January 01, 2003
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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,” he said.


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