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Song Singing The Blues?  
User currently offlineJAL777 From , joined Dec 1969, posts, RR:
Posted (10 years 10 months 3 weeks 2 days 19 hours ago) and read 2069 times:

By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 02/10/04

Delta Air Lines' Song offshoot is being "soundly trounced" by JetBlue Airways on some competing flights to Florida, according to a Raymond James analyst who estimates that Song is losing thousands of dollars per flight.


Analyst James Parker estimated that, on four Florida routes from New York's John F. Kennedy International airport, Song's operating losses in the third quarter last year were $4,042 to $7,944 per one-way flight. JetBlue made an operating profit on the same four routes, Parker said, because it had lower operating costs, got higher average fares and filled more seats on its smaller planes.

Delta executives have said Song, launched last year, is making a slight profit and holding its own against JetBlue and other discount carriers. But Delta has also effectively put Song's previously rapid growth on hold amid a strategic review by new Chief Executive Officer Gerald Grinstein.

"I don't think Delta is going to shut down Song," said Parker. But he added, "It does not appear that they're going to expand it."

Parker disclosed that his employer handled JetBlue's initial public offering in 2002 and subsequent investment banking work. Delta is not a client of Raymond James.

Parker's estimates on the key Florida routes were based on traffic and revenue statistics reported to the U.S. Department of Transportation, plus unit cost figures from their public statements. He said Song's results were probably modestly better than his estimates, in part because his estimates don't include revenue from passengers on connecting flights or from food sales.



YIKES!!!

20 replies: All unread, jump to last
 
User currently offlineBR715-A1-30 From , joined Dec 1969, posts, RR:
Reply 1, posted (10 years 10 months 3 weeks 2 days 19 hours ago) and read 2045 times:

Time for Song to start repainting their Green planes into BLUE planes.

jetBlue needs to paint their blue planes Green, and call it jetGreen. They are raking in the dough.


User currently offlinePVD757 From United States of America, joined Aug 2003, 3420 posts, RR: 16
Reply 2, posted (10 years 10 months 3 weeks 2 days 19 hours ago) and read 1997 times:

There has been some rumblings at Delta about Song since the new CEO took over. In fact, there were some routes announced out of JFK that probably would have been Song ops but were made mainline instead. I feel that Song is having trouble filling 199 seats per flight. And even if they are, they have to discount them so deeply that it's not worth it. Southwest supposedly has the lowest load factor out all of the majors yet does not lose money. This has to mean that the others are doing their math wrong. A full plane is fine, but you still have make money per passenger. it sounds like DL has to go back to the drawing board again. Oh, and for all of you out there that want to point to ATL for jetBlue, if jetBlue would have offered 4 or 5 destinations, they would be killing the two incumbents on those routes. JFK has been established and everyone is finding this out the hard way.

User currently offlineTWFirst From Vatican City, joined Apr 2000, 6346 posts, RR: 51
Reply 3, posted (10 years 10 months 3 weeks 2 days 19 hours ago) and read 1976 times:

Where's Otto Pylit? He knows EVERYTHING there is to know about Delta's books as he works on a concourse at ATL. I'm sure he knows exactly how much Song is making on each flight, as he has ALL the insider information. This analyst guy doesn't know what he's talking about..


An unexamined life isn't worth living.
User currently offlinePVD757 From United States of America, joined Aug 2003, 3420 posts, RR: 16
Reply 4, posted (10 years 10 months 3 weeks 2 days 19 hours ago) and read 1941 times:

Yeah really, let's ask any of the cabin service cleaners. They know everything.

User currently offlineJetBluefan1 From United States of America, joined Dec 2003, 3019 posts, RR: 14
Reply 5, posted (10 years 10 months 3 weeks 2 days 18 hours ago) and read 1864 times:

'Song Sung Blue' - the name of one of JetBlue's aircraft.

haha!

JetBluefan1



Most people on a.net hate JetBlue. Get used to it.
User currently offlineFanoftristars From United States of America, joined Jul 2000, 1615 posts, RR: 5
Reply 6, posted (10 years 10 months 3 weeks 2 days 18 hours ago) and read 1844 times:

This analyst might be right about JFK; however, on the two song flights I saw last friday from EWR to Florida, both 757s were completely full. JetBlue doesn't even offer EWR-FL.


"FLY DELTA JETS"
User currently offlinePVD757 From United States of America, joined Aug 2003, 3420 posts, RR: 16
Reply 7, posted (10 years 10 months 3 weeks 2 days 18 hours ago) and read 1825 times:

Maybe that's why they were full.................. Laugh out loud

User currently offlineSHUPirate1 From United States of America, joined Sep 2003, 3670 posts, RR: 16
Reply 8, posted (10 years 10 months 3 weeks 2 days 18 hours ago) and read 1810 times:

I specifically remember several Song 757's leaving PBI (headed to BDL, LGA, and JFK) the Sunday after Thanksgiving, accepting at least a dozen stand-by passengers...if you need to accept stand-by passengers on the Sunday after Thanksgiving, on one of the more traveled city-pairs in the United States, I'm sorry, but something's wrong, especially when most airlines, have to beg, plead, and then demand that people DON'T get on the plane...


Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
User currently offlineNonRevKing From , joined Dec 1969, posts, RR:
Reply 9, posted (10 years 10 months 3 weeks 2 days 17 hours ago) and read 1734 times:

This analyst is biased because Jetblue is a client of his, and Delta/Song isn't. He says this himself. Of course he's gonna run down the competitor.

JetBlue has just as many problems right now.

All you blue kool aid drinkers can flame me if you want, I really don't care anymore.

Brian - SPOT THIS!


User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4528 posts, RR: 33
Reply 10, posted (10 years 10 months 3 weeks 2 days 17 hours ago) and read 1656 times:

The analyst may be exaggerating, but not by much. Other sources such as the New York Times have confirmed that Song has higher operating costs and has achieved lower yields on NYC-Florida routes. I'd be wary of trying to estimate such precise loss figures, though.

JetBlue's biggest problem is Wall Street, which has hormonal issues. Either they're all ga-ga over B6 and overvaluing their stock, or pouting and selling off their stock. Hopefully they'll grow up sometime and treat JetBlue according to the facts like they do most airlines.

And all you JetBlue haters can flame me if you want, I don't care either.

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineJetBluefan1 From United States of America, joined Dec 2003, 3019 posts, RR: 14
Reply 11, posted (10 years 10 months 3 weeks 2 days 16 hours ago) and read 1615 times:

Feel free to flame me too!

I think the analyist was only speaking the truth, even though JetBlue is a client of his company. I can definitely see how Song has higher prices to pay. They also have some very low walk-up fares from JFK mainly to compete with JetBlue when their planes get full. But how is Song going to make a profit when they sell almost all of their seats at $85 one-way. JetBlue maybe sells 75 seats at $79 one-way, then continues climbing up to $249 one-way. The people who pay the walk-ups is where JetBlue gets the money from.

JetBluefan1



Most people on a.net hate JetBlue. Get used to it.
User currently offlineOttoPylit From , joined Dec 1969, posts, RR:
Reply 12, posted (10 years 10 months 3 weeks 2 days 16 hours ago) and read 1568 times:

Ah, the next daily round of "can a major run a profitable lcc" as if Delta Express wasn't already until the pilot contracts. Delta's expanding of JFK not including Song as a major part is because most of the markets they are expanding to do not have LCC competition. When they do, Delta will put Song into the market. And Delta is not going to turn itself into Song. If Song were really losing $4-$7 thousand a flight, wouldn't management have pulled the plug right now, especially how close DL is to Chapter 11 that most believe? That runs about $7 million a day, if my calculations are correct. No airline would keep something that burns that much.

Airline analysts do have preferred clients to hold credibility, so Jetblue being Parker's client would not be surprising. Just another reason for me to NOT believe everything that airline analysts say these days.

See you all Sunday afternoon around 5:28pm when the next post on Song is started. Take care. ;-D


User currently offlineN707PA From United States of America, joined Apr 2000, 279 posts, RR: 0
Reply 13, posted (10 years 10 months 3 weeks 2 days 16 hours ago) and read 1550 times:

Anyone got a pitcher?




User currently offlineJBLUA320 From United States of America, joined May 2002, 3180 posts, RR: 19
Reply 14, posted (10 years 10 months 3 weeks 2 days 15 hours ago) and read 1511 times:
Support Airliners.net - become a First Class Member!

In regards to the EWR-FLL flights, I think its worth noting that the frequency is 2x daily. This is a lot less seats to fill then JFK's 6+ .

Im not forecasting anything for song, nor jetBlue.... but the battle is going to get tougher for both. Song who has a mainline CEO ready to cut the cord and jetBlue whose costs will be rising in the near future- Things at JFK could get interesting! But I suppose in the short-term, it's good for passengers.

The fact that song is underperforming is not earth-shattering news, nor hardly surprising to anyone, I think. The EWR flights may be full, but it does not compensate for the lousy loads on JFK/LGA to Florida and presumably the western routes as well (have those started yet?).

Like I said before, the battle of JFK will get interesting. But if established carriers like Continental can maintain EWR flights, and American LGA flights, I can only hope that there is room enough for both Song and jetBlue in the market, atleast on NYC-FLL. Though I am a loyal jetBlue follower, song offers a product that is probably halfway decent, even if my experiences showed me otherwise.

In a perfect world, airlines would coexist peacefully, but I think that in the spirit of capitalism (and perhaps the supposed "State of Nature", where only man can decided when his turf is being infringed upon), a little competition can only strengthen the winner, and teach the loser a valuable lesson.

What can we do now? Sit back and relax- the only thing we can do in this situation is speculate, and I think we have all done more then enough.

JBLU


User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4528 posts, RR: 33
Reply 15, posted (10 years 10 months 3 weeks 2 days 15 hours ago) and read 1445 times:

Like I said before, the battle of JFK will get interesting. But if established carriers like Continental can maintain EWR flights, and American LGA flights, I can only hope that there is room enough for both Song and jetBlue in the market, atleast on NYC-FLL. Though I am a loyal jetBlue follower, song offers a product that is probably halfway decent, even if my experiences showed me otherwise.

The density of the NYC-Florida corridor is incredible. If Song can get their crew costs in order, and match capacity to demand (maybe Song has too much on JFK-FLL and the right amount on EWR-FLL, as you note), they and JetBlue can probably both flourish in that corridor. Time will tell.

Jim




Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6733 posts, RR: 24
Reply 16, posted (10 years 10 months 3 weeks 2 days 4 hours ago) and read 1359 times:

If Song were really losing $4-$7 thousand a flight, wouldn't management have pulled the plug right now, especially how close DL is to Chapter 11 that most believe? That runs about $7 million a day, if my calculations are correct. No airline would keep something that burns that much.

Where do you get $7 million dollars a day? The $4-$7 thousand per flight was only estimated for four Florida routes out of JFK (TPA, MCO, PBI, FLL). The four routes combined have 15 daily roundtrips or 30 one-way trips. So if we multiply 30 X (4-7 thousand) = $120,000-$210,000 per day. That's still a lot of money being burned, but no where near $7 million.

However, I would be hesitant to try to make calculations like these. There are a lot of assumptions being made...particularly about yields and fare distributions.



User currently offlineRichierich From United States of America, joined Nov 2000, 4298 posts, RR: 6
Reply 17, posted (10 years 10 months 3 weeks 2 days 2 hours ago) and read 1279 times:

Funny, this subject has come up several times over the last couple of weeks, especially since Delta announced that Song would have no further expansion at this time. I refuse to say "we told you so...", because obviously the blue koolaid has messed with my senses.

Even as inebbriated as I must be, I can still see that Song is floundering and will go away soon. At least two people who frequently post in airliners don't seemed to have spotted this yet... their minds must be on Song autopilot.

The Raymond James opinion is not the gospel, for sure. As I have said in other posts, only Delta knows for sure. Or perhaps they don't know, which could be even worse. But the writing is on the wall and I think Song is finished, likely before year end. It is not only me, of course, as plenty others with a sensible head believe it, as do airline financial analysts from a neutral party (this is their jobs, folks!). Perhaps the fumes from the lime green Song paint has gotten to people's minds (considering it is likely still wet!).

You don't have to be pro-JetBlue to see this. Wake up and smell the blue smelling salts. The fat lady is about to Sing!



None shall pass!!!!
User currently offlineOttoPylit From , joined Dec 1969, posts, RR:
Reply 18, posted (10 years 10 months 3 weeks 1 day 20 hours ago) and read 1167 times:

Parker's numbers could not have been more off balance. For his numbers to be possible, Delta would have to run those flights with anywhere between a 5-18% load factor. Obviously he is predicting only some FL flights, so I threw in Song's entire projected schedule by the end of the year. They obviously have competition on most all of their routes, so they MUST be that bad on nearly all. So I just multiplied that schedule to Parker's highest cost. The numbers clearly show the high doubt in his guess.

User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 19, posted (10 years 10 months 3 weeks 1 day 20 hours ago) and read 1128 times:

I could pick 4 routes on every carriers network and show that they are making a loss of probably a lot more than the song losses. There are plenty of flights out there that make a loss, yet they feed routes that make a profit, or they are in their infancy. I remember most statistics show that routes often take a few years to get profitable.

J


User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6733 posts, RR: 24
Reply 20, posted (10 years 10 months 3 weeks 1 day 19 hours ago) and read 1104 times:

OttoPylit,

Where do you get 5-18%?

The cost for DL to operate JFK-FLL one-way can roughly be calculated by multiplying the CASM x Number of seats x Distance flown.

So for JFK-FLL, assuming a CASM of .08 (about what we've heard for Song), 199 seats and a distance of 1,070 miles, we get: .08x199x1070 = $17,034. That's a rough cost estimate for DL to operate JFK-FLL one-way.

On the revenue side, lets assume DL has an average fare of $90 each way and an average loadfactor of 70%. That gives us, .70x199x90 = $12,537....this is a rough estimate of revenue for JFK-FLL one-way.

So, revenue-cost = profit (a very crude equation), $12,537-$17,034 = $-4,497. Using these approximations, DL is then losing $4,497 per flight.


Again, this is a very rough estimate. It doesn't take into consideration other revenues (food sales, cargo) and I'm just using a rough estimate for CASM, average fare and load factor. However, Parker's numbers can be duplicated without making any insane assumptions, so his hypothesis that Song is bleeding on the JFK-Florida routes is feasible.

Also, even if you multiply a loss of 4-7 thousand across all of Song's schedule (142 flights), you will not get 7 million a day. 142x(4-7,000) = $568,000-$994,000 per day. Of course, I would not apply this loss across all routes, as some Song routes perform better than others. I wouldn't be surprised if the JFK-Florida routes were some of the worst performers given the intense competition with JetBlue.




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