......"But Delta CEO Leo Mullin notes that his airline began passenger service in June 1929, five months before the stock market". Leo, if this is the best analogy you can make for Song's success, then this 'airline' is doomed from the start....In 1929 you didn't have Unionized pilots pulling down Millionaire wages, for starters. Bryant Petitt Cumming, GA crash that triggered the Depression. --- Bill Hough <psa188@juno.com> wrote: > =20 > ---------------------------------------------------------------------- > This article was sent to you by someone who found it > on SF Gate. > The original article can be found on SFGate.com > here: > http://www.sfgate.com/cgi-bin/article.cgi?file=3D/chronicle/archive/2003/02= > /16/ED226846.DTL > ---------------------------------------------------------------------- > Sunday, February 16, 2003 (SF Chronicle) > Can Song keep Delta from singin' the blues? > George F. Will, Washington Post Writers Group > > > Atlanta -- America's airline industry, which has > not netted a nickel sin= > ce > Kitty Hawk, has never been sicker. United Airlines, > the second-largest > carrier, lost $3.2 billion last year ($1.47 billion > in the fourth quarter, > or $16.3 million a day). It's in bankruptcy, as the > largest carrier, > American, may soon be, having lost $3.5 billion last > year, the worst loss > in aviation history. Shares of US Airways, the > seventh-largest, which > entered bankruptcy last August, trade over the > counter for 20 cents. > Yet in the teeth of this torrent of numbing > numbers, the third-largest > carrier, Delta (which last year lost a comparative > pittance -- $1.3 > billion), is launching a new airline. The start-up's > whimsical name -- > Song -- is intended to promise passengers something > other than the routine > grimness they experience nowadays. > Not since Henry Luce began a new business > magazine, Fortune, during the > economy's free fall in February 1930 has there been > such an act of > business bravado. But Delta CEO Leo Mullin notes > that his airline began > passenger service in June 1929, five months before > the stock market crash > that triggered the Depression. > Song, he says, is not a flight of fancy. It will > enable Delta to take on > its most significant competitor -- an airline that > did not exist when > Mullin came to Delta five and a half years ago. > About 25 percent of > Delta's business has something to do with Florida as > an origin or > destination, mostly involving leisure travelers. > Delta has been losing a > lot of that business to the 3-year- old, New > York-based JetBlue Airways. > It and Song are emulating the business model of > "no-frills" Southwest, t= > he > so-called "flying Wal-Mart" that is flying > relatively smoothly through the > industry's current turbulence, having recorded in > 2002 its 30th > consecutive profitable year. But Song and JetBlue > have frills. JetBlue has > 24 channels of live satellite TV. By October, Song > will have that, too. It > also will have on- board shopping, interactive games > and maps and digital > MP3 audio so passengers can make their own listening > menu. Song's first > green-and-white, all coach, 199-passenger 757s will > take off April 15, and > all 36 will be in service by December. > Delta's operating advantages include having only > one union, the pilots. > But Delta's pilots are the industry's highest paid. > Delta, United and > American have generally moved in lock-step regarding > pilots' pay. United's > pilots used a slowdown -- which cost the airline > $500 million -- to win a > lucrative contract in 2000. Delta then agreed to > United's terms plus 1 > percent. American then offered its pilots the Delta > deal, but Sept. 11 > happened before the pilots agreed. > And now that the exigencies of bankruptcy are > forcing concessions from > United's unions, Delta is left with the highest > labor costs of the big > three carriers. But Mullin hastens to add that there > are, of course, > severe costs to bankruptcy: An airline loses control > of its destiny to a > judge. Shareholders are devastated. Employee moral > plunges, taking a toll > on quality of service. Small and midsize communities > suffer from cutbacks. > Mullin says more than half -- $700 million -- of > Delta's $1.3 billion lo= > ss > last year resulted from post-Sept. 11 security > costs, many of them > federally mandated. These include fees for passenger > screening, increased > insurance costs (in 2001 Delta paid $2 million for > terrorism insurance; in > 2002, $145 million), new postal service and freight > restrictions, cockpit > door modifications (a $40 million item), the cost in > displaced passengers > of carrying air marshals, etc. > Mullin, who was a Conrail executive for five > years, sees "a slight > possibility" of an airline industry "collapse" > resembling the domino of > railroad bankruptcies that followed the Penn Central > bankruptcy in 1970 > and resulted in Conrail in 1976. > Government, he says, should compensate the > airlines for security costs, > because these are aspects of national defense. And > Congress might approve > binding arbitration for airline industry labor > negotiations, now that > labor sees the alternative as the hammer of > bankruptcy. Then, perhaps, the > industry will stop singing such a sad song.=20 > ---------------------------------------------------------------------- > Copyright 2003 SF Chronicle __________________________________________________ Do you Yahoo!? Yahoo! Shopping - Send Flowers for Valentine's Day http://shopping.yahoo.com