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NEW SUBSIDIARY TO LAUNCH EAST COAST SERVICE Delta Plans Low-Fare Line
Leo F. Mullin
Tired of getting trounced by low-fare carriers,
executives at Delta Air Lines have a new strategy: If you can’t
beat them, join them.
The Atlanta-based airline will launch a low-cost rival this
spring to compete with the likes of AirTran Airways and Southwest
Airlines. The as-yet-unnamed line, which will replace Delta
Express, initially will serve Boston, Orlando, Fort Lauderdale and
New York’s JFK, and plans eventually to expand across the country.
Most fares will be from $79 to $299.
The brand will have one type of plane and faster turnaround
times. Fares will be one way and nonrefundable, with 14-day,
seven-day or three-day advance-purchase options, as well as walk-up
fares. Pricing for groups has yet to be revealed.
The move comes at a grim time for Delta, which has suffered
quarterly losses of as much as $326 million, a flurry of layoffs
and a code-sharing alliance with Continental and Northwest stuck in
a regulatory holding pattern.
“Low-fare carriers represent a real threat,” chairman and CEO
Leo F. Mullin said in a release. “Delta intends to meet the
low-fare carriers head on first to halt their progress, and then to
regain competitive share.”
Following Delta’s lead, in December bankrupt United Airlines
announced plans to start its own low-fare line.
Industry response has been mixed. Big airlines have a poor
record of operating low-cost units, said Bruce Tepper, vice
president of Joselyn, Tepper & Associates, a consulting firm in
San Francisco. But Ray Neidl, airline analyst with New York
City-based investment banking firm Blaylock & Partners, L.P,
said Delta could benefit from its experience with Delta Express and
its largely nonunion staff. “If any carrier can do it, it’s Delta,”
• BRUCE MYINT
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