Shot Across the Bow to Connection Carriers?

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derg

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Delta CEO: If Quality Suffers, Feeder Carriers Could Change

DOW JONES NEWSWIRES
April 11, 2007 12:20 p.m.

ATLANTA (AP)--Delta Air Lines Inc. (DAL, DALRQ), which has indicated it might sell feeder carrier Comair after it exits bankruptcy, could make changes to the lineup of regional carriers that handle its connecting flights in the interest of quality, Chief Executive Gerald Grinstein said Wednesday.

"If we're not getting the right service, we'll have the substitutions," Grinstein told the Associated Press.

Comair, a subsidiary of Delta, and Atlantic Southeast Airlines, which Delta sold to SkyWest Inc. (SKYW) for $425 million in 2005 but still uses for connecting service, were ranked near the bottom of a recent airline-quality survey on lost baggage and flight delays.

Grinstein did not say any changes were imminent, and he noted that Delta's connection carriers are valued partners and Delta will work with them to try to correct issues.

But he also said the customer service by Delta's feeder carriers reflects on Delta's brand image.

"When we experience baggage failures, then it does affect the parent," Grinstein said.

Grinstein said his own baggage has been lost on flights on Delta and other airlines he has used, though he said he always got the baggage back. He didn't say what carriers besides Delta misplaced some of his baggage.

Grinstein's comments follow statements by Delta executives last month that the Atlanta-based airline could sell or spin off Erlanger, Ky.-based Comair after Delta emerges from bankruptcy.

Grinstein said the decision about what to do with Comair is one Delta's new board of directors will have to make.

Monday was the deadline for creditors to vote on Delta's reorganization plan, which must be approved for it to exit bankruptcy.

Grinstein said it won't be known until early next week how the vote went, but he said that based on conversations Delta has had with major creditors who voted, he is "supremely confident" that Delta will get the necessary votes for approval.

In addition to customer service and Comair, Grinstein talked about his future, the search for a replacement for him and Delta's confidence that once it exits Chapter 11 on April 30, it won't return to bankruptcy.

"Bankruptcy is a very searing experience," Grinstein said. "You don't ever want to have it happen again. One reason I want our management team internally to succeed here is because they've been through it."

Grinstein, who plans to step down as CEO once a successor is picked by the board, said Chief Financial Officer Ed Bastian and Chief Operating Officer James Whitehurst are both leading internal candidates to replace him.

Grinstein, who prefers that his replacement be someone from inside Delta, said he will answer any questions the board has about any candidate. But would he recommend one candidate over another if the board asks?

"Probably not," Grinstein said.

Delta has said its objectives for this year, in addition to exiting bankruptcy, include achieving the financial commitments in its transformation plan, boosting margins and building cash for long-term strength.

It will continue to expand its international service, with a special focus on its service from New York City's John F. Kennedy International Airport.

Grinstein said Delta is well on its way to achieving its goals.

Asked why he has decided to leave after Delta exits bankruptcy, Grinstein, 74, who was named CEO in November 2003, said it's just time for him to move on. He said "a group of younger people are ready to lead the company."

He said that after he leaves Delta he plans to move back to the Seattle area, where he is from. One of his first tasks will be helping the University of Washington search for a new law school dean. He stressed, with a laugh, he's not up for the job.
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Quality costs money. . .if big daddy is willing to pay a higher price for better quality, then alright. I don't see that happening though - the cheapest pig in the lot gets the prize in this game.
 
I think we're to the point where the quality is so bad, people are willing to spend more for a better product. The connection carriers are damaging the brand. As the 100 seaters become established on the mainline, hopefully we'll see less reliance on connection carriers in the system.
 
I hope the customers are willing to pay more, lord knows they are only paying 30-50% of what the actual cost of the flight(s) cost.

Need to get the customers to pay over 100% for ANYONE to begin to have some sort of stable profits year to year.
 
B767Driver said:
I think we're to the point where the quality is so bad, people are willing to spend more for a better product. The connection carriers are damaging the brand. As the 100 seaters become established on the mainline, hopefully we'll see less reliance on connection carriers in the system.
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Ditto. I'd like to eventually move outta this regional rat race, and Delta's on my target list. I'd rather see 100 seaters at Delta than more stretch Challengers at Skywest....
 
surreal1221 said:
I hope the customers are willing to pay more, lord knows they are only paying 30-50% of what the actual cost of the flight(s) cost.

Need to get the customers to pay over 100% for ANYONE to begin to have some sort of stable profits year to year.
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Eliminating the cost of mishandled baggage will probably pay for the cost of improved service.
 
Oh my God, you mean that if you treat your workers like crap, and pay them like crap as well, they might not be as motivated as they should to do a good job?

If you want quality, you gotta pay for it.

You ain't getting a Palm steak for the price of an Outback one. If you want good employees who go above and beyond, you gotta pay them and treat them right. Do that, and the company reaps rewards that flow right to the bottom line.

I don't know why management at any company doesn't get this. Any one of them could read the study which found a highly positive correlation between being on Fortune's best companies to work for and high stock returns.
 
kellwolf said:
Ditto. I'd like to eventually move outta this regional rat race, and Delta's on my target list. I'd rather see 100 seaters at Delta than more stretch Challengers at Skywest....
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The arrival of new generation 100-seat aircraft at mainline carriers is going to send a shockwave thru the regional world I think. There's going to be a big game of musical chairs about to begin this fall so I'd start thinking seriously about climbing higher on the food chain.

JMHO and I have a good chance of being out to lunch.
 
Well Doug, if you're out to lunch so am I.

With regards to 100 seaters at mainline levels, let's just say that there is a possibility some airlines have already begun running performance numbers for certain airports.

I think the comments were made to get the connection carriers in check. Add that along with the 100 seat mainline talks and it may be enough to light some fires under some people.

Only time will tell.
 
They sign Mesa/Freedom up for more flying and then talk about quality? Yeah, this sounds like a bunch of BS to me.

If the airlines really cared about quality Mesa would not exist in it's current form.
 
tonyw said:
Oh my God, you mean that if you treat your workers like crap, and pay them like crap as well, they might not be as motivated as they should to do a good job?

If you want quality, you gotta pay for it.
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I hear you, but I don't think it's just about the paycheck.

I have a perception (and it may be erroneous) that SWA has very good quality in terms of things like baggage services. I know that their rampers don't make a lot of money - I think 8.25 an hour is what they start out at. But they have a great corporate culture - people are happy to be there.

Why?
 
killbilly said:
I hear you, but I don't think it's just about the paycheck.

I have a perception (and it may be erroneous) that SWA has very good quality in terms of things like baggage services. I know that their rampers don't make a lot of money - I think 8.25 an hour is what they start out at. But they have a great corporate culture - people are happy to be there.

Why?
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It's not just about the $$$, it's about how you're treated as an employee. As a ramper at SWA, I never felt like management (at any level) looked down on me, there really WAS an open door policy, and all the different areas (ramp, CSA, operations, MX, flight ops, etc) got along really well, which is something I haven't seen at either XJT or PCL. PCL mainly b/c managment likes to pit the labor groups against each other and XJT b/c CAL more or less hated us. There's also a huge jump in pay from first year to second year at SWA on the ramp. Add in the profit sharing and health benefits, and it's a win-win.
 
wheelsup said:
They sign Mesa/Freedom up for more flying and then talk about quality? Yeah, this sounds like a bunch of BS to me.

If the airlines really cared about quality Mesa would not exist in it's current form.
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:yeahthat:
Dash 8's in JFK anyone ?
 
Doug Taylor said:
The arrival of new generation 100-seat aircraft at mainline carriers is going to send a shockwave thru the regional world I think. There's going to be a big game of musical chairs about to begin this fall so I'd start thinking seriously about climbing higher on the food chain.
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Well, that's in my plan too, but at the rate I'm going (averaging only 30-40 hours a month), that's probably not going to be an option for me if I stay here as I don't/won't have the hours for DAL or CAL to even look at me.

I DO have some other irons in the fire, but it's REAL slow going. I may miss the boat on getting to the majors in my lifetime.

Time will tell.
 
surreal1221 said:
I hope the customers are willing to pay more, lord knows they are only paying 30-50% of what the actual cost of the flight(s) cost.

Need to get the customers to pay over 100% for ANYONE to begin to have some sort of stable profits year to year.
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The airlines over the years have neglected quality, I am talking "years"

Airlines over the years have trained the consumer very well as to how to shop for the cheapest fares & to wait for a sale.

Going for quality, it takes time to win back those type of customers.

Right now, passengers are trained to know that there is no difference in service between the various airline, it takes some time to get the word out.

Changing a subject a little, I was looking a ticket on United airlines to New York from LAX, & went to Expedia to see what their price was, it was about $250 cheaper than on the United website.
 
mpenguin1 said:
Going for quality, it takes time to win back those type of customers.
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Well, if you ask me, those are the only kinds of customers worth having.

The idea is to bring in PROFITABLE customers. Screw the ones who don't make you money. They take away from your ability to service those customers who do make you money.

If I were in charge of an airline, I'd up the service -- meals on all flight of more than two hours, maybe free booze as well, and more room -- and charge more.

And if you bitched about it and said I want low low fares, I'd say, take a hike to someone who wants to give you that.

I want to take care of you better, and if all you care about is how cheap I can move your fat ass from point a to point b, I'm not interested in your business.
 
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