Delta Air Lines' cost cutting efforts will see the downsizing of its domestic system, while Continental Airlines struggles to find direction after its traumatic foray into the short-haul, low-cost sector.
Just prior to leading the cap on travel agent commissions in February, Delta announced a restructuring of its domestic system. The airline plans to cut short-haul flying by handing some markets over to its Delta Connection carriers and decreasing services out of smaller hubs. Instead, the airline will increase services at its hubs in Atlanta, Cincinnati and Salt Lake City, up long-haul flying system-wide by 3.7 per cent, and focus on developing a higher yield traffic mix.
Already boosted by US DOT approval of its codeshare agreement with Virgin Atlantic in early February, giving the carrier access to London/ Heathrow, Delta officials hope cost savings and revenue enhancements on the domestic system could total up to $60 million annually. The move is somewhat analogous to Northwest Airlines' efforts to focus on its primary hubs over the past two years. But Delta officials deny that the low-fare, short-haul competition has forced the move.
Meanwhile, Continental's downsizing of its Lite operation is tantamount to admitting its low-cost formula is a failure. The resignation of the head of the Lite programme, ex-Southwest marketing chief Don Valentine, further underscores this. Continental Lite, which lost $100 million last year, will provide hub feed but will not include 'linear', small market flying. Also, first class seating is being put back into some of the Lite fleet. The restructuring is part of an 18 per cent cutback in capacity across the board this year.
Meanwhile, Continental's downsizing of its Lite operation is tantamount to admitting its low-cost formula is a failure. The resignation of the head of the Lite programme, ex-Southwest marketing chief Don Valentine, further underscores this. Continental Lite, which lost $100 million last year, will provide hub feed but will not include 'linear', small market flying. Also, first class seating is being put back into some of the Lite fleet. The restructuring is part of an 18 per cent cutback in capacity across the board this year.
Source: Airline Business
