DL CEO says value fares are coming.

[WorldTraveler]

in response to questions about why fares aren't dropping right now as fuel prices drop, DL's CEO said on CBS that DL expects to have a basic (value) fare

http://www.cbsnews.com/videos/delta-ceo-on-holiday-travel-rising-fares-and-immigration-reform/?

The video - toward the end - also speaks to the immigration issue.

 

[topDawg]

in response to questions about why fares aren't dropping right now as fuel prices drop, DL's CEO said on CBS that DL expects to have a basic (value) fare

http://www.cbsnews.com/videos/delta-ceo-on-holiday-travel-rising-fares-and-immigration-reform/?

The video - toward the end - also speaks to the immigration issue.

Is it the EBT fare code so Delta can gain all that revenue you have been talking about?

 

[WorldTraveler]

lower fares for those who choose to buy on DL reliability and schedules = more revenue.

I suppose in that sense Everybody says Thanks - except for the ULCCs.

 

[LD3]

What happenings when all the other airlines start offering value fares?

 

[eolesen]

What happenings when all the other airlines start offering value fares?

<crickets>

 

[WorldTraveler]

What happenings when all the other airlines start offering value fares?

the ULCCs die?

I believe the idea is that the more carriers pile on, the faster the demise of the cattle class of carriers.

 

[LD3]

the ULCCs die?

I believe the idea is that the more carriers pile on, the faster the demise of the cattle class of carriers.

Wow, you must be drooling that DL may become the Terminix of the airline industry... Kill the bottom feeders, devalue Alaska and then look out all others that get in DL's way...

 

[eolesen]

Yeah, that "let's price them out of business" approach didn't work too well the last couple times it's been tried.

Employees took it in the shorts, and it hasn't stopped new ULCC's from appearing.

 

[jimntx]

E, it reminds me of the time at Texaco that a VP from HDQ was expounding upon the topic of "We're going to do this and we're going to do that, etc"  He looked at me and said, "You don't seem to be onboard with this.  Do you have any questions?"  I said, "Yes.  What's changed?"  He said, "What do you mean?"  I said, "What you are proposing didn't work the first two times we tried it.  What's changed about the situation that is going to make it work this time?"  He responded, "Well, you just have to try harder."  But then, he said, "You still don't seem to agree."  I responded, "Well, I was taught that doing the same thing over and over expecting different results was the first sign of insanity."  Abrupt end to meeting.  My boss later cornered me with "Why did you do that?  Now, I'll have to listen to him preach all through dinner about my need to control my employees.  You know they don't approve of anyone pointing out the truth to them."
 
This time though DL will run the LCC and ULCC lines out of business.  I'm sure of it.

 

[WorldTraveler]

and what examples of DL failing to successfully compete with LCCs or ULCCs would you like to cite?

seems to me that DL has stated that NYC has become profitable for them at the same time that B6 just presented that their financial results in JFK are not what they need them to be.

WN has pulled down multiple routes from ATL, SLC is not growing... looks to me that DL is being quite successful in competing with LCCs - and is now turning up the heat on the ULCCs which have essentially replaced the LCCs as the bottom feeders of the industry.

 

[robbedagain]

But it only took what some 85 or so yrs before for dl cld make nyc profitable.. :~

 

[WorldTraveler]

and as much as some would like to argue otherwise, the chances that AA is profitable in NYC is somewhere between slim and none. well-run companies don't continue to shrink and lose market share.

DL is doing as well as it is in NYC because it has been able to succeed against B6. there is a reason why B6 said that a key part of their strategic plans is to improve their margins in NYC.

 

[LD3]

= more revenue.

 

does not = profit.

 

[eolesen]

Yeah, and don't bother noticing that lowering fares to ULCC levels usually has a negative impact on revenue, especially when you're running at 85%+ load factors.

 

[WorldTraveler]

does not = profit.

no, but it is pretty hard to increase profits based on the same revenue.

remember (or know for the first time) that the reason why DL has been lauded as much as it has by analysts is because DL has done such a good job of increasing revenues while ALSO managing costs.

DL's RASM has increased at above average levels while DL is adding more capacity than either of the big 4.

DL has also managed to keep costs at or below the industry average.
 
 

Yeah, and don't bother noticing that lowering fares to ULCC levels usually has a negative impact on revenue, especially when you're running at 85%+ load factors.

which is why DL excels as well as it does at revenue mgmt. ULCCs don't offer robust schedules so it isn't hard for a network carrier to offer a few seats here and a few seats there and end up with as many or more seats in a market as the ULCCs... with a whole lot more schedule options.

further, it is precisely because DL is adding capacity and can do so that it can find seats to put into the market at fares that are profitable.

again, DL has the best track record in the industry of revenue generation.... let's see how this one turns out but I suspect that we will once again see that the ULCCs will decide DL's hubs aren't good places to grow and they will refocus their efforts elsewhere.