Delta Air Lines Seeks 'Crown Jewel' for New York-JFK Hub: Nonstop Flights to London

[donttouchthebeauty]

Thats funny, what a dream. Do you really think DAL has ANY chance of out bidding AA on any thing?

It's very evident and obvious that WT is a VERY wishful thinker, hes been drinking some of that sweet tea and it has rotted his brain.. WT, do us all a favor, take care of yourself and YOUR corp. before you go dogging others and having wishful thinking, no one really cares about this except the JFK base who doesnt want to uproot. UAL
still has 4 cities that serve London along with frankfurt, brussels, munich, paris, amsterdam, zurich, (obviously not the strongest european route network but definitely a presence, unlike Delta which has virtually zero presence in ASIA.. Keep dreaming Deltoid keep dreaming, it is doubtful you will ever be a world traveler, at least if you stick with DELTA.

 

[FA Mikey]

I think many people forget. Its not about serving the most places. Its about serving the right places.

 

[Ch. 12]

I think many people forget. Its not about serving the most places. Its about serving the right places.

And we all know that London is the wrong place...especially from New York. I mean...they completely pulled the concorde flights...just take a look for yourself!

Again...from where did you get the terms of the deal?

 

[Bear96]

Gotta be a sad day for UA employees, regardless of how they try to spin it.

Did you cry when (now insolvent) DL cancelled JFK-NRT?

 

[FWAAA]

Again...from where did you get the terms of the deal?

The purchase price for the route is mentioned in this article:

http://biz.yahoo.com/ap/060728/delta_united.html?.v=3

 

[FA Mikey]

And we all know that London is the wrong place...especially from New York. I mean...they completely pulled the concorde flights...just take a look for yourself!

Again...from where did you get the terms of the deal?

Terms all available on the web. London is not the wrong place at all. With around 20 daily flights between the two cities, that says a lot about that market.

But LGW or LHR, easy choice. The point was really about not serving the most destinations from JFK, But serving the most profitable ones.

 

[phllax]

LGW access is limited from cities with LHR carriers by Bermuda II. All four LHR-permitted airlines fly JFK-LHR, so nobody can fly JFK-LGW unless one of the four (AA, UA, BA or VS) ceases flying JFK-LHR. DL didn't "buy rights to LHR that it can't use." DL bought rights to London. Because of Bermuda II, its only access to London will be at LGW.

Thanks's for clearing that up. While I knew LGW was unrestricted, I didn't know that Bermuda II placed restrictions on LGA if the LHR frequencies were in full use.

 

[JFK777]

Delta finally has their golden destination from JFK. Now lets have the golden airplane to fly it, not the standard 763ER. A 777 or at least a 764ER. Since DAL's 777 are limited 8 flying to Mumbai and Tel Aviv this isn't viable; the 764 with a NEW BIZ Elite would make splash. Delta's 767 BIZ Class is 6 abreast, most airlines fly their 767 at 5 abreast, like Continental. Delta could use the route to nake a great splash with 764ER configured at 5 abreast in business Class with lie flat seats and all the bells and whistles. They are up against flying to Gatwick, BA and AA huge frequencies and Virgin's Upper Class and 4 daily flights. Delta can't compete on frequency or the right airport, so are its customers? Grandma and tours? Delta needs more then 2 flights daily and hope for open skies by 2008, I don't see it in 2007 for Open Skies.

Delta needs a great product because British Airways is coming out with a new lie flat seat this fall, their existing club class already goes flat. Virgin Upper Class is the benchmark in the industry and AA has 6 daily 777's with flat Business seats coming soon. Gatwick and a 767 just doesn't exite me. Now if the price was $1500.00 roundtrip, then that is UNCOMPETITIVE.

 

[Cosmo]

If LHR is the crown jewel, then how come DL and CO have consistently been able to get higher average fares to LGW from their ATL/CVG/EWR/IAH gateways than UA has gotten on JFKLHR and even ORDLHR, based on DOT data?

WorldTraveler:

You've made this comparison on several occasions recently so I finally decided to check the DOT numbers to see if it was true (and yes, I do have access to the DOT's international O&D databases, with the most recent period being the first quarter of 2006). Not particularly surprisingly, your statement is only partially true.

BTW, since the actual international O&D numbers are not allowed to be publicly discussed, I will use indexing or relative percent differences in my comparisons.

The truthful part of your statement involves United's results in the JFK-LHR market for the most recent annual period available (the year ended March 31, 2006). To be blunt, United had the lowest fare of all city/carrier combinations receiving nonstop service to one of the two major London airports, LHR and LGW. This reflects the power of the "S" curve in competition, where American has far more frequencies, carries far more passengers and had a substantially higher average fare (43% higher) than United in this market. So the reality is, whether or not this route was profitable for United (and IMHO I doubt that it was), the carrier was competing at a substantial disadvantage to American (and British Airways, its oneworld partner, plus Virgin Atlantic). So United sold the route (but apparently not the associated LHR slots) to Delta for a reported $21 million over 4 years, and will focus its future LHR service at its hubs. It wouldn't surprise me if the LHR slots used by United's one soon-to-be-discontinued JFK-LHR flight ended up being used by a new DEN-LHR flight eventually, once U.S.-E.U. Open Skies becomes a reality (which it will at some point). So in the end, United sold a non-hub route authority, that probably wasn't profitable anyway, for $21 million. To me, that's not a bad deal.

The not-so-truthful part of your statement involves United's ORD-LHR fares compared to other city/carrier combinations. While Continental at IAH and Delta at CVG (the #2 London routes for both carriers on the basis of passengers) did indeed have higher fares to LGW than United had from ORD to LHR in the year ended March 31, 2006, United's ORD-LHR fare came out on top compared to Delta's ATL-LGW and Continental's EWR-LGW fares. In fact, all 4 of United's hub routes to LHR had higher fares than Delta's ATL-LGW route. As shown below, United actually does quite well in a fare comparison with its competitors on all but the JFK-LHR route (fares are indexed with ATL = 100):

CO-IAH -- 160
AA-ORD -- 138
DL-CVG -- 125
UA-ORD -- 124
AA-DFW -- 123
UA-SFO -- 123
AA-RDU -- 122
UA-IAD -- 117
UA-LAX -- 113
AA-JFK -- 108
AA-LAX -- 103
DL-ATL -- 100
NW-DTW -- 98
CO-CLE -- 97
US-CLT -- 95
AA-BOS -- 95
NW-MSP -- 95
AA-MIA -- 95
US-PHL -- 81
CO-EWR -- 78
UA-JFK -- 75

After looking at these numbers, are you (or anyone else) still not clear on why United sold the JFK-London route authority to Delta, given the non-hub nature of the route for United as opposed to the benefits of being added to Delta's growing hub at JFK? In the future, it would also be useful to get your fare facts straight (or at least up-to-date).

But before you get all excited about Delta's prospects on the JFK-LGW route, take a real close look at the city/carrier combination immediately above UA-JFK on the above list. That's right, it's CO-EWR TO LGW. So let's look at the indexed New York area fares (with AA-JFK = 100):

AA-JFK -- 100
CO-EWR -- 73
UA-JFK -- 70

So does anyone seriously believe that Delta's JFK-LGW reported O&D fares after a year or two of service will be materially higher than Continental's EWR-LGW O&D fares (supported by the strength of its EWR hub) in the face of up to 17 daily JFK-LHR nonstops by American, British Airways and Virgin Atlantic using B777s, B747s and A340s?

Just a few things to consider as you celebrate Delta's upcoming ability to finally offer nonstop JFK-London service.

 

[JAMAKE1]

Atlanta loose-lips (a.k.a. WT) is now over at airliners.net spewing his delusions of grandeur: He's now suggesting that Delta will acquire UAL's ORD and SFO hubs. For the record, while at meetings at WHQ a few months back, we were presented with a powerpoint presentation with regard to United's trans-atlantic service. In spite of the fact that UA serves only a handful of European cities (LHR included), the company generates more revenue than CO, DL, and US on those handful of routes. Like FA Mikey stated, "It's not how many markets are served, but that the RIGHT markets are served." I will add to that, the RIGHT markets FROM the right markets (positions of strength).

 

[WorldTraveler]

you know the problem is that the list of markets that UA CAN make money in just keeps getting smaller and smaller. And I'm sure UA will find that DL's transatlantic operation didn't make money in the past year - they just entered bankruptcy unlike UA which spent 3 years there. Let's have a look at DL's results this year and see how much more profitable DL's TATL system is than UA's - even while DL is still in BK. Better yet, let's see how DL's operating margin compares in this quarter to what UA reports. Everyone got really hot and bothered about UA's margin but DL hasn't even reported. Anyone gonna bet DL blows UA's margin out of the water?

The S curve excuse is fine but why the you know what can UA not manage to compete in the key gateways that are necessary to support TATL and Latin service? Perhaps UA's strategic planning is only capable of winning in the west where UA has been entrenched for decades.

 

[Bear96]

And I'm sure UA will find that DL's transatlantic operation didn't make money in the past year - they just entered bankruptcy unlike UA which spent 3 years there.

(Insolvent) DL "just" entered bankruptcy? Like in the last few days or weeks? Hmmm . . . I thought it was like, LAST YEAR or something. And here it is almost August. What an interesting perception of time you have. There seems to be (insolvent) DL Time, and (solvent) UA Time.

And three years is an unacceptably long time to be in in Chapter 11?

Let's see how long (insolvent) DL actually spends in Ch.11 when all is said and done, and then see how out-of-whack (solvent) UA's visit in Ch.11 was in comparison.

WT, are you offering us your personal guarantee that (insolvent) DL's stay in Ch.11 will be significantly shorter than (solvent) UA's? Are you willing to stake your reputation and credibility on that? If not, why not?

 

[WorldTraveler]

Given that UA had the longest and most costly bankruptcy in US airline history, I will indeed go out on a limb and say that DL will do it shorter and cheaper than UA. And the vast majority of its employees will still have pension coverage when they come out and the ones that don't have it will be significantly higher paid than UA's comparable employees. Tell me what UA had accomplished in 9 months of BK. Better yet, tell me what UA has done in 3+ YEARS of BK that DL hasn't done in just 9 months.

I almost forgot to thank you for your wonderful data set, Cosmo. Of course I know you can interpret the data which is why I'm always glad that you drop in.

You didn't manage to explain why AA manages to get higher average fares in ORD than does UA even though AA is just the visiting team. You also must be truly embarassed to say that DL's little rinky dink midwest hub in CVG happens to generate better revenue than UA's in the huge world class city of CHI. You also didn't note that BDA 2 encourages overcapacity in LGW markets since a carrier can gain additional frequencies in peak periods by increasing frequencies during off peak periods. It is precisely what DL and CO have done which drove down their average fares. You'll recall that DL operated as many as 4 flts/day from ATL to LGW last year and CO is now operating 3X/day from EWR. LHR carriers don't have to worry about that little rule since the additional slot costs at LHR make it prohibitive to increase frequencies - and also keep the fares up. Or so the theory is supposed to work for carriers other than UA.

Isn't it interesting that this thread has brought out a whole bunch of AA employees. IS it because:

1. DL is the only airline doing anything of significance and this thread is the only thing of interest on USAviation in months. OR
2. AA is watching its company shed routes just like UA is doing (witness BOS and SJC) but they aren't seeing anything new in its place. OR
3. AA is amazed that a carrier actually embraces competition rather than colluding with a crosstown competitor to destroy valuable airport facilities and lock up the market in an agreement that the Justice Dept. took about 5 seconds to say is illegal. OR
4. AA is scared to death that DL has managed to overcome every major advantage AA had in the NYC market in a mere 6 months except for a NRT route (which is surely coming). OR
5. ALL OF THE ABOVE.

You UA folks can brag all you want about how profitable the flights you operate are but you do realize that your never-bankrupt archrival managed to have a higher operating margin than you did as did your pip squeak domestic alliance partner, don't you? You also know that based on DL's monthly bankruptcy reports for the quarter so far and its costs from the last quarter (which are surely going down even more) that DL could well be more profitable than UA DESPITE being in BK just 9 MERE months?


So yes, Jamake, I am discussing with my Airliners buddies that it is very likely that this won't be DL's last asset acquisition from UA. But it really shouldn't be a surprise to you. I've said it right here on this board that DL would be taking chunks of UA in the future. You should be grateful that DL is BUYING this route from UA; you'll recall that DL was able to just walk up and take one of UA's US-Brazil frequencies because UA wasn't even bothering to use it. You actually did miss that I said DL would be acquiring UA's PACIFIC operation. The NRT flights come with it.

You see, my friend, it's all about maximizing value for the owners. UA never did it well before BK and all the indications are that they aren't doing it any better now. After coming out of BK, UA's owners want the best return on their investment. It is very likely that DL will deliver the kind of superior return on investment that DL's owners want and that DL will indeed be able to demonstrate to UA's owners that DL could generate better returns for UA's owners than UA can operating those assets on their own.

It's a very sad day for UA and quite a grand one for DL. But it also is just one more step along the path that I predicted years ago and you just laughed at me for. Your laughs are sounding a bit more nervous.

 

[JAMAKE1]

WT...You're delusional. If you are such an expert, what the hell are you doing spending all of your time on internet chat boards? Like I said, you have lost all crediblity with me. Shouldn't you put your "expertise" to more lucrative use than espousing your predictions of Delta acquiring UAL assets on internet chatboards? As for compensation, while Delta's employees make an hourly wage that is higher than UAL's, Delta's workrules SUCK. You neglect to mention pay factors such as duty rigs, holiday pay, trip guarantee, understaffing, holding, etc., which all equate additional compensation. I'd be very interested to know how Delta's total compensation package compares with that of United's or anyone elses. Your chat room spins have become rather transparent. Keep spinning WT, it is amusing...

 

[FA Mikey]

Given that UA had the longest and most costly bankruptcy in US airline history, I will indeed go out on a limb and say that DL will do it shorter and cheaper than UA. And the vast majority of its employees will still have pension coverage when they come out and the ones that don't have it will be significantly higher paid than UA's comparable employees. Tell me what UA had accomplished in 9 months of BK. Better yet, tell me what UA has done in 3+ YEARS of BK that DL hasn't done in just 9 months.

Best to hold the gloating until DAL has made it out of BK. By the way I see UAL made some money last quarter, anyone else around here do that?

Isn't it interesting that this thread has brought out a whole bunch of AA employees. IS it because:

1. DL is the only airline doing anything of significance and this thread is the only thing of interest on USAviation in months. OR

Delta Air Lines Seeks 'Crown Jewel' for New York-JFK Hub:

F/A celebrates 50 years of flying!

CMH mainline down to 5 flights per day

DL adding 10 longrange 757 to fleet * 12

Passengers subdue man on Delta flight

These are the fascinating topics here and about delta since 10 July. How could anyone not be stuck here waiting for each new post!

2. AA is watching its company shed routes just like UA is doing (witness BOS and SJC) but they aren't seeing anything new in its place. OR

Nothing other than positive cash flow 5.5 billion cash on hand plus a profitable quarter.

3. AA is amazed that a carrier actually embraces competition rather than colluding with a crosstown competitor to destroy valuable airport facilities and lock up the market in an agreement that the Justice Dept. took about 5 seconds to say is illegal. OR

Oh you mean like how DAL and Airtan get along. Its just like bosom, buddies.

4. AA is scared to death that DL has managed to overcome every major advantage AA had in the NYC market in a mere 6 months except for a NRT route (which is surely coming). OR

LOL Delta is a second rate hack. Please Delta will never equal AA in NY. Flying a bunch of express flights to the NE and trying to put flights to every city in europe is not an advantage. It will be a severe disadvantage come winter and all the tourists and travel groups are back at work and home.

5. ALL OF THE ABOVE.

Sir wake up. Wake up sir we have landed, were here.

So yes, Jamake, I am discussing with my Airliners buddies that it is very likely that this won't be DL's last asset acquisition from UA. But it really shouldn't be a surprise to you. I've said it right here on this board that DL would be taking chunks of UA in the future. You should be grateful that DL is BUYING this route from UA; you'll recall that DL was able to just walk up and take one of UA's US-Brazil frequencies because UA wasn't even bothering to use it. You actually did miss that I said DL would be acquiring UA's PACIFIC operation. The NRT flights come with it.

Really sir I dont know what you took but you have to get off the plane.Up and at them!

You see, my friend, it's all about maximizing value for the owners. UA never did it well before BK and all the indications are that they aren't doing it any better now. After coming out of BK, UA's owners want the best return on their investment. It is very likely that DL will deliver the kind of superior return on investment that DL's owners want and that DL will indeed be able to demonstrate to UA's owners that DL could generate better returns for UA's owners than UA can operating those assets on their

Didnt Delta just 9 months ago wipe out all the value of the company to its owners?

It's a very sad day for UA and quite a grand one for DL. But it also is just one more step along the path that I predicted years ago and you just laughed at me for. Your laughs are sounding a bit more nervous.

Reading this post has made us all nervious, or was it nauseous, ahh all the same