Delta will reorient domestic network to feed expanding international services
20 Mar 2008
New York: Delta Air Lines has emphasized that the most important function of its domestic services will be to feed its expanding global network. According to Delta president and CFO, Edward Bastian, as of this summer, international services will constitute 41 per cent of the carrier's capacity.
Speaking at JP Morgan Transportation and Aviation Conference in New York, Bastian noted that Delta's international capacity will grow 15% for the full year, even as domestic capacity shrinks 7% in 2008. Accordingly, the carrier anticipated "double-digit [international] unit revenue growth" this year.
Interestingly, he pointed out that there was a "better opportunity of passing on the price of fuel" to international customers.
"Jet fuel prices are up 85% since the beginning of 2007," Bastian said. "What's going on with fuel is certainly unprecedented, if not a crisis for the industry."
Earlier this week, Delta Air Lines and United Airlines had announced that they would downsize domestically to help negotiate rising fuel costs and a slowing US economy. Both the carriers said that they would ground 15-20 mainline aircraft sometime later in the year with Delta also announcing a cut in its workforce, by approximately 2,000.
Domestically, Delta will focus on point-to-point flights, feeding hubs that handle international flight. He pointed out that domestic capacity reduction would actually be larger ''than the numbers indicate" if a growing portion of domestic passengers were considered to be flying the first leg of an international trip.
He noted that "strong international demand" still prevailed with no slump in forward bookings despite recessionary jitters in the US.
He also said that Delta would continue to grow its global network, aiming to find "truly new white spots," such as Africa, where it will start services this year to five destinations not presently served by any US carrier.
He also said that international strength may ensure that Delta might "be profitable this year, albeit modestly profitable."
