Song or More Room?

Hopeful

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Dec 21, 2002
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Reuters
Delta Gives Details of Low-Fare Airline
Wednesday January 29, 6:19 am ET


ATLANTA (Reuters) - Delta Air Lines (NYSE:DAL - News) took an aggressive step forward on Wednesday in its efforts to woo cost-conscious customers, unveiling a new low-fare airline named "Song" that will start flights up and down the East Coast in April, ratcheting up the fight with low-budget competitors.
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The new offshoot, which will use a simplified structure with one way fares ranging from $79 to $299, will replace Delta's Express unit, and should account for about 10 percent of Delta's total capacity in its first year of operation.

Delta, the No. 3 U.S. air carrier, said Song will initially fly Boeing 757s with 199 coach seats on routes between the Northeast and Florida. The company said it plans to operate 144 daily Song flights by October. The major U.S. carriers are all struggling to win customers back from lower-fare, profitable airlines like Southwest, JetBlue Airways Corp.,(NasdaqNM:JBLU - News) and, particularly in Delta's southern U.S. markets, AirTran Holdings Inc. (NYSE:AAI - News).

Song, headquartered in Atlanta, will compete directly with New York-based JetBlue, even offering in-flight satellite television. Delta said it would keep Song's costs low by turning its airplanes around quickly, using fewer flight attendants, and using its planes for 13.2 hours each day.
 

Connected1

Senior
Aug 20, 2002
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If AA only had $70 million to spend, would you rather start a low fare airline-within-an-airline or repeal More Room?
 

TWAFA007

Advanced
Sep 2, 2002
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Aloha,

DAL Song might just be their swan song. Quick name a low cost airline with in an airline that has actually worked? None. Even DAL's own Delta Express failed. Lets see. There was CAL Lite, U Metro. UAL Shuttle. All failed. Why? Because all they do is take away from their core business. U was dumb enough to compete against itself and fly Metro on routes U flew. It wont work. Never has never will.

ALOHA, 007
 

767jetz

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Aug 20, 2002
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[blockquote]
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On 1/29/2003 9:29:36 AM TWAFA007 wrote:

Aloha,

DAL Song might just be their swan song. Quick name a low cost airline with in an airline that has actually worked? None. Even DAL's own Delta Express failed. Lets see. There was CAL Lite, U Metro. UAL Shuttle. All failed. Why? Because all they do is take away from their core business. U was dumb enough to compete against itself and fly Metro on routes U flew. It wont work. Never has never will.

ALOHA, 007
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[/blockquote]

Actually, I beg to differ. I recently read an article (I think it was in USA Today or possible The N Y Times) about a low cost airline within an airline operating today that is successful and on it's way to making a profit, and helping the mainline. It's Air Canada. In fact, they are doing it without even shoving a low pay scale on the employees. It is working so well that recently executives from DAL, UAL, and others met with AC to see what their formula is.

Just because something didn't work in the past doesn't mean it can't work in the future if the model is changed sufficiently.
 
B

bagsmasher

Guest
Maybe it won't work, but at least they will give JBLU some competition. AA on the other hand cannot compete with WN, and just runs and hides. I would have more faith in my company if they actually had some ideas for the future other than shrink as WN expands.
 

KCFlyer

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Here's a thought - why not operate ONE airline that doesn't have a slew of differnt fares, that doesn't penalize changes, and that doesn't have a $1,500 difference between the lowest and highest price ticket? You can still offer more that "no frills", and you don't have to manage the operation of two different airlines. The other "airlines within an airline" concepts are doing this, but does Delta or United really think that they can continue with "business as usual" on their "full service" product?
 

FA Mikey

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[blockquote]
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On 1/29/2003 10:28:57 AM KCFlyer wrote:

Here's a thought - why not operate ONE airline that doesn't have a slew of differnt fares, that doesn't penalize changes, and that doesn't have a $1,500 difference between the lowest and highest price ticket? You can still offer more that "no frills", and you don't have to manage the operation of two different airlines. The other "airlines within an airline" concepts are doing this, but does Delta or United really think that they can continue with "business as usual" on their "full service" product?
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[/blockquote]Exactly. Better utilization of crews and equipment. Why create more bureaucracy. An airline with in an airline? Stupid. One consistent seamless product with Value pricing. The advantages over the others is the greater route network of cities, The more room in coach and upgrades we have to offer.

There is a large graveyard of failed attempts at this concept.
 

winedndined

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On 1/29/2003 10:28:57 AM KCFlyer wrote:

Here's a thought - why not operate ONE airline that doesn't have a slew of differnt fares, that doesn't penalize changes, and that doesn't have a $1,500 difference between the lowest and highest price ticket? You can still offer more that "no frills", and you don't have to manage the operation of two different airlines. The other "airlines within an airline" concepts are doing this, but does Delta or United really think that they can continue with "business as usual" on their "full service" product?



perhaps because the full service airlines operate a hub and spoke model which many say is no longer efficient and able to compete with the point to point system?
 

KCFlyer

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[blockquote]
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On 1/29/2003 12:43:38 PM winedndined wrote:
perhaps because the full service airlines operate a hub and spoke model which many say is no longer efficient and able to compete with the point to point system?

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[/blockquote]

Which begs the question, why develop a "low cost" airline within an airline to operate point to point, and then maintain the costly hub and spoke system?
 

MrMarky

Advanced
What to do with an extra $70 million, huh? I say stick with the tried and true -- spend it on bonuses for upper management.
 

KCFlyer

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[blockquote]
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On 1/29/2003 4:22:43 PM luv2fly wrote:

Can't you do better than that KC? Same ol rhetoric, same ol "Song" and dance.
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[/blockquote]

luv2fly, could you explain how this is going to help Delta? I mean, it's a low cost, point to point carrier, but ATL isn't being shut down is it? How're they gonna cut costs there when this airline within an airline steals passengers from it?

Is existing managment going to oversee the operation, or will they be hiring "management within management" to run the thing? If so, will they be able to find management that will take less in pay (they are low cost after all) that the "mainline" managers?

How will you sell your "elite" flyers, who demand first class on a "Song" flight from a city? Will "Song" go straight to Orlando, but mainline route the elite thru Atlanta?

Will passengers be able to accrue "Song miles" that can be redeemed for "Sky miles"? Any impact from a bunch of low cost passengers getting free tickets to Europe on Delta mainline?

Will Delta still have a plethora of fares between "less popular" cities, but the difference in advance and walk up remain over $1,500?

Sorry - I don't think the "airline within an airline" concept is going to work. IMHO, it's going to add another layer of management, it holds the potential of alienating some of your "medallion" passengers (kind of like CO Lite hacked them off by just booking them on a flight, only to discover that it was a "lite" flight and not a "mainline" flight, along with the "mainline" amenities).

Starting a whole new airline is fraught with costs. Restructuring fares in your mainline product would, IMHO, be a whole lot less expensive to start, and would result in more "quality" revenues without asking the "SIngers" of the new airline to work for peanuts.
 

FA Mikey

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[blockquote]
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On 1/29/2003 3:30:51 PM Vikedog64 wrote:

Mikey...you sound jealous. I'm curious, what makes you such an expert? Just curious...
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[/blockquote]
What am I jealous of?

I Not claiming to be an expert. Logically, Since 3 attempts by three different airlines all netted failure. What's to say this time will be any different? Why just make what you have more efficient, and utilize your current operation. Instead of a airline with-in an airline, its redundant.
 

luv2fly

Veteran
Aug 21, 2002
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[blockquote]
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On 1/29/2003 10:28:57 AM KCFlyer wrote:

Here's a thought - why not operate ONE airline that doesn't have a slew of differnt fares, that doesn't penalize changes, and that doesn't have a $1,500 difference between the lowest and highest price ticket? You can still offer more that "no frills", and you don't have to manage the operation of two different airlines. The other "airlines within an airline" concepts are doing this, but does Delta or United really think that they can continue with "business as usual" on their "full service" product?
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[/blockquote]
Can't you do better than that KC? Same ol rhetoric, same ol "Song" and dance.
 

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