Airtran Spits In Delta's Face

[LaBradford22]

Silly wabbit ... simplified fare structures are for LCC's!

http://biz.yahoo.com/prnews/050105/nyw129_1.html

Press Release Source: AirTran Airways


AirTran Airways: We Offered the Best Fares Yesterday, We Still Do Today and We Will Tomorrow
Wednesday January 5, 10:12 am ET


ORLANDO, Fla., Jan. 5 /PRNewswire-FirstCall/ -- AirTran Airways, a subsidiary of AirTran Holdings, Inc., (NYSE: AAI - News) today declared that the airline has always offered the best fares and will continue to offer the best fares.
"AirTran Airways has been offering low fares to our customers for over ten years now," stated Kevin Healy, vice president planning, pricing and sales for AirTran Airways. "We have been giving the consumers what they have demanded - an easy-to-understand pricing structure that is affordable and delivers real value. To match Delta's SimpliFares, AirTran Airways would have to raise our fares and add a bunch of restrictions and fees, and we are not going to do that."

While Delta Air Lines claims to offer a simplified fare structure, in fact, the new SimpliFares has a litany of convoluted rules:

* SimpliFares require a roundtrip purchase

* SimpliFares require a one night minimum stay - in effect, Delta traded
the Saturday night stay for a one night minimum stay

* SimpliFares have inconsistent advance purchase requirements

* SimpliFares offer no free standby for business travelers

* SimpliFares "nickels and dimes" customers by charging extra for
reservations in person or over the phone

* SimpliFares have a litany of other convoluted rules


"SimpliFares is about as simple as the U.S. Tax Code -- and it is nothing more than big airline pricing mumbo-jumbo," stated Kevin Healy, vice planning, pricing and sales. "Once again, Delta is trying to mimic a highly efficient, low cost carrier like AirTran Airways, but they are falling short. It is difficult for a leopard to change its spots."

AirTran Airways has always offered simple, low one-way fares. In addition to low fares, AirTran Airways also offers the following amenities to its customers:

* AirTran Airways offers Business Class on every flight, with upgrades
starting as low as $35.

* AirTran Airways offers the youngest all-Boeing fleet in the U.S.A.

* AirTran Airways offers easy online booking and check-in at
http://www.airtran.com

* AirTran Airways offers low one-way fares with no roundtrip requirements

* AirTran Airways offers free same-day standby at no charge

* AirTran Airways does not "nickel and dime" customers with junk fees
based on how a customer makes a reservation


AirTran Airways believes Chris McGinnis, editor of The Ticket, travel newsletter, and contributor to CNN, said it best in his Ticket newsletter, "In Atlanta, we have AirTran to thank for bringing common sense to air travel- although it has not ballyhooed it as such, Delta has been competing with "SimpliFares" on AirTran routes for the past several years."

AirTran Airways is one of America's largest low-fare airlines -- with 6,000 friendly, professional Crew Members and operating over 500 flights a day to more than 40 destinations. The airline's hub is at Hartsfield-Jackson Atlanta International Airport, the world's busiest airport by passenger volume, where it is the second largest carrier. AirTran Airways, a subsidiary of AirTran Holdings (NYSE: AAI - News), is the world's largest operator of the Boeing 717 and has America's youngest all-Boeing fleet. The airline recently added the Boeing 737-700 aircraft to its fleet, which like the Boeing 717 is one of the most fuel efficient and environmentally friendly aircraft flying today. AirTran Airways was also the first airline to install XM Satellite Radio on a commercial aircraft. For reservations or more information, visit http://www.airtran.com (America Online Keyword: AirTran).

Media Contacts:
Tad Hutcheson
[email protected]
678.254.7442

Judy Graham-Weaver
[email protected]
678.254.7448




--------------------------------------------------------------------------------
Source: AirTran Airways

 

[TheDog2004]

AirTran's own CEO mentioned in an interview some time ago that he's worried.

 

[WorldTraveler]

All of the former LCCs will have a much harder time competing for passenges. If and when the other 5 "legacies" match Delta's fares, the LCCs will not have the price advantage they once had.

DL has finally figured it out and it is to the benefit of customers and legacy airlines - where the industry began.

 

[WorldTraveler]

Someone agrees with me.

Press Release Source: Bestfares.com


Delta's New Airfare Structure to Disrupt Low-Cost Airlines, Says Bestfares.com
Wednesday January 5, 12:01 pm ET


ARLINGTON, Texas, Jan. 5 /PRNewswire/ -- Today's announcement by Delta Air Lines of its new SimpliFares program has one mission: to disrupt the growth of low-cost airlines, says Tom Parsons, CEO of Bestfares.com, an internet travel information web site

 

[AA191]

Good for Delta!!

 

[latreal]

AirTran's own CEO mentioned in an interview some time ago that he's worried.

[post="235761"][/post]​

Maybe that was before the fares actually were published.

I see no fare difference as far out as March 2005.

 

[TheDog2004]

Maybe that was before the fares actually were published.

I see no fare difference as far out as March 2005.

[post="235844"][/post]​

You need to look at the walkup fares, which is where the real money is made.

The AirTran CEO said he was worried about the 'de-peaking' of ATL.

This memo is a panic attack.

 

[funguy2]

All of the former LCCs will have a much harder time competing for passenges. If and when the other 5 "legacies" match Delta's fares, the LCCs will not have the price advantage they once had.

DL has finally figured it out and it is to the benefit of customers and legacy airlines - where the industry began.

[post="235767"][/post]​

But the LCC's still have the cost advantage. The legacies, and their armadas of regional jets, do not... So, the LCC's can still profit more (or at profit at all) when the legacies cannot. The legacies need to define to the consumer why they are worth a premium to the LCC's. Historically, it has been easy... Legacies had advantages in network (LCC's were limited), reliability (LCC's used to have old airplanes and amateurish operations (like when PEOPLExpress booked 747's to 4 times capacity based on their on-board ticketing program)), services (first class, on-board entertainment, airport clubs, codeshares etc). However, now LCC's have significantly eroded many of these items... The legacies still have superior on-board service (like long-haul/int'l first class, more clubs, global networks, but their advantages, and thus premium, has been eroded. Becoming more like an LCC won't bring that back.

 

[TheDog2004]

Most LCCs only have a cost advantage because their employees have no seniority. jetBlue's pay scales for pilots are actually the same as other airlines - it's just that nobody has accrued enough seniority for them to be paying them as much as the others.

Southwest's cost advantage exists only because they are able to hedge fuel. Jim Parker admitted had they not hedged so heavily that they would be losing money right now, too.

Why is it that when an airline like Delta does something that has WORKED for the so called 'Low Cost Carriers' it's destined to failure? Delta has seen this increase yields in Cincinnati. They have seen it work with Song.

Is it really destined to failure because Delta isn't named Southwest?

 

[funguy2]

TheDog2004:

I remember reading that SimpliFares increased TRAFFIC at CVG, but I did not read that it increased YIELD... Big difference. RASM increases by selling the same number of tickets at a higher price (increasing yield) or selling more tickets at the same price (increasing traffic). Since all airlines have been recording record load factors, we know that recent RASM gains have been made on more traffic, not more yield.

However, you are right to point out that SimpliFares combined with good revenue management could produce higher RASM (and yield). This is what America West did successfully a few year back, and what AMR tried unsuccessfully about a decade ago. Will it work? Maybe.

But my point was this: Even if it does work, DAL's costs are still higher than the LCC's. Higher costs need higher revenue to be profitable. All successful "high-end" companies are able to successfully differentiate their product. Think of a Sheraton Four Points Resort vs. Motel 6. Sheraton's fearures, such as prime locations, ammenities, etc, justify thier higher price to their customers.

The major airlines used to justify their higher prices too... However, as LCC's have been able to offer a closer product to the legacies, the legacies need to find new ways to justify their higher prices. Some of the old ways will continue to work (Frequent Flyer programs, clubs, int'l networks, etc). Some new ways have come about, like code-sharing.

Now, if Motel 6 can set up a hotel next door to Sheraton, and similar in amenties, et al, but still charge Motel 6 prices, well then Sheraton will have to either match Motel 6's price or justify its higher price to consumers. Similarly, the legacies now have to do more simply because they need to stay a step ahead of the LCC's, who now have First Class, on-board entertainment, and much improved networks. That is, unless they can match costs with the LCC's, which thus far has proven to be a VERY difficult goal.

 

[WorldTraveler]

funguy2 (not sure where #1 is or it that makes you a junior sized ball of fun),
The legacy airlines have been hated for years because they were perceived as engaging in bait and switch pricing tactics for years and gouging their best customers - neither strategy will work to build loyalty and that is why Delta has made the fare change. According to its CEO, Delta is committed to rebuilding loyalty among its passengers.

The media coverage of this fare change has been absolutely phenomenal. I just came back from a high school basketball game and people were talking about it. It is featured on the front page of cnn.com where it has been all day; it has been covered on the front page of business and general news papers and websites all day long (front page of USAToday as well as DL's own 2 page ad spread). People wanted this to happen years ago and Delta finally made it happen. They will surely reap the benefits.

There are a couple of other reasons why DL probably made the move now.
- DL serves more connecting passengers and has a bigger domestic connecting network than any other airline. This move gives DL an advantage in the thousands of markets where passengers were driving to bigger cities to fly between busier airports in order to get lower fares instead of flying from their hometown airports.
- The LCCs have shown that people will use their websites and not agencies or other websites when they know they will get a good deal. DL will undoubtedly shift more passengers to its own website; airline's own websites are generally the lowest cost ways to obtain a booking.
- DL has much fewer of its own hub markets left w/o low cost competition than do other legacy carriers like NW or AA. As such the cost will be less for DL.

You mention overall costs. Yes, DL has had very high costs but keep in mind DL has aggressively attacked costs as part of its concessions. Unlike UA and US particularly, DL is growing its network. All of the LCCs know that by growing, you reduce costs. I fully expect that DL will report cost reductions in the 2nd and 3rd quarters of this year (maybe even in the first quarter) approaching 25% or more. Granted, those numbers aren't in WN or B6's territory but they do come much closer to F9 and AirTran which are really hub and spoke LCCs so are better comparisons to legacy carriers.

This fare initiative further validates what I said on 1/1/05 on a UAL posting:

"...the airline industry is about to enter a phase where the legacy carriers that are able to do so will actively begin managing their destinies, including acquiring other carriers it that is what is necessary to ensure the survival of the solvent airlines."

DL has done with this fare initiative what DL needs to do to ensure its survival.

 

[mrman]

TheDog2004:


Now, if Motel 6 can set up a hotel next door to Sheraton, and similar in amenties, et al, but still charge Motel 6 prices, well then Sheraton will have to either match Motel 6's price or justify its higher price to consumers. Similarly, the legacies now have to do more simply because they need to stay a step ahead of the LCC's, who now have First Class, on-board entertainment, and much improved networks. That is, unless they can match costs with the LCC's, which thus far has proven to be a VERY difficult goal.

[post="235997"][/post]​

Yes but the Sheraton does not charge you $10 to check in with a person or $100 to change reservations or charge you a fee to check in a day early (standby)

This amoung others is what pisses off business travelers and sends them to the LCC - Customer Service

 

[WorldTraveler]

Many LCCs do have lower fares when purchased on their websites. The end result is the same although I agree that charging to talk to a human is bad.

 

[emily]

Most LCCs only have a cost advantage because their employees have no seniority. jetBlue's pay scales for pilots are actually the same as other airlines - it's just that nobody has accrued enough seniority for them to be paying them as much as the others.

Southwest's cost advantage exists only because they are able to hedge fuel. Jim Parker admitted had they not hedged so heavily that they would be losing money right now, too.

Why is it that when an airline like Delta does something that has WORKED for the so called 'Low Cost Carriers' it's destined to failure? Delta has seen this increase yields in Cincinnati. They have seen it work with Song.

Is it really destined to failure because Delta isn't named Southwest?

[post="235984"][/post]​

No, Jetblue pilot pay scales are actually NOT the same as other airlines-regardless of seniority. Southwest pays much better. Jetblue pay is PATHETIC!

 

[mrman]

Many LCCs do have lower fares when purchased on their websites. The end result is the same although I agree that charging to talk to a human is bad.

[post="236245"][/post]​

The result is not the same. The LCC reward one to use their website mainly with FF credits, The legacy punish you with fees. Customers do not liked to be punished