More pressure for AA

[BeenThere]

Reuters
Delta''s Low-Cost Unit to Fly Next Year
Wednesday November 20, 8:21 am ET
ATLANTA (Reuters) - Delta Air Lines (NYSEAL - News) said on Wednesday its newly created low-cost air carrier will begin operation next year by initially offering flights on 36 Boeing 757s between the U.S. Northeast and Florida.
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Most one-way fares are expected to be between $79 and $299, as Delta''s unit costs on the new airline will be about 20 percent below those of its regular 757s.
Atlanta-based Delta, the No. 3 U.S. airline, developed the airline to help take back some of the market share it has lost to successful low-cost carriers Southwest Airlines (NYSE:LUV - News), JetBlue Airways (NasdaqNM:JBLU - News) and AirTran Holdings (NYSE:AAI - News).
Analysts have waited with a mix of skepticism and curiosity for details on the new airline within an airline, partly because that type of model has often been unsuccessful in the past.
John Selvaggio, 56, who was named in August to lead the new low-fare strategy, will become president of the new subsidiary. Delta plans to announce the new unit''s name, product and service elements prior to the launch of service in 2003.

 

[capeman]

If AA can get relief from the scope clause, they will just compete with DAL using RJ's. The only differance will be that there is more frequency. Sure it won't be a 757, but your selection of times would be a lot better. (JMHO)

 

[MAH4546]

[blockquote]
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On 11/20/2002 8:13:55 AM capeman wrote:

If AA can get relief from the scope clause, they will just compete with DAL using RJ's. The only differance will be that there is more frequency. Sure it won't be a 757, but your selection of times would be a lot better. (JMHO)
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[/blockquote]

Compete with DAL on what with RJs? MCO-JFK and FLL-OAK? I don't think so. The new carrier, which will start off with busy Northeast-Florida routes, and then go to California-Florida routes, is not the kind you use RJs to compete with.

 

[planemech669]

CRJs and ERJs can handle the distance easily. Anything in the 800 to 1100 mile range is easily done. The rest of the formula depends on demand.

 

[Busdrvr]

[blockquote]
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On 11/20/2002 10:31:57 AM eolesen wrote:

Get real. The new DL subsidiary appears to be directly aimed at competing with two pesky carriers based at JFK and ATL/MCO respectively...

If DL can be cost-competitive or even revenue-competitive with Jetblue and Airtran, this will be fun to watch.
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[/blockquote]

Won't it be grand? Hopefully UAL will still be around to add some more cheap comp in the IAD transcon markets and AMR could make JFK transcon it's loss leader, and in a year or so, one less parasite. I'm sure there'll still be the lawsuits though. It's just sad that folks just don't understand. It'll be differant this time, our CEO loves us, We'll fly nothing but brand new free jets forever... This will be VERY interesting. BTW, UAL is considering shuttle type operations for ALL of the NB jets.

 

[DLFlyer31]

AA would get killed putting RJ's on this route. Who wants to get crammed on an RJ for 2+ hours when they could be on a more spacious 757/A320 which has some form of IFE?

Then there's the whole cost problem. JFK-MCO will likely be priced as low as $79 each way. At those prices, a high cost RJ would never have a chance of making money.

I can't imagine AA would want to waste RJ's on a low yield market like JFK-Florida. I expect many of the RJ's will be used to replace all the F100's that are retiring over the next year.

 

[TAN 767 300]

I wonder if these 757's will look like the Aero-Bus of the DC-8-61/71s used on this same type of deal back in the late 70's or early 80s when they competed with EAL on the same routes. legroom????Forget it!
Keep with MRTC, in the end AA will come out ahead.

 

[capeman]

[P]
[BLOCKQUOTE][BR]----------------[BR]On 11/20/2002 1055 AM DLFlyer31 wrote:
[P]AA would get killed putting RJ's on this route. Who wants to get crammed on an RJ for 2+ hours when they could be on a more spacious 757/A320 which has some form of IFE? [BR][BR]Then there's the whole cost problem. JFK-MCO will likely be priced as low as $79 each way. At those prices, a high cost RJ would never have a chance of making money. [BR][BR]I can't imagine AA would want to waste RJ's on a low yield market like JFK-Florida. I expect many of the RJ's will be used to replace all the F100's that are retiring over the next year.[/P]----------------[/BLOCKQUOTE]
[P][/P]Spacious 757? DAL will have all one class cattle carts. Seat pitch will be the same as an RJ. All overheads will go fast on the 757. On the RJ you can gate check your bag and have it when you walk off. Sure they can't compete on the JFK route, but that is only one route. What about ISP, PVD, ORH, MHT, ORF, RIC, PHL, all to MCO with RJ's. Don't just limit it to major markets. [BR][BR]If there is a change to market demand you could even switch an RJ to a 767 in markets that demand it. Instead of dedicating a fleet of 757's to a specific city. I am not trying to compare a 757 to an RJ, but rather opening up some new ways to combat DAL and possibly open markets in smaller cities to take away some of the competition.

 

[Oliver Stone''s Apprentice]

Get real. The new DL subsidiary appears to be directly aimed at competing with two pesky carriers based at JFK and ATL/MCO respectively...

If DL can be cost-competitive or even revenue-competitive with Jetblue and Airtran, this will be fun to watch.

 

[Rhino]

RJ's not cost-effective. These are not thin, high yield routes, they are among the most heavily-travelled, heavily-discounted.

Clearly JB and AirTran are the main targets, anyone else is collateral damage.

I suspect JB will hold it's own. Soros has deep pockets and hasn't sold any shares.

Direct competititon with Air Tran would require Delta Lite to fly out of ATL.

 

[magsau]

With DAL offering 757's in high density config. it would be suicide to put an RJ on as a competitor. The distance covered would cause the performance issue to be a problem. As I understand it the ACA RJ's can barely make ORD-JAX on a VFR day without weight restrictions. The RJ at over 2 hours is not a comfy ride, as the tube just get claustrophobic.

 

[Oliver Stone''s Apprentice]

They don't need to be in ATL for this to hurt Airtran, assuming customers take DLX2 nonstops instead of connecting in ATL.

 

[Busdrvr]

[blockquote]
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On 11/20/2002 11:38:46 AM Rhino wrote:

Soros has deep pockets and hasn't sold any shares.

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[/blockquote]

I doubt if Soros would start throwing new money into the operation. I'm sure he'll ride the stock until he figures he can slowly sell out without attracting any attention. i highly doubt tthat if JBlu starts burning cash that he'll give them more to make the fire bigger.

 

[MAH4546]

[blockquote]
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On 11/20/2002 10:31:53 AM capeman wrote:



[BLOCKQUOTE]
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On 11/20/2002 1055 AM DLFlyer31 wrote:


AA would get killed putting RJ's on this route. Who wants to get crammed on an RJ for 2+ hours when they could be on a more spacious 757/A320 which has some form of IFE?

Then there's the whole cost problem. JFK-MCO will likely be priced as low as $79 each way. At those prices, a high cost RJ would never have a chance of making money.

I can't imagine AA would want to waste RJ's on a low yield market like JFK-Florida. I expect many of the RJ's will be used to replace all the F100's that are retiring over the next year.[/P]----------------[/BLOCKQUOTE]


[/P]Spacious 757? DAL will have all one class cattle carts. Seat pitch will be the same as an RJ. All overheads will go fast on the 757. On the RJ you can gate check your bag and have it when you walk off. Sure they can't compete on the JFK route, but that is only one route. What about ISP, PVD, ORH, MHT, ORF, RIC, PHL, all to MCO with RJ's. Don't just limit it to major markets.

If there is a change to market demand you could even switch an RJ to a 767 in markets that demand it. Instead of dedicating a fleet of 757's to a specific city. I am not trying to compare a 757 to an RJ, but rather opening up some new ways to combat DAL and possibly open markets in smaller cities to take away some of the competition.
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[/blockquote]

Actually, the 757s for DLX2 will have more legroom than DL's mainline aircraft do in coach. And screw MCO flying, how about some ORF-MIA or GSO-MIA with RJs? The new DLX2 will not all be about MCO. It will have major ops at MCO and FLL, with TPA, PBI, and RSW also getting some services. After they start up with the NE routes, look for FLL/MCO-LAX/OAK.

 

[mga707]

[blockquote]
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On 11/20/2002 833 PM MAH4546 wrote:

The new DLX2 will not all be about MCO. It will have major ops at MCO and FLL, with TPA, PBI, and RSW also getting some services. After they start up with the NE routes, look for FLL/MCO-LAX/OAK.

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[/blockquote]

Wow. With the route map you've just described, all they need now is to put a sun face on the tail, and have ads featuring sexy stews. and, whadya know, the ol' name is once again available...