Press Release Source: Northwest Airlines


Northwest Responds to Media Inquiries Concerning Reported Delta Fare Initiative
Tuesday January 4, 4:56 pm ET


EAGAN, Minn., Jan. 4 /PRNewswire-FirstCall/ -- In response to numerous requests from the news media for comments on the reported Delta Air Lines fare initiative, Northwest released the following statement today:
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"Although any analysis of the effects of the reported Delta fare initiative depends upon the details of Delta's proposal, if it occurs, Northwest believes that 'fare simplifications' of the sort being described are revenue negative. Northwest expects that such an initiative, if it becomes general, would immediately adversely and significantly affect industry revenues."

Northwest Airlines (Nasdaq: NWAC - News) is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo, and Amsterdam, and approximately 1,500 daily departures. Northwest and its travel partners serve more than 900 cities in more than 160 countries on six continents.




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Source: Northwest Airlines

If NW didn't have so much bad press in MSP about the high fares they charge out of their Minnesota super-fortress, they wouldn't need to issue a press release.

I'd really rather see NW go bye-bye instead of US, but nwa (were they hoping people wouldn't recognize them as Northwest with that logo?) flies to many destinations with little competiton, so they get to stay... drat!

Tell us how you really feel.

I'm not surprised at all. See example of DL undercutting SkyTeam partner AF in the following thread:

https://www.airliners.net/discussions/general_aviation/read.main/1890294/

Eta unknown:

NW "gets to stay" because unlike other aforementioned airlines that are on the brink of liquidation, their management actually knows how to run an airline... and seeing that they've captured 80% of the MSP market, seems Minnesotans don't hate NW as much as you suggest.

I could see it not helping NW while helping DL. NW's business is much more sheltered from LCC's than Delta's. It is also much more O&D oriented rather than connecting. ATL/CVG/SLC are already under this new type of pricing. DTW/MEM/MSP remain hubs with for the most part old style pricing.

Filejw,
While I don't at all agree with ETA's sentiments, his statement serves as a perfect example of what's wrong with legacy carriers. There was a time when
NW, along with most other Legacy carriers would eliminate competition with predatory pricing policies, only to raise prices once competition was eliminated. They were successful in doing so, because the public either didn't trust the newcomer, or was tied to the legacy carrier's loyalty program.

But, the mega-hub pricing strategies and customer service shortfalls have built up such incredible levels of resentment amongst the flying public, people are sticking with the LCC's even when legacies match pricing. Now, not only is a legacy carrier losing money by matching an LCC's pricing, but they are also failing to succeed in winning back lost passengers due to lingering resentment.

I don't think DL dropping fares all by itself is going to help the carrier. There has to be a fundamental change in the way that DL, NW, US, UA, AA treat passengers. Being in SFO, I can't tell you how many times I've heard people say I would love to fly ANYONE other than UA if it weren't for my miles. In UA's defense, I've seen them really raise their game and really work hard in improving the customer experience. I haven't seen this from either US or DL. My limited experiences with NW have been mediocre at best, so I can understand the sentiments, although I don't wish any airline employees to lose their jobs.

"Your compassion for the livelihood of 47000 people is just beautiful..Go F##k yourself,,,,"

47,000 people?!? Is that supposed to be some kind of a joke? Try 5,000,000. NEWay, I would say the same thing that you said to Eta, but I have a little bit more class than that, but dido to you my friend if you're trying to bash Minnesota.

Jeremy

PA110,
It' s not DL prices that bother me its Eta's attitude.In my over 40 hockey league we try to remember everybody has to go work the next day and we have a response to people that forget it.

It really depends how you read into this statement. Nowhere does NW specifically say that they are not happy with Delta's new fare structure.

It simply states the truth......this new structure will reduce revenue in the industry. Are the airlines ready to handle this, even Delta? That is questionable. NW is simply stating the truth. Revenue is continually falling in this industry, which is somewhat worrisome, since by and large, even at the LCC's costs are still not where they should be.

NW's statement could be taken many ways......

My turn....isn't DL running a high load factor now? They drop rules and regs and fares to raise that factor? Hmmmmmmmmm...the old great white hair sees it this way. This is a GREAT way to raise $$$$$$. Perhaps Dl needs a few bucks because the drain is getting a little bigger each month...more out then in?. Then again perhaps airTran is eatting DL's lunch at ATL and DL needs a drastic move.
Only my two cents worth.....I say NW or any other carrier would not like to change the rules. NW was merely the first to sound off.
safe

DL is not doing this to raise load factors. Load factors are already high. DL expects the yield to rise. That is, on average DL will see a rise in fares paid. ie fairly priced walk up fares replacing deeply discounted leisure fares. And since DL already mirrors Airtran pricing in every single market Airtran has nothing to do with it.

And yet, Delta still hasn't announced anything...

B

I agree DL is "not doing this to raise load factors" They aren't anemic now. They need more cash, not more bodies. Bodies they got! Some of those walk up fares are touching the stratosphere now with DL and almost everyone else. DL wants to RAISE em somemore?
Try this...take all your cheap-o fares and tack on $20 bucks RT. The legacy's should follow. Sooner or later so will the cheap-os because they know they can get it.
Try that and quit the nickel-dime crap...the change fee..stand bye charge(NW does not have a stand-by charge..thats why I fly them), over weight bag games..buy a sandwich.. a five dollar beer...hell, only the Palace where the Pistons play charge more...
Big Six. GO BACK TO BASICS..do what brought you to the dance...
And don't insult everyone here's intelligence with"Airtran has nothing to with it"
Airtran is big pain in DL's ass and DL knows it. Those people at ATL getting on and off Airtran planes were DL's pax. Who are you kidding?
safe

Delta has been matching Airtran market to market for 4 years now. You're the one the brought Airtran as a possible reason. No. This new pricing will not effect their competition in the least.

Legacy carriers already understand that price is everything no matter where they are.

Now to survive in this climate they also all know their own prices have to be lower and every one of them is trying as fast as they can to match them while still trying to make the profit they could not even make before. To do this they have to dig out from the mountains of obligations and debt that past practices such as Regulation, unions, pensions and managed competition made a normal operational procedure. Now fuel prices are an unimaginable and underappreciated punch. This only added to an unavoidable domino in our financial climate. As cash runs out at each carrier more drastic measures are available and acceptable through bankruptcy laws and thoughts of liquidation possibilities. Each carrier that reaches this point institutes such new rules and prices that make it that much more imperative the others follow. All businesses are finding this out.

When your competition starts at a profit and stays there is a sea change from the past. No equal debt load is the hammer that is flattening the playing field. And it will.

The period we are is uncomfortable at best. Traditional values are being rewritten. Service levels at the Legacies are suffering from morale as wages and manning are cut to provide savings for the time needed but in themselves cause an escalation of feelings against them that make the changes thought needed that much time important and time sensitive.

How to keep that expedited landing safe and recoverable is not in any manual as yet.

Please understand the problems and do not condemn a system in freefall. Everyone wants to survive. Everyone wants to offer a product that makes both the provider and the customer happy. It will happen but the added acrimony will not help one bit. Not any more than what the rampers at PHL are alleged to have done.

"And yet, Delta still hasn't announced anything..."

An official announcement is expected tomorrow.

Jeremy

What lousy fares? Why so negative about NWA? I fly every week -- let's see, last year, I flew on Continental, American, Delta, Air Canada, Northwest, US Airways, KLM, and a few others --

NWA is the most cooperative airline for a passenger who misses a flight, looses luggage, has any kind of problem. Their fares are competitive, terminals are from OK to great (Airlink terminals to DTW), and the personnel is always cooperative and friendly. I do have a recent problem with Pinnacle; however, I am hoping that will be resolved, and again, other than one Pinnacle flight attendant, who should be quietly deposited under the stairs, the Pinnacle personnel are also helpful

We have to try something to stimulate demand.

Northwest very seldom goes along with any fare initiative.

This is just their conservative rhetoric.

If NW doesn't like DL's propsed fare rationaliztion, NW should do DL a favor and kick them out the the bed in which they have been sleeping together. It would greatly benefit DL, just as CO's retaliatory reaction to HP's "fair fares" improved HP's lot considerably while it's been CO spinning their wheels ever since.

Tango-Bravo:

You hit the nail smack on the head.

Jetdeltamsy:

But - the demand is already there. November traffic rose 9% yoy, with a load factor of 74% - which ain't too shabby for November.

The problem is that costs exceed revenue. And I can't see how the answer to that is to reduce revenue.

cheers

mariner

Some of those walk up fares are touching the stratosphere now with DL and almost everyone else. DL wants to RAISE em somemore?

I don't know if you understand the Simplifares approach Delta would be taking(if and when they announce something). The simplifares out of CVG cap fares to certain cities, no more paid than $499($599 for First Class), compared to a current walk-up to someplace like SLC for $1000. Since that started, they have seen an increase of people flying out of CVG(where there is no LCC competition), rather than defecting to DAY and LEX. It keeps your local customers flying out of the local airport. Thats the approach they would be taking, telling the customers, "You can fly on us and know that you will not pay more than this." It assures the customers that they know what they will get.


Airtran is big pain in DL's ass and DL knows it. Those people at ATL getting on and off Airtran planes were DL's pax. Who are you kidding?

I think I would have to disagree with ya there. Although Airtran is a big competitor to DL and does overlap many routes, it isn't the biggest threat to Delta right now. I'm not saying that Delta wouldn't want Airtran gone, but Delta has more to fear from more powerful airlines like Southwest in other cities(SLC, MCO, TPA, etc). And many of those people were Delta pax, but only for the past 12 years. Before that, they may have been Eastern's. Besides, if Delta figured that they couldn't live with FL, they could have done something to try and run them out back during the booming late 90's when record revenues were being made. Delta and Eastern could live with each other in ATL before EA died, and I think Delta and Airtran can as well.

Is this the same Northwest that attacked HP into Phoenix when they dropped their fares to MSP  

Thanks for the comeback OttoPylit. I understand a little better with YOUR explanation and as you have read in past posts, I crave knowledge of this industry.
I would think DL is drawing the line on airTran in a few markets. For example, airTran/Valuejet has had FNT(Flint)-ATL since the mid 90's. Just about 6 months ago, Comair gets into the act(that route). I know, I was the first pax off at FNT on their first trip ATL-FNT. They handed me a nice Comair umbrella as I disemarked. LOL
I'm sure these two are banging heads on other routes into and out of ATL.
AirTran and NW are also competing with FNT to MCO and FLL.
This new DL approach will be watched by other carriers very carefully.
As you well know,in the industry, its monkey see, monkey do. Another carrier should follow the DL lead. Lets see who and when.
ALSO I can add that since Indy Air showed up in LAN, DL/COMAIR lowed a lot of fares. Indy is now gone at LAN so lets see what DL does now.
I understand fully about airports, airlines and fares that keep people from driving to another city to catch a flight. FNT, LAN and DTW are sort on in a little war to keep the boardings local...quit driving to the next city.
Happy New Year to you and yours from Central Michgan..
safe

What's interesting is that AA tried to simplify fares about 10 years ago, with First, unrestricted Coach, 7-day advance, and 21-day advance. Several of the legacy carriers started to match the program, and then NW started a 50% discount fare during the summer.

All the airlines matched NW's fares and dropped the simplified structure. No one made money that summer, and a lot of people who had never flown before were getting on airplanes. There was a tote board in UA's F/A office at ORD with a countdown of the days, "until the Clampetts go home." That was a reference to the sit-com, "The Beverly Hillbillies."

A friend of mine who flies for AA told me that the joke was that people at AA were making sure that Bob Crandall was never at a function with Al Checchi, the CEO of NW, because Bob would have straggled Al.

Yes, Delta has put RJ's on many routes that Airtran flies and lowers the fares to the same just to let Airtran know that they are not alone. I think its a big penis thing. Delta just needs to say, "Hey, you can make money flying into FNT(or any other secondary airport), and so can we(or at least limit you doing so). Don't forget it." Its because you have all men running airlines, they have to put up that macho image. lol

I applaud NW for their absolutely sober, honest publicity. They hit it right on the head. All DL's initiative does is gaurantee reductions in unit revenue, which is the last thing the legacies need. At the end of the day what the new DL initiative does is devalue the comparative advantage of the legacy carriers. The big 6 deserve to charge a premium for providing travel options from Des Moisnes to Denpasar. The DL program fails to account for the diversity of these travel options, and enters a game that the legacies will inherently loose. It is great that B6 can offer a good deal from New York to FLL, but NW puts the heavy iron across the ocean and can get me to Manila in a day if need be. There are far different costs associated with this. I hope DL's idea flies, but it seems to be yet another way to dilute the revenue base of the airlines that built the industry

What sort of communication if any goes on between codeshare partners when something like this occurs? Wouldn't some degree of negotiation be in place or is that not the case?

What sort of communication if any goes on between codeshare partners when something like this occurs? Wouldn't some degree of negotiation be in place or is that not the case?

collaboration on this type of issue would be illegal!

anyway, what some of you seem to be forgetting is that delta also plans to better utilize their planes and employees. planes spending more time flying vs sitting around would be a revenue enhancer would it not...?

Typical NWA response

 


My tail is getting red from bending over to NWA here at MSP............


Mike at MSP

They hit it right on the head. All DL's initiative does is gaurantee reductions in unit revenue, which is the last thing the legacies need. At the end of the day what the new DL initiative does is devalue the comparative advantage of the legacy carriers.

Anybody here remember AA's "value pricing"...the one where they slightly raised advance purchase fares but drastically cut walkup fares? I was on a trip from MCI to DFW when they implented it...I happened to by flying on a full Y class fare and paid $700 for it. AA's new pricing dropped that to about $400. MCI-DFW is about 920 miles, so a $400 fare would bring it about .43 cents per seat mile. The beauty was....AA's proposed lowest fares still made them a profit. Helluva concept. Now, given all that, guess which airline started a money losing"fire sale" price war....yep...the same airline that says Delta's actions are "revenue negative".

When hasn't NW resisted a fare schedule change initiated by another carrier?

I received the email below today. According to the Wall Street Journal the fares were scheduled to be rolled out later this month, but the timetable was moved to today because of all the media leaks and the fact some passengers were putting their travel plans on hold to wait for the new fares.


Beginning January 5, 2005, Delta will have a new nationwide fare structure that will make flying more convenient, simpler and more affordable than ever.

It's called SimpliFares™:
• Fares are up to 50% lower.
• No Saturday night stay required.
• Good 365 days a year within the contiguous 48 states.
• Just 8 fares: six for Coach and two for First Class.

And as a SkyMiles® member, you’ll continue to earn miles every time you fly. Plus, earn 1,000 Bonus Miles when you purchase your round-trip ticket at delta.com. You’ll probably find it even easier to earn Medallion® status with SimpliFares because First Class and premium Coach fares — which earn the most MQM — have been significantly reduced.

Need to change a ticket?
No problem — from now on with SimpliFares, the change fee is only $50, no matter what. And, when you purchase a ticket at delta.com, you can avoid booking fees. Starting today, tickets purchased over the telephone from Delta Reservations will cost $5 more and $10 more per ticket if purchased at Delta ticketing locations (e.g. CTOs, airports).

SimpliFares is just one of the many measures Delta is taking to make it easier for you to travel with us. To take full advantage of SimpliFares the next time you fly, or for more information, visit delta.com/simplifares.

Sincerely,



Paul Matsen
Senior Vice President, Chief Marketing Officer

I too applaud NWA for being honest and candid with this announcement. I think fare simplification is in order, definitely! Perhaps slashing fares across the board is a bit drastic though. NWA is right... this will not be a revenue positive event an that is exactly what they don't need. This is going to drive yields down, revenues down and put Delta in a more precarious financial situation. Unless they get their costs to mirror an LCC this won't fly. I think that if NWA follows with anything, it will just change some rules. Again, NWA has got their head on straight and are attempting to run their business. Remember, airlines are indeed businesses and have to make money. NWA seems to be one of the few carriers that know what they want to be and are sticking to it (read: a PLAN!).

To the people that complain about NWA being the spoiler. Do a little research and you'll find that NWA isn't always the spoiler. And if they are the spolier they have reasons! Why raise fares that people don't buy? Why raise the already inflated walk up fares? Why alienate your most important customers by raising already high business fares? What they need to raise are the fares that (to borrow from another post) the Clampets are buying! Fares are indeed too low around this country but as long as there are LCCs that can offer those dirt cheap fares and still make money, that's the way it's going to be. Air travel has turned into a product just like anything else. People will go to the cheapest, buy the cheapest and sacrifice quality for the almighty dollar. They believe they ought to raise fares that will indeed prove to be a revenue positive event. Otherwise, rasing a blanket amount of fares will actually DECREASE your revenue.


AZJ

I too applaud NWA for being honest and candid with this announcement. I think fare simplification is in order, definitely! Perhaps slashing fares across the board is a bit drastic though. NWA is right...

DL is NOT slashing fares across the board. Let me repeat that again:

DELTA IS NOT SLASHING FARES ACROSS THE BOARD!!

While DL is lowering many of the last minute walk-up fares, many of the advanced purchase fares will stay the same and in some cases go up. If the Simplified fares are applied rationally, this initiative should actually INCREASE yields.

NW is against this move because NW still holds a near monopoly in many markets. NW is the least exposed to LCC's of the six legacy carriers. Because of these facts, NW wants to keep the old arcane way of pricing. Simplified Fares will undermine NW's monopoly pricing system.

To the people that complain about NWA being the spoiler. Do a little research and you'll find that NWA isn't always the spoiler.

Check your facts. I think you'll find that they're the spoiler in the vast majority of cases.

FlyPNS1, I agree. NW has a monopoly at MSP. But the title suggests that it is only NW that is unhappy with the new DL fare structure; aren't most?

NWA is right... this will not be a revenue positive event an that is exactly what they don't need.

Let me ask you this....if a 21 day advance fare lets you break even on the seat mile costs, and the 14 and 7 day fares let you get a 2 to 10 cent per mile profit, and your last minute fares allow you a .50 cent per mile profit, then how is this any more "revenue negative" than offering 21 and 14 day fare that lose you money, and hoping to make it up with a fare that brings in $1.50 per mile, and that very few people are willing to pay? Watch...in markets where NWA competes with Delta, look for a giant fare sale, with fares that could never turn a profit are offered by NWA. If Delta were smart - they'd let them give away their seats and lose money, while Delta charged a fair price for a less restrictive ticket, and made a profit, though their almighty "market share" might suffer a bit.

Seems like Airtran is rather amused by the notion:

http://biz.yahoo.com/prnews/050105/nyw129_1.html

"SimpliFares is about as simple as the U.S. Tax Code -- and it is nothing more than big airline pricing mumbo-jumbo," stated Kevin Healy, vice planning, pricing and sales. "Once again, Delta is trying to mimic a highly efficient, low cost carrier like AirTran Airways, but they are falling short. It is difficult for a leopard to change its spots."

Love It!

Craig
MKE

Delta and Northwest operate in totally different markets. DL 3 hubs all with LCC competiton. NW 3 hubs all with very little LCC pressure. DL has value pricing already in 80% of it's markets. So tough shit for NW.

Padcrasher

I have to disagree with you, CVG has no LCC's to give DL any competition. DTW has WN and NK not to mention numerous charters as well.

Yes I was wrong about CVG. But Delta has already converted CVG to this type pricing and incurred revenue gains. DTW/MSP/MEM may have a little LCC competition, but they are some of the most major dominated markets in the Nation.

Here is the response from the Business Travel Coalition. I have to say I agree with them!

Northwest have created a fortress in MSP by taking control of the whole of the new terminal for themselves and their partners.

After my flight this past weekend on Southwest, I'm going to fly them wherever I need to go. Since I have no desire to go to the Dakotas, NW won't be in my schedule!


PRESS STATEMENT
BTC Cautions On Northwest Airlines' Announcement
Airline telegraphing future business intentions, says group
RADNOR, PA., January 4, 2005--The Business Travel Coalition (BTC) today responded with concern that Northwest Airlines (NWA) would issue a Statement warning competitors that Delta Air Lines' anticipated airfare structure simplification would…"immediately adversely and significantly affect industry revenues." The NWA Statement http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/01-04-2005/0002767518&EDATE= , released at the close of business today, clearly telegraphs, in effect, that NWA does not plan or contemplate changes to its fares in response to a fare simplification initiative by Delta.
Time Magazine on Sunday was the first news outlet to report that Delta would be expanding its "SimpliFares" experiment at Cinci nnati throughout its domestic U.S.< /span> system. Apparently, Delta would neither confirm nor deny news reports. The Delta fare structure lowers and simplifies fares and fees, and eliminates some restrictions. This is similar to an initiative called Value Pricing, introduced in 1992 by American Airlines, which according to industry observers was derailed by NWA.
Through its public Statement today, NWA is dangerously close to embracing an anticompetitive practice that the U.S. Department of Justice addressed a decade ago. On December 21, 1992, the U.S. DOJ sued major U.S. airlines because airlines were announcing future fare plans through ATPCO with an implicit invitation to competitors to agree. To end this practice, airlines, including NWA, entered into a 10-year consent decree effective August 10, 1994, which forbade telegraphing future business intentions. While the consent decree expired in 2004, the underlying antitrust policy continues to be valid.

BTC chairman Kevin Mitchell stated, "The airline industry has a long and checkered history of anticompetitive problems, and business travelers have too often been victimized by the collusive actions of major airlines. BTC will monitor developments closely in coming days, and if necessary, call upon the U.S. DOJ and State Attorney Generals to investigate."

Padcrasher

I agree about MSP and MEM! Though MEM does not have the O&D that MSP has. MEM you do have some drivable alternatives that you could do in a pinch. Now MSP you are for the most part stuck.

. There has to be a fundamental change in the way that DL, NW, US, UA, AA treat passengers.
I notice you left out CO, was this intentional?

One thing about NW. I had people fly LGA-MSP-ANC-MSP-LGA in December and there was no IFE AT ALL! MSP-ANC is over 7 hours, almost as long as a DL flight from ATL-LGW! There was no IFE and the fare was very high! I think the NW should consider bringing back IFE on at least some domestic routes, espically 7 hour domestic routes!

flairport judging from your past childish posts I would suggest turning the TV off and reading a book. Pick something meaningful, something that can teach you something of value.

Reading between the lines of that AirTran response article, I understood the following:

"Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah (We're shitting our pants) Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah Blah."

Interesting how the competition thinks they know so much about the others way of doing business. If you want to buy a Chevy, would you listen to a Ford dealer?

This is classic too: "Once again, Delta is trying to mimic a highly efficient, low cost carrier like AirTran Airways"

But then the article goes on to list how Delta is different. Riiiiight. Let's break that down:

SimpliFares require a roundtrip purchase

Just about the only thing AirTran got right. But then again, Delta has already stated this so I cant understand why AirTran is acting like they're uncovered some big secret.

SimpliFares require a one night minimum stay - in effect, Delta traded the Saturday night stay for a one night minimum stay

So? Again Delta has already stated this.

SimpliFares have inconsistent advance purchase requirements

I don't know what's inconsistent about 21, 14, 7, and walk-up.

SimpliFares offer no free standby for business travelers

Not exactly true. True, Delta does not off standby. Delta DOES offer a free CONFIRMED seat for PM and GM members (mostly business travelers) and for everyone else there's "same day confirmed seating" for a small fee of $25. I'd rather do that and be confirmed that sit for hours hoping to get a standby seat when the flights are full.

SimpliFares "nickels and dimes" customers by charging extra for reservations in person or over the phone

Not really anything different than what a lot of carriers are doing, trying to guide more people to book online.

SimpliFares have a litany of other convoluted rules

Oh really? Well, since AirTran are the experts on Delta's fare rules, perhaps they can name the "litany of other convoluted rules". They can't, because that's a BS statement.

No question about it, the spin-masters are FL are in full damage control.

B

>>Northwest have created a fortress in MSP by taking control of the whole of the new terminal for themselves and their partners.<<

That hasn't happened yet.


>>My tail is getting red from bending over to NWA here at MSP............<<

SO... are you flying other carriers??? I didn't think so. I do not understand this attitude. People bitch that their hub airline is charging too much, yet they continue to fly them, which means flying nonstop commands a premium.... as it should. If you weren't willing to pay the premium for the convenience, you would fly a competing carrier (unless NW is the only carrier to a particular destination of course, which isn't the case except for a few very small towns in outstate MN and MI).

Although I still believe NWA is a very well-managed airline, I do believe that fare bucket simplification on the part of the legacy carriers makes total sense. However, IMO Delta has chosen to spin this pricing re-org as "slashing fares" in order to generate publicity among consumers.... but I'm willing to bet anything their RASM is going to remain pretty close to what it is... because they'll offer less of the lowest buckets and more of the higher buckets. Why in the world would they do something to drastically lower RASM? They haven't yet made and aren't able to make enough cost cuts to have a cost structure comparable to the LCC's.... so immediately doing something that would drastically lower revenue would be committing suicide. They've obviously done tons of financial modeling in preparation for this... the Sat. night stay restriction didn't mean much anymore anyway because they've lost so much business traffic, and they'll probably generate as much or more change fee revenue because more people will be more inclined to change a ticket at a $50 price point as opposed to $100... when these types of restrictions were originally put in place, it was to try and cover the costs associated with these transactions as they cost a lot to conduct due to the manpower involved... with the improvements in and implementation of new technology over the past few years, it's much cheaper to transact things like ticket changes and calculating how many seats to oversell a flight and how much to charge for a seat due to load factor, etc. Thus, Delta can rescind these things now and look like it's doing something revolutionary.

I do agree w/BTC's commentary... the airline industry is already an oligopoly, and perhaps NW didn't intend to, but I suppose they are dangerously close to indirectly colluding w/their competitors by publicly saying "don't do it"....

Associated Press
Estimated Airline Revenue Shortfalls
Wednesday January 5, 12:25 pm ET
By The Associated Press
Estimated Revenue Shortfalls for Major Airlines in 2005


Estimated revenue shortfalls for major airlines in 2005, based on industrywide adoption of Delta's overhauled fare structure, which reduced some fares by as much as 50 percent. Industrywide domestic revenue totaled about $70 billion in 2004.
AMR Corp. (American Airlines) - $600 million

Continental Airlines Inc. - $250 million

Delta Air Lines Inc. - $600 million

Northwest Airlines Co. - $400 million

UAL Corp. (United Airlines) - $500 million

US Airways Group Inc. - $200 million

Source: Merrill Lynch

Not that airlines are in business to lose money, but if your competitor has one foot in the ground and they are losing money faster and/or closer to closing up than you, I believe it's a reasonable short-term strategy to give them a little push over the edge. And in this case, I am of the opinion that DL has the most to gain (out of the resulting 5 majors anyway) from a possible US demise, so I would be curious to see what those Merrill Lynch numbers but modified to account for 1 less competitor, a reshuffled distribution of marketshare amongst the survivors, and the resulting increase in prices/yields due to the reduction of supply.

On a surface level, most of us are saying that DL stands to lose money, which makes it seem asinine that they are doing this. But I see NW's subsequent response as the curious thing here. That is, NW's conservative stance on any attempted fare hikes in the past have, in my opinion, been a result of an attempt to bloodlet the competition (particularly in an industry as I see it now where "cash is king"), so the very fact that they issued a press release to voice their perceived--although a good point was made earlier that suggests that the subject line reads too much into the statements themselves--displeasure is an indicator to me that NW themselves have something more to lose than just revenue here. Which comes back to my comments about the redistribution of marketshare in the East: NW has probably the least presence there than any of the remaining 4 would in a post-US marketplace, and subsequently has the least ability to capitalize.

-Mike