At the Association of Corporate Travel Executives spring
conference in Las Vegas, business travel editor Jerry Limone spoke
with Lee Macenczak, Delta's senior vice president of sales and
distribution planning, about issues the airline faces.
Travel Weekly: Some U.S. airlines have chosen
to publish Web fares in the GDSs -- through Galileo's Momentum and
Sabre's Direct Connect Availability programs -- in exchange for
reduced GDS fees. Does Delta plan to do likewise?
Macenczak: We're looking at our options. We've
had discussions with the folks you've mentioned. They've come to
the table with new ideas, which is good. Those solutions are not
dead issues with us.
I think it's a good start. Something is going to happen with the
GDS rules, and I think the GDSs are looking to start the change
process without killing their balance sheets.
Hopefully, if the rule [about mandatory equal participation in
the GDSs] goes away, we can negotiate a deal with the GDSs as we do
any vendor at Delta.
There are other solutions [to reduce distribution costs], too.
Some companies, like Navitaire [a Minneapolis-based provider of res
system software], have software to do direct connections. We're
also looking at our own direct-connect solution.
We want to take our time and choose a solution that's in place
for a long period of time, not just a year or two.
TW: JetBlue just started service from Atlanta
to Long Beach, Calif., and another low-fare carrier, AirTran, will
launch service from Atlanta to Los Angeles in June. What will be
Delta's response?
Macenczak: We're going to vigorously compete.
We've increased capacity in the Atlanta-Los Angeles market. The
low-fare carriers are coming in, and we're going to stand and
compete.
TW: Will lowering fares and increasing capacity
to absorb demand be a profitable move for Delta?
Macenczak: We know we have a cost problem.
We're looking to achieve a 15% reduction in cost per available seat
mile, and we have a team working on that. We're examining
scheduling, turn times, network structure, maintenance and
technology infrastructure.
We're challenging the way things have been done in the past in
order to make the entire company more cost effective.
TW: Delta's new low-fare carrier, Song, offers
more legroom and satellite TV. Are you concerned that business
travelers will value Song's service more than Delta's?
Macenczak: There have been concerns about Song
competing with the main line, but I think there will be a
separation, so that it won't be an issue.
Song mainly will fly in high-density leisure markets. There will
be some corporate customers who fly on Song in those markets, and
good for them because it's a good product.
If corporations have a negotiated discount with Delta, they
cannot apply the discount to a Song fare, but they can count [Song
flights] toward their market share or volume goals.
If some features on Song will work on the main line, there's no
reason why we wouldn't try them there. We can use Song as a test
case for new processes, like shorter turn times.
TW: Some airlines have experimented with
slashing walk-up fares to stimulate business travel. What does
Delta think about that practice?
Macenczak: We ran a test [of cutting
last-minute fares] during the first three months of the year in 14
cities, and the results were not what we expected. Some markets did
well and some fell short. We need to go back to the drawing
board.
Everybody is looking for what works. We will come to a solution
that works for us.