Delta accused of making business decision for bad reason [RETALIATION]

DeltaI love the Business Travel Coalition. I really do. I see a press release from this organization in my inbox, and I start to smile. It’s like reading Business Insider headlines without stopping to think that they may be click-bait (not that I’m ever guilty of that, of course …). Well, the latest is downright hilarious. If you hate Delta, you’ll love the Business Travel Coalition.

In its latest statement, the BTC draws attention to a “predatory” move by Delta. In response to Frontier Airlines’ decision to open a route from Minneapolis to Kansas City, it says, the largest airline in the United States has pulled the trigger on routes from Kansas City to Boston, Columbus and New Orleans. According to the BTC, that’s some heavy-duty payback, intended to help Delta “maintain its monopoly position at Minneapolis St. Paul International Airport.”

Ummmmm, really? It’s a pretty costly “retaliation” play.

Of course, Delta couldn’t have come up with this idea on its own. The BTC explains:

This is a page from Northwest Airlines’ playbook reminiscent of its 1993 response to entry by tiny Reno Air when Northwest announced it would overlay the carrier’s routes from Reno to MSP, Seattle, Los Angeles and San Diego.

Yeah, of course it is. The people with aluminum foil on their heads and hanging from their ceilings are doubtless nodding in violent agreement right now. Fortunately, it gets better when you hear what BTC chairman Kevin Mitchell has to say about all this:

“As we saw in the U.S. during the 1990s, strategies of predation seek to drive low-cost competitors out of markets and create barriers – literal barriers of fear – for potential new entrants. Consumers may benefit from below-cost pricing in the short term, but once a new entrant is driven from a market, the incumbent airline can raise prices above competitive levels and recoup the “investment” in its strategy of predation.”

As the ol’ infomercial folks say, “But wait! There’s more!”

“Just as importantly, the anticompetitive behavior sends an unmistakable message to other competitors to not trespass on the incumbent’s markets anywhere in its network, negatively impacting consumers even more broadly. Make no mistake, Delta’s heavy-handed, punitive attack on this low-cost carrier is meant to chill all other low-cost airlines that might otherwise try to mount competition at one of the most concentrated hub airports in the U.S.,” added Mitchell.

Look, the BTC may have a point in all this. It won’t be communicated effectively, though, if they take this approach. In case you need a chuckle, here’s the full statement. First, though, you need a break, largely because these people are so bat-shit crazy. So, to break this up, I offer you some singing skeletons from Canada.l


Okay, now here’s the statement:

It’s deja vu all over again as Delta Air Lines seeks to maintain its monopoly position at Minneapolis St. Paul International Airport (MSP) by retaliating against Frontier Airlines for deciding to initiate scheduled service from Kansas City to MSP on June 6, 2011. In a response that can only be considered retaliatory and anticompetitive, Delta beginning on June 6 will start flights from Kansas City to Boston, Columbus and New Orleans, and from Omaha to Ronald Reagan Washington National Airport – all overlaying Frontier’s schedules. This is a page from Northwest Airlines’ playbook reminiscent of its 1993 response to entry by tiny Reno Air when Northwest announced it would overlay the carrier’s routes from Reno to MSP, Seattle, Los Angeles and San Diego.

“As we saw in the U.S. during the 1990s, strategies of predation seek to drive low-cost competitors out of markets and create barriers – literal barriers of fear – for potential new entrants. Consumers may benefit from below-cost pricing in the short term, but once a new entrant is driven from a market, the incumbent airline can raise prices above competitive levels and recoup the “investment” in its strategy of predation,” said Business Travel Coalition chairman Kevin Mitchell.

“Just as importantly, the anticompetitive behavior sends an unmistakable message to other competitors to not trespass on the incumbent’s markets anywhere in its network, negatively impacting consumers even more broadly. Make no mistake, Delta’s heavy-handed, punitive attack on this low-cost carrier is meant to chill all other low-cost airlines that might otherwise try to mount competition at one of the most concentrated hub airports in the U.S.,” added Mitchell.

In 2008 testimony before the U.S. Senate and House, in opposition to the proposed Northwest – Delta merger, BTC forewarned about the consequences of creating mega carriers and driving radical consolidation of the U.S. marketplace for commercial aviation services:

Strategies of Predation. “The resulting mega carriers would fortify their hubs with near-exclusive contracts with corporations and travel management companies, and other well-tested practices such as gate hoarding, schedule bracketing, triple frequent flyer points and travel agency override programs, making the barriers-to-entry for low-cost carriers of the 1990s seem low. Congress should be concerned with the market power of super-mega airlines and their incentive and means to frustrate new airline entry at hub airports.”

Indeed, the Delta-Northwest merger created the largest airline in the world; one that possesses the market dominance necessary to frustrate new entry at its hub airports, and one that can project its considerable power into adjacent markets, as also noted in BTC’s 2008 testimony:

Adjacent Market Power. “Congress should be concerned with these mega carriers’ ability to drive supplier prices to below competitive rates for travel agencies, travel management companies, airports, global distribution systems, parts suppliers, caterers and all manner of supply chain participants. Likewise, these carriers would have the power to accelerate the transfer of costs onto the backs of consumers.”

Delta’s move against Frontier adds further evidence and warning that the U.S. commercial aviation market is failing. Indeed, some two and one half years into the widespread implementation of programs that unbundle airline services from the base ticket, market forces are inadequate to drive airlines to make fee information available to the travel agency sales channel. As a consequence, not only were many consumers surprised at the airport by some $9.2 billion in airline fees in 2010, but because those fees are withheld from travel agencies and cloaked from the pricing discipline of a comparative shopping process, they are artificially high. This resulting economic inefficiency is a strong indication of market failure and cause for concern.

The U.S. Department of Justice and State Attorneys General should be on high alert to the return of strategies of predation and other anti-competitive practices in the airline industry. As serious as predation was in the 1990s as a threat to consumers and the competitive structure of the airline industry, today consolidation has made potential consequences worse by orders of magnitude. The U.S. DOJ and State AGs should send an equally unmistakable message back to Delta that it is being watched and that abusive, anticompetitive behavior in the airline industry will not be tolerated. Business travelers and consumers have been pummeled by a series of airfare increases, many of them hidden, over the last few years. They need — and deserve — more airline competition and not the return of old tricks of the past that are designed to kill it.

[photo by Rainer Ebert via Flickr]

Which airline made the most money on baggage fees?

airline baggage feesLast year, baggage fees were used by airlines to make up for lost fare revenue, as the recession kept people on the ground. This year, it’s just been a great source of extra revenue, as passenger traffic and fares are up – and the fees haven’t gone away. Almost all airlines are getting in on the action, some more egregious than others.

Well, data for the third quarter of 2010 is in, and we can finally take a look at who’s hitting us hardest … and for how much. The numbers will probably shock you. The top baggage fee-grabber owned close to 30 percent of the total baggage fees charged in the United States, a market that has reached $2.6 billion for the first three quarters of the year, and the top five dominate with approximately 80 percent of the total fees charged for bags, according to data from the Department of Transportation.

Let’s take a look at the top five airlines for baggage fee snatching (and then the rest):1. Delta Air Lines, $733 million: in fairness, Delta is the largest airline in the United States, so it’s to be expected that it will generate the most revenue.

2. American Airlines, $431 million: the third-largest airline hits the #2 spot for baggage fees, implying an aptitude for prying open customer wallets yet to be recognized by its competitors.

3. US Airways, $388 million: again, this is an impressive take, as evidenced by the distance between US Airways and Continental, in the #4 spot.

4. Continental Airlines, $258 million: this almost makes the airline look downright reasonable, especially when it’s year-to-date baggage fees aren’t even as substantial as what Delta raked in during the third quarter alone!

5. United Airlines, $239 million:

And, the rest:

6. AirTran Airways: $112 million

7. Alaska Airlines: $81 million

8. Spirit Air Lines: $56 million

9. Frontier Airlines: $44 million

10. JetBlue Airways: $43 million

11. Allegiant Air: $43 million

12. Hawaiian Airlines: $40 million

13. Virgin America: $27 million

14. Southwest Airlines: $23 million

15. Republic Airlines: $18 million

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16. Horizon Air: $13 million

17. Sun Country airlines: $9 million

18. Mesa Airlines: $2 million

19. Continental Micronesia: $2 million

20. USA 3000 Airlines: $2 million

[photo by The Story Lady via Flickr]

Frontier’s new seating: ‘Stretch’ for some, ‘scrunch’ for others

Sure, I think it’s great that Frontier is introducing Stretch — a new premium economy section in the first four rows of coach that adds more legroom.

But what I don’t like is that they’re not taking out any rows in back. Instead, they’re squeezing the space between the other rows to make up for the extra room.

Sounds as though you’re either moving up to riches, or being pushed back to rags.

Originally, seats were 33 inches in pitch — meaning the space from a spot on your chair to the same spot of the chair in front of you. The Stretch section now gets 36 inches. The other seats behind are scrunched to 31 inches — or even 30 inches.

Because of Frontier’s tier class system, the only way that you can get a Stretch seat at the time of booking is if you’re a Classic Plus member. For you, it’s free. For everyone else, you get your chance at check-in. Those in the Classic class can get an upgrade for $15 per flight segment. Those in the Economy class pay $25 per flight segment.

You can currently find Stretch in the airline’s Embraer 190s. A320s, A318s, and A319s will follow suit in the next few months. The new seating class just started earlier this month.
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Commuter plane crashed on way to Nome and all safe

Last night a Frontier Flying Service plane heading to Nome, Alaska from Brevig Mission went down with a pilot and five passengers. Although the story is not as fantastical as the Hudson River landing, I imagine the sentiments of those on board are similar, particularly with the news of the crash near Buffalo still so recent.

According to this Anchorage Daily News article sent our way by Matt, a Gadling reader, the pilot guided the plane into a safe crash landing then set off the emergency locator beacon to help rescue teams locate the plane. Only one person suffered a bump on the head.

When the plane didn’t arrive on time after the pilot lost contact with the tower, officials knew something was wrong. The Piper PA-31-350 was found seven miles from Nome by rescuers on snow machines. The plane crash is under investigation, and it’s unclear what happened to cause the crash.

Reading the story reminded me of the harrowing tales my husband has told about flying to fish camp in Alaska. He had a couple of flights where his heart ended up in his throat, so to speak. No crashes, though–just some dips and turns he could have done without. [The photo is of a Piper Chieftain with Golden Eagle Airlines in Australia.]

Frontier not as shaky any more

Frontier Airlines had a tough year last year. A generally tough market, made worse by a bankruptcy filing, called the airline’s viability into question. But, a strong December could be just the light at the end of the tunnel that this company needs. If all goes well, according to the Rocky Mountain News, it could hit its goal of pulling out of Chapter 11 this summer. In November, Frontier actually turned a profit. While this may not sound like much to you, think of the bump in morale, not to mention that it’s a visible sign of progress.

The only stumbling block left is the slow winter season and finding some financing to help the airline exit bankruptcy. At the end of November, the company only had $57.2 million in cash and cash equivalents, a number that will have to go up. But, if Frontier can fix that situation, The Tampa Tribune reports that the skies could be clear by June.

[Via USA Today]