Airtran Spits In Delta's Face
- Thread starter LaBradford22
- Start date
WorldTraveller:
I think, that with good revenue management, Delta's new fare structure can be RASM neutral (while being seen as a huge benefit to consumers) to RASM positive. I am sure DAL's leadership feels the same way, which is why they went forward with it. However, I am sure AMR thought the same thing 10 years ago... So the initiative could cost the industry millions of dollars, like it did when AA tried it previously. However, the flip side is that Southwest has been doing it this way for years, and America West went to a similar structure with success. So, I am not saying this is the end of the world.
My point, again, was that legacies have higher unit costs, thus must produce higher unit revenues to remain viable. In order to do so, they must convince customers to spend more money to buy their higher priced, higher cost service.
I agree that Delta is working on reducing its costs, and that is good. However, I am not sure that Delta is growing significantly. The airline recently closed a hub and all the new service announcements I read involve high-CASM regional jet growth. Will Delta grow in the future? Assuming they survive the shakeout, I think they will. Certainly, if US Airways folds, Delta will be able to grow its east coast network. We'll have to wait and see how that works out.
(And, btw, funguy2 reflects that I lost the funguy screen name during a US Aviation forums server switch where the screen name was still active, but I no longer had access to it.)
I think, that with good revenue management, Delta's new fare structure can be RASM neutral (while being seen as a huge benefit to consumers) to RASM positive. I am sure DAL's leadership feels the same way, which is why they went forward with it. However, I am sure AMR thought the same thing 10 years ago... So the initiative could cost the industry millions of dollars, like it did when AA tried it previously. However, the flip side is that Southwest has been doing it this way for years, and America West went to a similar structure with success. So, I am not saying this is the end of the world.
My point, again, was that legacies have higher unit costs, thus must produce higher unit revenues to remain viable. In order to do so, they must convince customers to spend more money to buy their higher priced, higher cost service.
I agree that Delta is working on reducing its costs, and that is good. However, I am not sure that Delta is growing significantly. The airline recently closed a hub and all the new service announcements I read involve high-CASM regional jet growth. Will Delta grow in the future? Assuming they survive the shakeout, I think they will. Certainly, if US Airways folds, Delta will be able to grow its east coast network. We'll have to wait and see how that works out.
(And, btw, funguy2 reflects that I lost the funguy screen name during a US Aviation forums server switch where the screen name was still active, but I no longer had access to it.)
funguy2 said:
DL mainline is still growing...just look at the December numbers.
Mainline domestic ASM's +2.8%
Mainline Latin American ASM's +42.2% (that's not a typo)
Mainline Atlantic ASM's +13.2%
Mainline Pacific ASM's +9.7%
Overall, mainline ASM increase of 6.8%. I consider a mainline growth rate of 6.8% to be reasonably healthy. With the new schedule starting Jan 31, DL is projecting an addtional 6% increase in mainline ASM's. The tough time comes when DL gets to 2006 and can't squeeze any more utilization out of the mainline fleet (not to mention retirements of some mainline planes). At that point, DL will be forced to either stagnate mainline or somehow acquire new/used mainline planes.
I think the prime reason for Airtran's press releases is that Airtran is feeling a little cornered right now. In ATL, DL is upping capacity and streamlining fares which will put more pressure on Airtran.
To reduce exposure to DL, Airtran has publically stated they want expansion outside of ATL. However, that hasn't gone so well either. Airtran had a small focus city in PHL, but WN has arrived and stymied Airtran's growth. MDW was another opportunity, but once again WN swooped in. BWI has potential, but Airtran's growth is limited by WN's monstrous presence.
Finally, there's DFW where Airtran could grow and not face too much WN competition (because of the Wright Amendment). But growth in DFW means facing a fare war with AA (who has a reputation for very aggressive pricing) and WN pushing for the repeal of the Wright Amendment. These factors make DFW less appealing.
So where does Airtran go? ATL and DFW mean bloody fare wars, while MDW/BWI/PHL mean butting heads with WN. Things will be even tougher if USAirways somehow manages to survive and hold onto their slots at LGA/DCA.
markkus757
Veteran
- Jul 26, 2004
- 598
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Last time I checked, the legacies already match a percentage of the low fares in the same markets. This only pressures them to fill the plane even more. Is it me or is everyone already flying around pretty full planes?
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,721
markkus,
the benefit of Delta's rationalization of fares is because DL will now have access to that huge pool of passengers who actually live closer to many of the small and medium sized airports - of which Delta serves more than any other airline - yet which have had high fares. Yes, DL has the most overlap with LCCs of any of the legacy airlines so had less to lose, and because of the breadth of its domestic network, the most to gain.
dlflyer,
thanks for providing the facts. Let's also not forget that a big part of the benefit of the simplified fare structure is that DL can grow its number of bookings coming from the web. I don't believe any of the legacy carriers have more than 30% of their bookings coming from the web - one-half to one-third what the LCCs get.
I suspect that the industry will be radically different a year from now and DL will have had the opportunity to significantly restructure its network by acquiring other carrier's assets. My bet is that DL will be acquiring significant portions of UA's network out of bankruptcy.
the benefit of Delta's rationalization of fares is because DL will now have access to that huge pool of passengers who actually live closer to many of the small and medium sized airports - of which Delta serves more than any other airline - yet which have had high fares. Yes, DL has the most overlap with LCCs of any of the legacy airlines so had less to lose, and because of the breadth of its domestic network, the most to gain.
dlflyer,
thanks for providing the facts. Let's also not forget that a big part of the benefit of the simplified fare structure is that DL can grow its number of bookings coming from the web. I don't believe any of the legacy carriers have more than 30% of their bookings coming from the web - one-half to one-third what the LCCs get.
I suspect that the industry will be radically different a year from now and DL will have had the opportunity to significantly restructure its network by acquiring other carrier's assets. My bet is that DL will be acquiring significant portions of UA's network out of bankruptcy.
DLFLyer31: I am surprised at DAL's growth, although the mainline domestic growth is pretty small. DAL's int'l growth seems inline with the the focus of the other legacies, which can't compete domestically very well, so they grow int'l. UAL and CAL have publicly announced similar strategies.
And I don't dispute that AirTran is a feeling a bit "stymied" right now. In addition to what you have listed, it seems that AirTran may have been keeping a PIT expansion plan in the wings to announce the minute US Airways folds or whatever happens happens (like they had a BWI plan announced within a week of US Airways closing BWI). I suspect Southwest just stepped all over that one too. And I suspect they are watching Frontier flounder in the pressure of BK UAL, and they remember the pressure they faced when they were even more focused on ATL now, and DAL put the screw to them (DAL added service to 3 AirTran destinations in one day). I am sure they don't want to be in that situation again... And who could blame them.
And I don't dispute that AirTran is a feeling a bit "stymied" right now. In addition to what you have listed, it seems that AirTran may have been keeping a PIT expansion plan in the wings to announce the minute US Airways folds or whatever happens happens (like they had a BWI plan announced within a week of US Airways closing BWI). I suspect Southwest just stepped all over that one too. And I suspect they are watching Frontier flounder in the pressure of BK UAL, and they remember the pressure they faced when they were even more focused on ATL now, and DAL put the screw to them (DAL added service to 3 AirTran destinations in one day). I am sure they don't want to be in that situation again... And who could blame them.
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