Delta files for bankruptcy protection

Atlanta Journal-Constitution ^ | 9-16-2005 | Russell Grantham

[magellan]

"It's called over-capacity."

Right. The airlines have already decreased capacity, but there is still overcapacity. But the capacity is not going empty. It is being sold. At too low of a fare.

A simple question: If Delta (and Nortwest and the rest), cut their capacity in half, and double their prices, what would be the effect on their economics?

A round-trip airfare between Atlanta and Washington D.C. is $145. A round-trip bus fare on Greyhound is $125. Does anyone really believe the value of a one and a half hour airplane trip is only $10 more each way than a sixteen and a half hour bus trip each way? That's 67 cents per hour for the extra time spent on the bus.

Airline management is simply incompetent. They cannot even price their product based on its value to their customers.

[Pukin Dog]

I understand what you say. However, I am referring to the mass exodus from Delta that is about to begin bigtime. It is going to be interesting to see how many pilots are around a month from now, with all the talk of no canceled flights and all. I guess we will see.

[phantomworker]

Why can't something be done to stop this drain on America? What would happen if it continues? Isn't it heading for socialism then?

[PAR35]

Like the analyst in the article said, there are only three things to blame: fuel, fuel, fuel.

No, you have to add pension liability in there. They are going to ditch that liability, put in a fairly nice defined contribution plan, and immediately add 5 billion to the bottom line.

[safisoft]

However, I am referring to the mass exodus from Delta that is about to begin bigtime.

You are right on target. With both DAL and NWA out, there will be enough shifting of jobs to make the next few months very interesting in the way of incidents and accidents.

[uncitizen]

This is not the fault of "unions"; only the pilots of Delta are unionized

The mechanics, baggage handlers, flight attendants are not unionized? I am surprised.

I've also heard that pensions are a major part of the financial overhead problems of the airlines. Same as with the auto industry.

I don't think you can blame this on fuel prices either. Fuel prices can easily be passed on to the consumer via ticket prices.

[phantomworker]

ping

"Just curious what you think of the Boeing machinists who are on strike, not because of an economic or benefit package, but because of perceived disrespect paid to them by management. How far can management push employees until they strike or are employees just expected to take abuse from management?"

[phantomworker]

That actually makes a lot of sense. Why doesn't somebody do something about it?

[safisoft]

A simple question: If Delta (and Nortwest and the rest), cut their capacity in half, and double their prices, what would be the effect on their economics?

Every airline employee in America has been asking this question for the past 5 years. We are always given the same answer, "Yield management will not allow us to reduce unit costs." It is the weirdest thing. In the old days, and airline was making money at 65% load. Now, at 85% they are losing the farm. They CLAIM that what changed was the Internet provides a view to the lowest cost, so that is all they can chase - lowest by one penny.

When we all work for Southwest or JetBlue, then the prices will climb < grin >

[BluH2o]

Delta and Northwest airlines was supposed to merge into one airline come November.. I wonder what they will do now..

Really??? That's BS ... total BS!!!

[patton]

Delta and Northwest are doing something about it - they are dumping their defined-benefit unfunded pension liability on us. Just like united did, and just like GM will - what did you want?

[phantomworker]

You are right about the unions not being run by the "brightest bulbs" LOL, they are often a bunch of thugs, but they claim they are striking because of lack of respect and that emotionalism will go far. Their jobs are not interesting, they punch a clock and take lunches and breaks when a whistle blows. They think, what's wrong with demanding a little respect?

[phantomworker]

I would like someone, some group to stop this pension drain. What do you think could be done to stop it?

[patton]

Nothing - they are now fully-respected unemployed people. Gee, I bet they feel better!

Somebody told me one (his initials might have been Dr WPC), that if you rely on a huge pile of someone else's capital, for your ability to earn a living bolting on bumpers...best be quiet.

[ordinaryguy]

Orbitz is showing me a Delta non-stop ATL-IAD fare of $138. United, AirTran and US Airways will sell a non-stop ticket for $117. If Delta raised their fare I'd just buy a ticket for $117 from a different airline. I might even do that with the fare still at $138. Delta is apparently not competitive on that route. If Delta doubles their fare, the business traveler you mentioned will probably fly United instead.

I think part of the problem is that Delta has all of those planes, employees, and slots. I don't know that reducing the number of daily flight from ATL to IAD will result in better coverage of fixed costs. It isn't a matter of losing $100/ticket but making it up on volume. Businesses must do their best, in the short run, of covering their fixed costs.

I agree that there are huge changes coming in the industry, and I have no idea where we'll end up.

[ARA]

where did you hear that...

[WoofDog123]

what % component of cost of carrying a passenger is fuel, versus labor, plane note cost, etc?

[WoofDog123]

their stock options are worthless, that is by far the bulk of their compensation potential.

[patton]

It is not what can be done to stop it now, it is what should have been done 20 years ago.

Coorporations were allowed to underfund their pension accounts - now we get stuck with the bill.

Who will we get the money back from?

No one, actually.

[Pukin Dog]

Prices SHOULD climb. It is ridiculous to be having these stupid price wars. I hate looking back in the cabin at ugly flight attendants, because pretty ones wont do that job anymore accept the VERY young and the pilot hunters.

In all seriousness, there need to be fewer flights and lose the stupid hub and spoke crap while we are at it. You cant even get a good cup of coffee outside of Singapore and Virgin. Money rules, and that why flying sucks for passengers and crew.