What really is Deltas end game?
Hey guys I have been doing some reading for the last few days trying to understand and see what the future really holds for everyone in the aviation industry here in the US. It is quite obvious that things are changing rapidly from what we once knew with the 6 majors that have know shrunk to the big 3.
I think the “second’ wave of mergers has started with the Southwest/Airtran merger, I suspect Spirit/Frontier will be next and quite possibly JetBlue and Virgin America some time after.
The regional market is long over due for reinvention as the old model in theory makes no sense to me. And with that comes RA and his aggressive, non traditional ways of growing Delta and maintain significant profitability.
I have not been involved with the US market in and shape, size or form prior to now so my thoughts are purely unemotional and speculative based on the trends that I see happening with out loyalty to any brand. Yes I am very much aware of Delta selling Comair and the failed Delta Academy, the sale of ASA to SkyWest, and subsequent offer to repurchase said entity. I am also aware that this all happened on someone else’s watch and during a time when assets had been sold of due the bankruptcy proceedings.
Delta was the first airline to emerge out of bankruptcy after 911 and have posted record profits with profit sharing cheques that brings out the green-eyed monster for many - All under the helm on RA.
When Delta first bought the fuel refinery, everyone laughed, some said he was foolish to move away from the core business, but that’s exactly what they didn’t see - the business of cheaper fuel by eliminating the marketers and their profits. Now we are seeing airlines approach Delta trying to broker a deal to purchase cheaper fuel to improve their bottom line whilst guess who is now a middle man and selling for profit - which brings me to Endeavor and Deltas interest.
Just as with the fuel business Delta can use Endeavor to eliminate the middle man, to stop paying profits to companies to operate on their behalf and keep it all in-house as well. IMHO what has slowed this plan down is the fact that the moral for a company that was in bankruptcy was at an all time low, which has spilled into the various pilot bodies that have cast Endeavour in a bad light. The programs that have been introduced and subsequently scrapped quite possibly hadn’t brought in the numbers that they had hoped for and they have been looking at ways to get the attention of guys to get them in.
The more guys they get then the movement will be more apparent as now they can do more flying and get more equipment out of storage. The more out of storage the instant upgrades will improve and so will moral. But it comes back to the age-old question of the chicken and the egg….
From what I understand Delta has invested a significant amount of time and money in changing the training programs and SOP’s to mirror Delta so pilots transitioning would be like a change in type as the Delta core values and thought process would already be ingrained.
On other topics I have seen the question why not merge, well I think that for tax purposes the organizational structure as it stands can bring in more profits. I worked for a huge multinational company that had thousands of employees’ world wide but owned/employed very little directly. Through this web of a structure everything was billed and got the company tax concessions etc leading to significantly high profits.
For my fellow Aviators, I really wish every single one of you success, I know things have been quite hard over the last few years so I understand you being jaded, and the scars from being bitten still hurt, but I think we are about to see a huge change happen in the regional sector.
Just as the big ones have merged I suspect that direction the majors are going with is wholly owned regonals. Delta with Endeavour, AA with Envoy and the best thing United can do is to purchase Skywest. Southwest, Spirit/Frontier, Jet blue and Virgin will need to find partners to feed them just as well. All of this is happening with the pilot shortage that is about to start (from all indications it will be a feeding frenzy a year from now).
So my thinking is guys, its time to press on to greater achievements in the future, enjoy the fireworks, be happy that it is finally happening, be happy for all our colleagues and their success and give the younger guys that will be coming into our profession hope.
No, I am not drinking the KoolAid and i am not looking for a heated debate, just adding my 2 cents.