This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ Delta Hopes Its Venture Will Sing a New Tune May 11, 2003 By EDWARD WONG BEFITTING its name, Song, the low-cost carrier started last month by Delta Air Lines, plans to introduce video-screens where passengers can create a playlist of MP3 music. Those same screens, once they are available next year, will let travelers watch live satellite television or pay-per-view movies or play interactive video games with other passengers. Delta's intention in creating Song was to build an airline that would draw travelers from JetBlue Airways and other low-cost carriers that have drained Delta of passengers on the East Coast. The company's strategy seems simple: offer consumers a banquet of options missing from the rivals, on the assumption that more is clearly better. The problem is that the airline industry has historically demonstrated that the opposite holds true. Airlines that offer fewer options to passengers have thrived, while those that have tried to be all things to all people have suffered financially. The most obvious evidence of this is Southwest Airlines, which has been profitable for 30 years, all the while promising nothing to customers except low fares. Large network carriers that took a different tack are now in bankruptcy court or on the brink of having to file for bankruptcy protection. The two obvious cases are United Airlines, now struggling to bring down costs under Chapter 11 protection from creditors, and American Airlines, which barely avoided a bankruptcy filing in mid-April but is still foundering because of huge expenses. Those two carriers, as well as all their network rivals, once thought that the path to profits lay in offering everything to passengers - hot food, frequent flier programs, flights to every corner of the country. They have discovered in the last couple years that travelers just want to get from one place to another safely on a plane. Yet Song executives obviously believe that passengers do want something extra. Besides the various choices for in-flight entertainment, Song also promises to sell hot food. Executives have said they will encourage customers to use the Song Web site to send messages saying what they would like to see on the flights. Some industry experts are skeptical of such efforts. "People will say they want things," said Robert W. Mann, an aviation industry consultant based on Long Island. "Getting them to pay for them is something else entirely." In-flight entertainment is very expensive for airlines to operate, Mr. Mann added. High costs have plagued every attempt by a big network airline to start a low-cost subsidiary, including Shuttle by United, Continental Lite, Metrojet at US Airways and even Delta's precursor to Song, Delta Express. Delta is shutting down Delta Express as Song increases its flights, which are to number 144 a day by November. John Selvaggio, the president of Song, said the new airline operated differently from Delta, so cutting costs will be much easier than at the parent. The key is increased productivity, he said. For example, Song's planes will be used 12.7 hours a day, while Delta's are used slightly more than 10 hours a day, Mr. Selvaggio said. What is more, he added, flight attendants will work on a different pay structure and with more efficient work rules. But pilots, the only unionized group at Delta, will work under the same contract at both carriers. Delta's pilots also have the most generous contract in the industry. Using Delta's pay scale at Song could hobble Song's attempts to keep its costs down, said Jamie Baker, an analyst at J. P. Morgan Chase. "We do not believe that Song can achieve profitability on a fully allocated stand-alone basis, in part because its pilots will be the highest paid in the industry," Mr. Baker said. He added that Delta also faced a major challenge in overhauling the culture of its work force. Passengers on low-cost carriers like Southwest and JetBlue often praise the relaxed, cheerful attitudes of the flight attendants. Song's flight attendants come from the labor pool already at Delta and need to be retrained to work on Song with a more lighthearted attitude, Mr. Selvaggio said. Even if Song attracts passengers with its extra amenities (many of which will not be available until next year), even if it achieves significantly higher productivity levels than Delta, it still has to operate in bleakest air-travel environment in decades. The American-led invasion of Iraq has done little to reduce fears of terrorist attacks, and concerns over the new respiratory illness SARS have led many people to cancel trips. But Mr. Selvaggio said that the industry downturn only justified Delta's decision to start a low-cost operation. "We really decided this would still be the best time to launch this low-cost product," he said. "There's no time like the present to find a reduced-cost alternative." http://www.nytimes.com/2003/05/11/travel/repsong.html?ex=1053832450&ei=1&en=bbaba3ec574d42a3 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company