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On 11/20/2002 11:32:22 AM AirplaneFan wrote:
And how does DL EX2 strategy differ from DL EX? And what happens if they are successful? If JetBlue has to pull some of its 16 nonstops between JFK and FLL then where will it put them? Might they go to ATL or CVG? It just seems that its a terribly flawed strategy to believe you can knock off the low-fare carriers with a contived airline. If they tie themselves too closely to DL then they lose the impact of the "jazzy name". If they distance themselves too far from DL than they run the risk of being another "Kiwi Air" or "New York Airways". Will passengers call into the same reservation number or a different one? Will DL have a Class A and Class B employee system? And do Class B's have the opportunity to become Class A's? Share Freq. flyer points? Will DL EX2 have to check with Atlanta before any expansion plans? Won't that depress moral when DL EX2 doesn't have many of the excitement of a new start-up (stock options, new cities, plenty of room for advancement), but all of the drawbacks (low initial salary). [/P]
If you were to ask me what the most successful strategy to compete against the low-fares its simply to lower your costs where you can effectively compete. Mix pay with profit sharing, when times are good all benefit; when times are bad, all share the sacrafices.[/P]
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You might find this plan laughable, but most people found WN pretty laughable when they first started.....remember the cheesy ads, cheesy uniforms and ugly planes.
Passengers will likely call into the same reservation system, though its possible DL could create a new system. Ideally, a bulk of the pax will book on-line, so DL shouldn't need new res agents.
The pilots will be totally left alone. They will keep their current payscales for the 752 and fly the new low-fare carrier as if it was regular DL. I guess further down the road DL might try to push for concessions, but by DL's own current projections, they can get a low enough CASM with the pilots paid as is.
Maintenance will also be kept inside the existing DL since the infrastructure is already in place and it's actually cheaper for DL to keep the maintenance in-house.
Other employee groups are likely to be hired from the outside and at a lower pay scale and less benefits. Obviously morale at the DLX2 might be lower, but no lower than at any other start-up. There's no room for advancement at most low-fare carriers so what's the big deal. Do you really think your average 22 yr old going to work for AAI (or any lowfare carrier)as a baggage handler really expects to climb the ranks? Not in today's world.
You're right that the best strategy is to lower cost in order to compete and DL is doing that. However, it is IMPOSSIBLE for DL to ever get its costs as low as WN,JBLU,etc. So DL has to come up with new tools to compete or they can take the strategy of other carriers like US and simply do nothing.