elta's Song is the latest attempt by a
major airline to create a small, profitable, point-to-point,
low-fare carrier inside a large, not-so-profitable, high-fare,
To nobody's surprise, Song will attempt to emulate and improve
upon what Delta believes to be the best features of Southwest,
JetBlue and AirTran: a
catchy Web site, a distinct "corporate culture," low costs,
efficient operations. You get the picture.
Delta also is taking this opportunity to further perpetuate the
notion that airline reliance on agency distribution is synonymous
Song believes one key to its success will be a distribution
strategy that relies on direct sales for 70% of the business.
Song's services will be in the GDSs, but agents are expected to
contribute only about 30% of the new venture's revenue.
The airline-within-an-airline concept failed at US Airways,
United, Continental and elsewhere. Delta's own previous effort,
Delta Express, apparently is not successful enough to continue.
Delta claims to have done its homework this time.
We'll see. For now, we remain unconvinced that an airline the
size of Delta can improve its profitability by making 5% of the
operation more efficient than the other 95%, but, evidently,
there's a lot about airline economics that eludes us.
• • •
he Senate has passed a measure
that will allow for the return of a year-round, interisland cruise
operation in Hawaii with new ships, thanks to the efforts of Sen.
Daniel Inouye (D-Hawaii). That's good for Hawaii, and good for the
It's also good for Norwegian Cruise Line, which had the
entrepreneurial spirit to take the initiative and buy the
unfinished hulls and pieces of what were to be the Project America
But now the measure is before a House-Senate conference
committee, a place where compromises get made. And a good one could
be brewing. Holland America and Princess are suggesting there's
more than one way to help cruising in Hawaii.
Inouye paved the way for NCL's Hawaii venture by amending an
appropriations bill to give NCL an exemption to register
foreign-built ships under the U.S. flag and operate them in
domestic cruise service.
Commerce Committee chairman John McCain (R.-Ariz.) described it
as a "special interest" provision that "should be expanded" to
create similar opportunities for other cruise lines and other
ports. That is exactly what Holland America and Princess are
We do not dispute that much good might come from what Sen.
Inouye has proposed for Hawaii, but we would urge the committee to
look closely at other alternatives on the table.
For new details on this topic, see Interisland cruising may get wider berth.