Delta leads US network industry with Skymiles overhaul

[AdAstraPerAspera]

WT,
In case you aren't familiar with the upgrade requirements in JFK-LAX on the nonstop carriers that currently offer premium cabin(s):

AA: 500 mile upgrades for Gold and Platinum, complimentary for Executive Platinum (and Concierge Key)
DL: Global Upgrade Certificate (only available to Diamond Medallion)
UA: Regional Upgrade Certificate
VX: paid upgrades (~$300) available at designated windows with expanded window for elevate elites.

If I lived in NYC and traveled that route id be upset. I've heard from NYC colleagues that the seats are indeed going out empty or with non-revs, great for you guys to enjoy but less great for revenue passengers. Yes DL has an enhanced product on the route-just like international BusinessElite if I were DM I wouldn't waste a global upgrade on that route when it could be used for AMS, NRT, TLV, but with DL shrinking the size of their premium cabins those upgrades are probably few and far between.

AA transcon from BOS/MIA works like clockwork for me and they do indeed sell most seats, lately I'm upgraded at T-4 hrs or at the gate. Lately my JFK upgrades have cleared at the gate but under the current AA rules I get priority over originating pax at JFK.

Josh

 
+1
 

except that they aren't empty. DL is selling them for money. that's why they aren't willing to offer upgrades and the expectation that someone will get standby.

Remember that DL offers the smallest percentage of premium seats on JFK-LAX (which is true on many routes) yet DL's system average fare per mile is higher than its peers.

The fact that DL is not giving seats away on the transcons is an enormous step forward from where they were in the market for years.

 
Not sure why anyone would actually pay for a premium seat on DL when they can get a superior product with better service for the same price on AA
 
And keep in mind, I'm just a non-partisan observer

 

[WorldTraveler]

first you are NOT a non-partisan observer if you have access to DL pass benefits or receive any financial benefit from the company. To try to frame yourself as unbiased is just absurd.

As much as people like DL and the industry's elite passengers may or may not like it, one of the major expected benefits of consolidation in the industry was stronger pricing power and ability to better match capacity to demand.

Pricing power doesn't just involve published pricing but the whole continuum of services that airlines offer including their promotional programs. Americans have become addicted to airline frequent flyer programs and expect they should just continue to provide more and more rewards with less and less commitment on the consumer's part.

DL is a business and a very well-run one at that. DL will invest its promotional dollars, including its frequent flyer program, where it generates the greatest return on investment.

DL might well be just plain stupid with the transcon upgrade changes and the whole Skymiles changes as well but given that they have recorded the highest profit by a global airline EVER and have revenue premiums to the rest of its US peers, it is highly doubtful that they are making a mistake.

They know full well they will alienate some passengers while gaining others.

Let's also remember that as a result of AA and UA's decision to no longer serve large parts of the economy cabin market and DL's added capacity in those markets, DL is now the largest airline in terms of total seats.

As much as AA or UA want to try to make a case otherwise, there isn't a single market that I know of where a carrier dominates market revenue while also not being the largest overall airline.

AA and UA somehow believe they can operate the JFK transcons as an exception to every airline marketing principle and succeed.

You need only look at UA's performance in the market to realize they are a much smaller part of the overall market which has absolutely affected their overall revenues.

Since Parker will likely cut JFK down to a spoke city, it is likely that AA will look no different from UA at JFK in time.

 

[FrugalFlyerv2.0]

Since Parker will likely cut JFK down to a spoke city, it is likely that AA will look no different from UA at JFK in time.

Really?
What are you smoking?

 

[WorldTraveler]

clean, fresh air.

the chances of AA at JFK not being cut are slim.

 

[FrugalFlyerv2.0]

clean, fresh air.

the chances of AA at JFK not being cut are slim.

you're dreamin'

 

[AdAstraPerAspera]

first you are NOT a non-partisan observer if you have access to DL pass benefits or receive any financial benefit from the company. 

 
Fair enough. But that means you are not an impartial observer, either.
 

Since Parker will likely cut JFK down to a spoke city, it is likely that AA will look no different from UA at JFK in time.

 
Okay, now you are just being a plain old troll. You enjoy rustling everyone's jimmies; you have so much as said so. No other explanation for a statement so ridiculous.
 

you're dreamin'

 
+1000

 

[Kev3188]

first you are NOT a non-partisan observer if you have access to DL pass benefits or receive any financial benefit from the company. To try to frame yourself as unbiased is just absurd.

Keep that in mind...

 

Since Parker will likely cut JFK down to a spoke city...

That's a pretty bold prediction... yet just ambiguous enough to allow plenty of wiggle room. Want to make your assertion a little more specific, or are you just happy to get people riled up again?
 
 

the chances of AA at JFK not being cut are slim.

"Not being cut" and "cutting JFK down to a spoke city" are two different things, even with your usual exceptions in play.

Which one is it?

 

[WorldTraveler]

first, I never claimed to be impartial.

Impartial doesn't mean that I can't cite genuine facts which support my case and also deal with facts from others that might be counter to my position, if they existed.

I get wound up thinking that people on here believe they can change the rules of business because the outcome of those rules are not to their liking.

In the case of JFK, the best case for what AA will do in the future would be its 10 year track record where it has cut the number of seats offered by 30% at an airport where the rate of growth is far higher.

AA has given up huge chunks of its market share at JFK to B6 and DL with DL gaining not only the most but also the most in the key markets.

As much as the AA fanclub wants to believe that AA is not finished at JFK and can recover, the simple fact is that there is a principle of business that doesn't apply just to airlines. It is VERY rare if not impossible for a company that is not the top 1 or 2 in a market to generate revenues sufficient to justify staying in the market, give comparable costs as competitors. Factor in that B6 ad DL are BOTH lower cost competitors than AA even after BK and it is even harder to see how AA will regain what it lost.

Jack Welch of GE established the principle that GE would either win in the lines of business it competes in or it would leave them and they have done that to great success. The whole principle of hub dominance in the airline industry is based on the same idea. The idea that 3 airlines cannot successfully hub at the same airport has been well-established and the only place it happens is DEN which is very likely a money pit for each of the airlines with large operations there.

AA has tried for too long to be in all of the key markets of the world whether they have the market strength to do so successfully or not. UA pulled out of the MIA-Latin America market because it could not remain a distant #2. DL made the moves it has in LHR because it cannot succeed long term as #3 - and the evidence is increasing that the DL-VS partnership is increasing DL's success at the expense of UA.

It is not possible for AA to act as a niche hub carrier in someone else's hub; either they can maintain a fully competitive hub or they shrink down to a spoke city.

When you factor in the duplicated connecting service that new AA has over both JFK and PHL much of which uses regional jets which will become harder and harder to justify, the chances are very high that AA's presence at JFK within a few years will be just to its hubs, the transcon markets, and alliance hubs.

 

[FrugalFlyerv2.0]

... ... ... the simple fact is that there is a principle of business that doesn't apply just to airlines. It is VERY rare if not impossible for a company that is not the top 1 or 2 in a market to generate revenues sufficient to justify staying in the market, give comparable costs as competitors
 

I do like DL, they are good airline, but I find it hilarious you seem to convenietly ignore this little gem of knowledge when you're pontificating about DL 'winning' at LAX and the west coast.
 
Oh well, at least you admited you're not an impartial poster on here.  (or was that spectator that logged in ... ... ... )

 

[WorldTraveler]

I never said that DL was #1 at LAX or on the west coast or even likely would be.

Once again, my focus about AA and LAX has been about LAX to ASIA. They are still very much competing in other LAX markets so far as I can see.

And DL is also competing very effectively in the LAX markets in which they compete. DL just doesn't have any huge lead weights that pull down its performance.

Since this topic is specific to the Skymiles overhaul, the obvious connection between LAX and the Skymiles overhaul is the JFK transcon market.

I have never said that it is not possible that DL could have miscalculated regarding the 2014 or 2015 Skymiles overhaul or the change with the transcon upgrades but that DL has a solid track record of getting strategic initiatives right before hand and then executing them very well.

If that proves NOT to be the case, then I am sure rightfully will let me know, as I fully expect you should.

 

[USFlyer]

It's fairly clear to me why DL would let the seats go empty.  If VFFs can upgrade, there's little incentive for them to pay the higher fare to get the seat in the first place.  The same logic is used on international flights and has been for many years on all the majors.  I can't fault DL for this, especially given the product is better than the First class product on other DL domestic flights.

 

[WorldTraveler]

Aviation Week has a feature article on DL.

One of DL's network VPs makes this observation which explains both DL's RASM premium over the industry but also its likely need to not promise more than it can deliver with frequent flyer benefits.


A major difference between Delta and the two other carriers in the Big Three is: “We own our markets,” says Cortelyou. Delta's market share at its hubs at Salt Lake City International, Minneapolis–St. Paul International, Detroit Metropolitan-Wayne County and, of course, in Atlanta, is often much greater than that of its chief rivals at their respective main bases. Delta is making major inroads into the New York market—which used to boast only a Continental hub at Newark (N.J.) Liberty International Airport.

another recent report (CAPA) notes

As part of its defence against weaker passenger unit revenue growth relative to its US industry peers, United has often touted its larger recorded passenger unit revenues relative to other carriers. At the end of 3Q2013 United touted a PRASM premium of 14.9% compared with the average PRASM recorded by members of trade group Airlines For America (all the US major carriers are members of the group). However, for CY2013 United's consolidated PRASM of USD13.50 cents was lower than American's USD13.67 cents and Delta's USD14.15 cents.

while noting PRASM and CASM exfuel guidance by the big 3

AA PRASM up 2.5-3.5%, CASM up 4-6% for mainline, 5-7% for regionals
DL PRASM up 3-4%, CASM up 0.5% to 1.5%
UA PRASM up 1.5-2.5%, CASM up 3-4% as of the date of publication.

http://centreforaviation.com/analysis/united-starts-2014-on-a-weak-note--does-this-set-the-stage-for-more-disappointing-results-163917

 

[WorldTraveler]

DL said on the earnings conference call that they are selling (not upgrading) 45% of their first class seats.

 

[737823]

WT DL does First Class Monetization (FCM) where they sell F seats for ~$50-150 or so above Y seat. So pax booking last minute and who plan to check bags its a no brainer. In fact sometimes a restricted F ticket is cheaper than Y. Applaud DL for maximizing revenue but it does come at the expense of Medallions. That said, they haven't (yet) implemented a buy-up program like UA that sells the seats to non-status folks in Y while elites are still on the upgrade list.

Josh

 

[WorldTraveler]

DL has done that for years.

The first class cabin on US legacy airlines became nothing more than part of the loyalty program.

Airlines simply cannot continue to invest as much as they do in the forward cabin without a justifiable return on investment when their peers such as WN can manage to fit 10 to 20 more seats on a similar aircraft without FC.

Again, note that DL's domestic RASM was up more than 7% including a 5% increase in yield. People are willing to pay more and more for DL's products and they simply do not need to give away as much in rewards.