Delta alerts and points out to the DOJ how consolidation hurts ticket prices...

[Flufdriver]

http://finance.fortu...rce=yahoo_quote

 

[traderjake]

Did you expect anything else from the government shills at the Communist News Network?


http://www.youtube.com/watch?v=1LK9a8AT2b8

 

[WorldTraveler]

heaven forbid that we should have
"absurdly high profit margins for an airline."

problem with the theory in the article is that DL's best revenue came from NYC and ATL, cities where it grew thru the slot giveaway from US and in ATL where WN decided they didn't want to take on DL so they could save up their resources for that Texas based airline 900 miles down I-20.

I'm sure it is hard to admit but the reason why DL is getting the level of profits it does is because it is flying to the right places using that hugely complex fleet of 300 year old airplanes it has and it happens to have a whole bunch of employees who are motivated by making a whole lot of money by doing what the company needs to do to win over the best customers.

Those absurdly high profit margins are because DL is providing a service that customers are willing to pay good money for - and a whole lot of them are lining up day after day to board DL flights.

Has nothing to do with consolidation. If it did, then UA should do even better than DL since UA is smaller .. but they aren't expected to come close. Blows the size theory out of the water.

Did someone say this is the US forum? So why is this article posted here?

 

[nycbusdriver]

heaven forbid that we should have
"absurdly high profit margins for an airline."

problem with the theory in the article is that DL's best revenue came from NYC and ATL, cities where it grew thru the slot giveaway from US and in ATL where WN decided they didn't want to take on DL so they could save up their resources for that Texas based airline 900 miles down I-20.

I'm sure it is hard to admit but the reason why DL is getting the level of profits it does is because it is flying to the right places using that hugely complex fleet of 300 year old airplanes it has and it happens to have a whole bunch of employees who are motivated by making a whole lot of money by doing what the company needs to do to win over the best customers.

Those absurdly high profit margins are because DL is providing a service that customers are willing to pay good money for - and a whole lot of them are lining up day after day to board DL flights.

Has nothing to do with consolidation. If it did, then UA should do even better than DL since UA is smaller .. but they aren't expected to come close. Blows the size theory out of the water.

Did someone say this is the US forum? So why is this article posted here?

How many 300 year old airplanes does Delta have? I imagine at that age they are hugely complex. Maintenance must be a nightmare.

 

[WorldTraveler]

I dunno... they build some darn good machines back then.... just look at the cathedrals and castles that are still standing - and a lot of them have been attacked - more than once.

 

[jimntx]

How many 300 year old airplanes does Delta have? I imagine at that age they are hugely complex. Maintenance must be a nightmare.

Following a design by Galileo, the wings actually flap--powered by a bicycle contraption in the cockpit. Only real maintenance is keeping the wing/body joint greased well.

 

[Reed Richards]

I dunno... they build some darn good machines back then.... just look at the cathedrals and castles that are still standing - and a lot of them have been attacked - more than once.

I love this book, bought it for my kids years ago. Take care World! http://www.amazon.co.../ref=pd_sim_b_4 RR

 

[nycbusdriver]

I dunno... they build some darn good machines back then.... just look at the cathedrals and castles that are still standing - and a lot of them have been attacked - more than once.

There are a lot more in ruins than there are standing. And those standing have always been maintained and repaired.

 

[jimntx]

"American and US Airways are taking the government to court to get a judge to overturn what they think is an unfair ruling."

Another statement in the article that is not factual. The DOJ filed suit in court to stop the merger. They can not stop it on their own. AMR and LCC responded in the negative to the suit, but they did not "take the government to court." 'Twas the other way around.

Also, there was a statement to the effect that an increase in revenue was proof that ticket prices had increased. Not so. If one airline sells more tickets than the year before, revenue will increase whether ticket prices go up or not--unless, of course, ticket prices go down. More customers, more revenue. It doesn't even mean that the airline will have increased profits--just increased revenue.

 

[nycbusdriver]

Also, there was a statement to the effect that an increase in revenue was proof that ticket prices had increased. Not so. If one airline sells more tickets than the year before, revenue will increase whether ticket prices go up or not--unless, of course, ticket prices go down. More customers, more revenue. It doesn't even mean that the airline will have increased profits--just increased revenue.

Good point. If an airline is profitable with a systemwide load factor of, say 80% average, then raising that average by even 1% would be a huge addition to the bottom line (all other factors being equal.) That 1% would be almost pure profit, since expenses are obviously covered by the profitable 80%.

Before anyone starts with the old "load factor does not mean profit" diatribe, when taken as a systemwide average a small load factor increase is pure profit...which is huge given the size of these operations.

 

[WorldTraveler]

airlines are pushing past 85% LFs with regularity largely because they are getting rid of capacity that doesn't really produce.

It is hard to believe that capacity will move up much further.

It is much easier to continue to improve revenue. See the difference in revenue that each carrier produces

Consolidated passenger yield: (the amount of revenue per mile that an airline collects from paying passengers, expressed in cents, here including mainline and regional operations)

DL- 16.85
US - 16.75
AA - 16.36
UA - 15.96
WN - 15.94

The opportunity is to push revenue up far more than load factor. It also shows why strong revenue drops directly to the bottom line much faster than fuller airplanes.

When that revenue gets "stopped" by higher costs, then the company can't deliver but revenue is the first and most important determinant of success.

 

[UPNAWAY]

Higher ticket prices are not necessarily a bad thing, even for the consumer. Ticket prices have been too low it was obvious. The idea that higher ticket prices is grounds to block a merger is laughable.

 

[Hope777]

Ticket price are not that different from 30 years ago. We cant say that for Landing Fees or Fuel, can we?

 

[WorldTraveler]

which is why the airlines of today are much more efficient than they were then. Look how many fewer employees there are to work a flight and how many more seats are on the airplane.

 

[ContUNITEus]

Very well written report and I agree.