Atlanta route on weekdays, in addition to AirTran's four daily flights. According to data from Seabury Airline Planning Group, 18,437 weekly nonstop seats are available between the airports. There is even more service from Washington Dulles to Atlanta, where Delta has 15 flights every weekday, AirTran four, United six and Independence Air as many as 16.

 

[jimntx]

This is Delta -- the company that flies 767s from ATL to JAX and SAV. If they wanted to attack US Airways in Charlotte I think it would be a lot more aggressive than 3 50 seaters a day.

[post="189249"][/post]​

The number and the size of the a/c is not really the issue. It's the fare. If DL is charging $126+tax for CLT-LGA even if there are only 2 seats/flight at that fare, UAIR has to match. CLT has been a high-fare, low-competition market for UAIR, and since there isn't really that much O&D traffic at CLT compared to say ATL, UAIR needs to retain as many of those bodies as possible. And, UAIR is in no position to have to fight a fare war at this time.

 

[funguy2]

Anyone see the irony?? Uair in BK because their costs are too high and now they are starting fare wars...

[post="189238"][/post]​

Actually, this is a common BK airline tactic. Since they don't have to pay all their bills (i.e. US Airways' pension obligations, and they expect a 23% reduction in employee costs based on the S1113(e) filing), BK airlines often do this to raise cash quickly, and to ensure traffic continues to fly on their airline (i.e. fight the fear factor from Bronner saying Liquidation is near) by offering a deal that people cannot refuse.

This is very common... EAL did it, Pan Am did it, CAL and HP did it during their BK's. Seems counter-intuitive, and it is, but the company just needs to ensure some kind of inbound cash flow, even at a loss. This goes back to my cash flow-bucket example. The idea here is to ensure some cash is being dropped into the bucket so that all the immediate bills can be paid (cash flowing out the hole in the bottom of the bucket).