WorldTraveler
Corn Field
- Joined
- Dec 5, 2003
- Messages
- 21,709
- Reaction score
- 10,662
I never cease to be amazed at how people cannot understand the power of ATL as a hub. You can fly anything you want to anywhere in the world you want and it will work. Who cares if ATLDXB only generates 10 passengers/day…. that is not what DL goes after. And BTW we really have no idea now many passengers fly ATLDXB since foreign carriers don’t have to report data to the DOT like US carriers do… and CRS data is not completely accurate either given the ability to break fares. And as I’ve pointed out, ATLICN is KE’s most profitable route. Given that DL and KE have antitrust immunity and share revenue, you can bet DL knows exactly what it takes for DL to succeed in that market. And DXB is by far the most western city in the Middle East and is very business friendly with hundreds of US companies doing business there.
It is true that DL’s domestic system is driving the revenue growth in their system but you also are seeing that DL has reached the size of their domestic system they want. The 757s that are coming from AA next year effectively backfill the 764s on a unit basis that are being removed for int’l service because the 757s won’t be ready to deploy overseas for several months since the aircraft are not currently ETOPS capable. DL does still have narrowbody aircraft on order from DL and are rumored to be looking at other narrowbody aircraft. Bottom line is that the capacity pulldown certainly helped the domestic system but you only get to use that ticket once. And every other network carrier has pulled down domestic capacity fairly significantly at least once since 2001.
While you can correctly argue that DL’s int’l routes didn’t make money, I have stated several times that their int’l RASM has increased year over year – and never was at the revenue deficit that it’s domestic system was at relative to the industry. Given that DL’s system costs are down and yet its profitability on the transatlantic and Latin systems are down year over year, it’s obvious that DL has had significant startup costs. As those routes mature, the revenue will improve and costs will stabilize.
It should also be noted that several of DL’s new routes are rumored to be receiving some sort of financial assistance (PSA, OTP) and all of the newest routes are starting with less than daily service. DL is obviously being much more cautious but also looking for ways to help minimize the startup costs. They clearly are not being reckless in their expansion as evidenced by their ability to grow their revenue. They simply need to get their int’l costs in line – which will happen as the markets mature – and they need to develop these markets.
Nonetheless, stockholders don’t really care where the money comes from. AA’s domestic system was half as profitable as DL’s but AA made more money to Europe and Latin America. On an ASM basis, DL’s single route to NRT was 3 times more profitable than CO’s Pacific network while AA lost money there. It is management’s prerogative how to deploy a company’s assets and DL has clearly indicated that it is responsibility moving its assets around as part of its restructuring. I would also certainly not accuse any of the US network carriers of being irresponsible with their company’s assets since AA is trying to fix their Pacific system by pulling down capacity there while CO is trying to fix its domestic system, although as some have pointed out that is a tough act to do.
DL is far from abandoning its domestic system. ATL is still a powerhouse above any other in the world. And while you may like to call DL’s smaller hubs as second rate, DL’s domestic operations at CVG and SLC are both larger than STL, CLE, or SJC to name a few defunct hubs. And there is no other city the size of CVG that supports 5 int’l flights per day. Further, DL has repeatedly said that CVG and SLC are profitable. DL couldn’t have turned in the domestic profitability statistics they did if that weren’t true. ATL is still only about 60% of Delta Air Lines.
It is true that DL’s domestic system is driving the revenue growth in their system but you also are seeing that DL has reached the size of their domestic system they want. The 757s that are coming from AA next year effectively backfill the 764s on a unit basis that are being removed for int’l service because the 757s won’t be ready to deploy overseas for several months since the aircraft are not currently ETOPS capable. DL does still have narrowbody aircraft on order from DL and are rumored to be looking at other narrowbody aircraft. Bottom line is that the capacity pulldown certainly helped the domestic system but you only get to use that ticket once. And every other network carrier has pulled down domestic capacity fairly significantly at least once since 2001.
While you can correctly argue that DL’s int’l routes didn’t make money, I have stated several times that their int’l RASM has increased year over year – and never was at the revenue deficit that it’s domestic system was at relative to the industry. Given that DL’s system costs are down and yet its profitability on the transatlantic and Latin systems are down year over year, it’s obvious that DL has had significant startup costs. As those routes mature, the revenue will improve and costs will stabilize.
It should also be noted that several of DL’s new routes are rumored to be receiving some sort of financial assistance (PSA, OTP) and all of the newest routes are starting with less than daily service. DL is obviously being much more cautious but also looking for ways to help minimize the startup costs. They clearly are not being reckless in their expansion as evidenced by their ability to grow their revenue. They simply need to get their int’l costs in line – which will happen as the markets mature – and they need to develop these markets.
Nonetheless, stockholders don’t really care where the money comes from. AA’s domestic system was half as profitable as DL’s but AA made more money to Europe and Latin America. On an ASM basis, DL’s single route to NRT was 3 times more profitable than CO’s Pacific network while AA lost money there. It is management’s prerogative how to deploy a company’s assets and DL has clearly indicated that it is responsibility moving its assets around as part of its restructuring. I would also certainly not accuse any of the US network carriers of being irresponsible with their company’s assets since AA is trying to fix their Pacific system by pulling down capacity there while CO is trying to fix its domestic system, although as some have pointed out that is a tough act to do.
DL is far from abandoning its domestic system. ATL is still a powerhouse above any other in the world. And while you may like to call DL’s smaller hubs as second rate, DL’s domestic operations at CVG and SLC are both larger than STL, CLE, or SJC to name a few defunct hubs. And there is no other city the size of CVG that supports 5 int’l flights per day. Further, DL has repeatedly said that CVG and SLC are profitable. DL couldn’t have turned in the domestic profitability statistics they did if that weren’t true. ATL is still only about 60% of Delta Air Lines.
