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Old 07-15-2011, 09:01 AM   #1  
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Default Delta Pulling Out of Some EAS Markets

OK, it's not exactly new news that Delta is phasing out the Saabs, but here's the latest announcement from the company today on service to EAS markets:

News Release Issued: July 15, 2011 11:48 AM EDT
Delta to Adjust Service to Smaller, Underperforming Markets

Airline retires Saab fleet, cites $14 million in annual loss with average load factor of 52 percent for 24 underperforming markets, will apply for increased Essential Air Service subsidy in nine markets

ATLANTA, July 15, 2011 /PRNewswire/ -- Delta Air Lines (NYSE: DAL) today will notify the U.S. Department of Transportation (DOT) of its plans to adjust flying in 24 small markets. In concert with the retirement of Delta's Saab fleet and to halt $14 million in annual losses, the changes will affect Essential Air Service (EAS) markets.



Flights in these markets on average depart with 52 percent of the seats filled, with some locations as low as 12 percent. This compares to a domestic system load factor of 83 percent for 2010. Weak demand in some markets has led to flights occasionally operated with no passengers on board.


"While Delta would prefer to continue serving these communities, the new reality of mounting cost pressures faced by our industry means we can no longer afford to provide this service. As we continue to strengthen our business, Delta is retiring the Saab turboprops and some 50-seat jet aircraft, which will hinder the financial viability of serving these smaller markets," Delta said.


Delta has taken a number of steps to respond to added cost pressures. Delta previously announced its intention to reduce capacity this fall by 4 percent and retire 140 aircraft. Delta has reduced its facility costs at 170 airport locations and 10 cargo locations across the system, saving more than $80 million annually.


The notification provides the DOT the opportunity to select a new carrier to begin service in affected EAS communities within a 90-day period. Delta will continue to serve the affected communities through its Delta Connection partners until the DOT selects a replacement carrier and appropriate funding is available. In some cities, Delta is coordinating with other carriers to bid on the routes. In addition, Delta will to continue service in some subsidized and non-subsidized markets, but the subsidy rate must be higher in order for Delta to fly larger regional jets on the routes in question. A complete list of affected communities is available at Delta Air Lines Newsroom - Press Kit.


The EAS program was created to ensure small communities continue to have access to passenger air service. In some cases, airline service in EAS markets is subsidized by the government. The Airline Deregulation Act of 1978 provides that if a carrier is held in beyond the 90-day notice period, it is entitled to receive compensation "to pay for the fully allocated actual cost to the carrier of performing the ...service ... plus a reasonable return on investment that is at least 5 percent of operating costs; and to provide the carrier an additional return that recognizes the demonstrated additional lost profits from opportunities foregone [by continuing to be held in and providing service]."


Delta will offer customers booked for travel in these markets alternative transportation choices or refunds. Delta will reach out to customers who have provided full contact information in their reservations to arrange alternate transportation or refunds. Customers wishing to make changes to reservations also can contact Delta Reservations at 1-800-221-1212.
Delta Air Lines serves more than 160 million customers each year, and was named by Fortune magazine as the most admired airline worldwide in its 2011 World's Most Admired Companies airline industry list. With an industry-leading global network, Delta and the Delta Connection carriers offer service to 355 destinations in 65 countries on six continents. Headquartered in Atlanta, Delta employs 80,000 employees worldwide and operates a mainline fleet of more than 700 aircraft. A founding member of the SkyTeam global alliance, Delta participates in the industry's leading trans-Atlantic joint venture with Air France-KLM and Alitalia. Including its worldwide alliance partners, Delta offers customers more than 13,000 daily flights, with hubs in Amsterdam, Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-JFK, Paris-Charles de Gaulle, Salt Lake City and Tokyo-Narita. The airline's service includes the SkyMiles frequent flier program, a world-class airline loyalty program; the award-winning BusinessElite service; and more than 50 Delta Sky Clubs in airports worldwide. Delta is investing more than $2 billion through 2013 in airport facilities and global products, services and technology to enhance the customer experience in the air and on the ground. Customers can check in for flights, print boarding passes, check bags and review flight status at delta.com.
SOURCE Delta Air Lines
For further information: Delta Corporate Communications, +1-404-715-2554
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Old 07-15-2011, 05:43 PM   #2  
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[mod delete] This is exactly why the NWA / DAL Merger was a bad idea. They come in and slash and burn. The idiots in ATL have no idea how remote some areas in the midwest can be. Northwest did.

Last edited by TonyWilliams; 07-16-2011 at 05:20 PM. Reason: You're relatively new here, but please no profanity
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Old 07-15-2011, 05:50 PM   #3  
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This is exactly why the NWA / DAL Merger was a bad idea. They come in and slash and burn. The idiots in ATL have no idea how remote some areas in the midwest can be. Northwest did.
The idiots in ATL that are doing all the slashing and burning are all former NWA management. It may be called "Delta," but it's fNWA management running things. I guess they just don't like the NW. Maybe that's why they sold the company in the first place.

Last edited by TonyWilliams; 07-16-2011 at 05:20 PM.
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Old 07-15-2011, 06:53 PM   #4  
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This is exactly why the NWA / DAL Merger was a bad idea. They come in and slash and burn. The idiots in ATL have no idea how remote some areas in the midwest can be. Northwest did.
Shouldn't airlines make decisions based on economics and not based on the how much service is provided to people who choose to live in remote areas?

Last edited by TonyWilliams; 07-16-2011 at 05:21 PM.
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Old 07-15-2011, 07:13 PM   #5  
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Shouldn't airlines make decisions based on economics and not based on the how much service is provided to people who choose to live in remote areas?
Good point.... When did Delta (or any other U.S. airline) become public transportation?
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Old 07-15-2011, 07:29 PM   #6  
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Shouldn't airlines make decisions based on economics and not based on the how much service is provided to people who choose to live in remote areas?
Glad somebody said it.

Some places need EAS (just look at Alaska), many others don't need it. Especially considering the program is taxpayer funded.
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Old 07-15-2011, 07:36 PM   #7  
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Shouldn't airlines make decisions based on economics and not based on the how much service is provided to people who choose to live in remote areas?
If they made decisions just on economics would they get rid of turbo props at a time when gas is just under all time highs? If it was based just on economics wouldn't they keep flying routes with government guaranteed money? It was my understanding that that these routes were positive cash flow. Regardless of how you feel about EAS, if the government is going to hand you money, why not do it?
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Old 07-15-2011, 07:40 PM   #8  
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Originally Posted by flyprdu View Post
This is exactly why the NWA / DAL Merger was a bad idea. They come in and slash and burn. The idiots in ATL have no idea how remote some areas in the midwest can be. Northwest did.
Really? This is why the merger was a bad idea?

You're right - let's keep running the MSP-Podunk, SD flights with 4 people so Farmer Bob can vacate to AZ during the winter months, after the beet harvest is complete.

The idiots in ATL have more of a clue than you will ever know.

Last edited by TonyWilliams; 07-16-2011 at 05:21 PM.
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Old 07-15-2011, 07:44 PM   #9  
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Old 07-15-2011, 08:24 PM   #10  
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If they made decisions just on economics would they get rid of turbo props at a time when gas is just under all time highs? If it was based just on economics wouldn't they keep flying routes with government guaranteed money? It was my understanding that that these routes were positive cash flow. Regardless of how you feel about EAS, if the government is going to hand you money, why not do it?
Apparently not if they lost 14mil on the routes.
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