But the options in an ATL market are almost "non-existant" as well... unless your counting non-DL entrants, then your point is moot. NW also pulls from many midwest / central US markets as well for their asian service.
UA and NW are the "Significant" US based airlines flying to Asia. They have a combined RPM for the Pacific in March of almost 4 Billion miles, compare to that of DL of 130 Million.
To say who has the greatest reach, well I give that to NW/UA currently. I ask if you've ever been on a widebody to asia on either UA or NW or DL for that matter and asked where people are going... WBC has always been full on my recent asia flights... and they do include asian businessmen as well.
There's (much) more to the world besides Asia and there's more to Asia than NW and UA.
It is laughable to keep arguing that the NW brand should survive solely because of its Asian presence.
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Originally Posted by DHAST
Is part of that due to scheduling issues? With one flight per day ex-NRT to all destinations in Asia and most in the US, I just have to wonder.
Absolutely. NW will always have a strong share of the higher yielding US-Japan market, but will never have a truly competitive intra-Asian presence because of the inability to grow its presence.
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Originally Posted by respectable_man
Maybe I'm just repeating thezipper's point, but DL's international product is only available ex-ATL or JFK with isolated exceptions like CVG or SLC, so how is the situation to the disadvantage of NW?
Are you per-chance getting emotional about the DL brand?
DL the second largest international presence in the largest international gateway in the country. DL carries more TATL passengers out of JFK every day than NW does in its entire TATL network.
I'm dealing with facts, not emotion. (In my opinion, CO has the best and strongest US brand.)
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Originally Posted by PVGMSP
I'd say the majority of cost savings are in the areas I mentioned - accounting/flight ops/IT, etc. Many many companies operate very successfully by using multiple brands.
As I'm sure you know, airlines have very high fixed costs. Operating with two certificates requires duplicate departments for most operating functions.
Last edited by thezipper; May 1, 08 at 7:03 pm.
Reason: consecutive posts by OP
As I'm sure you know, airlines have very high fixed costs. Operating with two certificates requires duplicate departments for most operating functions.
Enlighten me here. So, since US operated under 2 certificates (AW + "legacy" US) after the merger until fairly recently, are you saying they had two accounting/IT/HR, etc departments for all this time?
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I've never contested the fact there is more to the world than asia, but it seems that UA and NW have a pretty good lock on flying from the US to that part of the world, not to mention the big cargo $$$... DL, not so much...
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Originally Posted by sxf24
There's (much) more to the world besides Asia and there's more to Asia than NW and UA.
uhhh where have I said anything close to that... it's more laughable that DL and their aging 767's and MD-88's survive soley on their TATL laurels.
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Originally Posted by sxf24
It is laughable to keep arguing that the NW brand should survive solely because of its Asian presence.
DL has significant TATL service, abiet with older planes. The NW/KL JV has ~2/3 the service (based on RPM's) with new A330's. I think there are arguements both ways on this one... it's not a black and white case.
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But you are confusing product with brand, and I think that is a mistake. You assume that NW's excellent international product can overcome their poor domestic reputation. It is funny, I recommend the NW TATL product to friends, co-workers, and complete strangers. In most cases, they have either never heard of NW, or they have "sworn to never fly them again" because they flew them domestically and thought it stunk. Folks that have never flown them call them NorthWorst! Where, exactly, is this "brand"? I can't find it. And what I can find doesn't reflect the quality of the product.
Personally, I think neither brand is very valuable, so they might as well flip a coin. Heck, since I think the product is better than the brand, I suggest they just give it some new name and let the product speak for itself.
I'm not sure I'm confusing product and brand but rather suggesting that the quality of the product must enter somewhere in the equation.
Yes, NW starts with two strikes when it comes to reputation; NW has cut it advertising budget and I think this lack of visibility has hurt the airline, at least relative to others. NW has certainly not tried very hard to play its strengths. It would take a lot of effort to turn the reputation of NW domestically. Possibly they did not need to try at all as planes were full anyways. I don't have an answer to that.
What my feeble mind fails to understand how "better brand" and a statement like "DL the second largest international presence in the largest international gateway in the country" are related. Just because McDonald's has the largest number of outlets does not make it a better brand.
If it is "laughable to keep arguing that the NW brand should survive solely because of its Asian presence", why is it not equally laughable to keep arguing that the DL brand should survive solely because of its European presence? At least the consensus is that NW usually offers the better TATL and TPac product. What are the rational arguments in favor of keeping the DL brand alive? Is it JFK, an airport perceived (rightly or wrongly) as a dungeon?
If brand image is important to you, I'm with pbarnette: throw out the lot and start with a fresh sheet of paper.
BTW, I too think that CO is perceived as better, but this is in part because it DOES offer with consistency a good quality product. Even on those dreadful RJ runs, the enthusiastic service makes the plane look less uncomfortable!
Enlighten me here. So, since US operated under 2 certificates (AW + "legacy" US) after the merger until fairly recently, are you saying they had two accounting/IT/HR, etc departments for all this time?
I never said anything about accounting or HR departments. While there are savings there, they alone won't provide the magnitude needed.
Operating under two certificates/brands significantly increases both the cost and complexity of operations. Outside your affinity towards the NW brand, what reason is there to take this unnecessary step?
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Originally Posted by thezipper
I've never contested the fact there is more to the world than asia, but it seems that UA and NW have a pretty good lock on flying from the US to that part of the world, not to mention the big cargo $$$... DL, not so much...
That have never been disputed. Why do you think NW is such an attractive partner?
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Originally Posted by thezipper
uhhh where have I said anything close to that... it's more laughable that DL and their aging 767's and MD-88's survive soley on their TATL laurels.
I'm sure you've heard of the other efforts to diversify the revenue base. Why pretend otherwise?
Quote:
Originally Posted by thezipper
DL has significant TATL service, abiet with older planes. The NW/KL JV has ~2/3 the service (based on RPM's) with new A330's. I think there are arguements both ways on this one... it's not a black and white case.
Of course its not. However, the recent point remains: the DL brand is more widely known and for many people, is more positively perceived.
Besides, as we all know, well maintained older aircraft can often be as comfortable as some newer planes.
As I'm sure you know, airlines have very high fixed costs. Operating with two certificates requires duplicate departments for most operating functions.
So Accounting/IT/HR, etc (like what I said) are NOT among most operating functions?
Like many here, I feel NW and DL has its own brand strength geographically, so it may make business sense to keep both names. IMHO, Delta has less name recognition in Asia than, say, Finnair, which flies to NRT/PVG/PEK/HKG/CAN/KIX, etc.
As someone who lived in Michigan, Chicago and Minnesota, I know many people never warmed up to Macy's, which replaced Marshall Field's/Dayton's/Hudson's a few years ago.
Last edited by PVGMSP; May 1, 08 at 10:26 pm.
Reason: Typo
So Accounting/IT/HR, etc (like what I said) are NOT among most operating functions?
Like many here, I feel NW and DL has its own brand strength geographically, so it may make business sense to keep both names. IMHO, Delta has less name recognition in Asia than, say, Finnair, which flies to NRT/PVG/PEK/HKG/CAN/KIX, etc.
As someone who lived in Michigan, Chicago and Minnesota, I know many people never warm up to Macy's, which replaced Marshall Field's/Dayton's/Hudson's a few years ago.
They may not warm up to Macy's, but Detroiters were fine with Marshall Field's, and they will be fine with Delta.
IMO, a large ad campaign similar to the "Cingular is now the new ATT" would be effective- with a rebranded "New" delta- new livery, new uniforms, new service guidlines, (along with new other things that will be negative, like new "enhanced" skymiles)- and then all over the world you would target the ads- in Atlanta, it would be about delta, in DTW/MSP it would be Northwest and Delta are now the New Delta. In shared markets it would be Delta+NW are now the New Delta, and in Asia/AMS, it would be Northwest is now the new Delta"
I know this has probably been discussed but does anyone know what will happen to the NWA Worldperks miles conversion? I am thinking as I am sure most of you are of getting many of those credit card bonus miles. I'm just wondering if itll be worth it.
If it is "laughable to keep arguing that the NW brand should survive solely because of its Asian presence", why is it not equally laughable to keep arguing that the DL brand should survive solely because of its European presence?
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Originally Posted by respectable_man
What are the rational arguments in favor of keeping the DL brand alive?
If one looks at this objectively, DL does have a bigger and deeper global footprint - not only in Europe, but the Middle East, Africa, Caribbean, Central, and South America. Even in the U.S., DL does have broader coverage, only exceptions being of course the NW strongholds in the Midwest and to an extent, parts of the Pacific Northwest. I really don't want to get furhter into a p!ssing match about who is bigger where - suffice it to say that both have very strong #1 or #2 presence in many areas where the other is practically a non-entity...and that's why the complementary networks can only help.
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Originally Posted by respectable_man
At least the consensus is that NW usually offers the better TATL and TPac product.
Well, TPAC-wise, DL flies only the 777s which offer nose-to-tail AVOD PTVs (which NW doesn't have on their 744s), offers at least one free cocktail (which no other US carrier does across the Pacific) and an amenity kit (which no other US carrier does) in the back . Of course DL is a virtual non-entity in terms of destinations and flights in the Pacific compared to NW.
To those who say that DLNW cannot overcome the disapperance of the NW name/strong presence in the Pacific, while I agree it will take time (and the right moves by DLNW), it is not impossible - just take a look at what UA has accomplished in the Pacific: when it acquired Pan Am's Pacific ops back in 1985, it was a non-entity there with about two or three TPAC nonstops. Since then, UA has grown into the largest US carrier across the Pacific, and regardless of what anyone wants to believe, has a stronger presence and footprint in all of Asia except for Japan than NW.
Look at markets like BKK, SIN, HKG or even the P.R.C - NW has but a token presence in these markets. NW may have been in the Pacific for more than 60+ years, but it hasn't fully leveraged its potential outside of Japan. Case in point - HKG: For years, NW has only been able to maintain a single daily HKG-NRT flight while UA has run circles around it with 744 nonstops to ORD, SFO, LAX, SIN, SGN...This is HKG we're talking about, not some small undeveloped business market that needs to be nurtured and fed through a hub like NRT.
Digressing a bit, I think what you will see with a combined DLNW will be additional/new nonstops from US gateway cities directly to some Asian destinations like HKG, ICN, etc. NRT as a hub will still be maintained but focus on more O&D Japan-USA traffic as well as serve as feed to smaller Asian destinations that need time to develop (what NRT currently has with NRT-CAN, NRT-Busan, etc.)
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Merger Hokus-pokus
So the figure that I have heard is that Delta has 7000 pilots, Northwest has 5000. Assume an average pilot salary of $150,000.
So Delta is offering the pilots a 30% raise to get the merger done. Assume that the Northwest pilots are eventually brought on board so the 30% raise is extended to them as well.
My back of the envelope calculation is 12000 * $45,000 = $540,000,000. So Delta/NW will need half of the "savings" from a merger just to pay increased pilot salaries. Last quarter Delta/NW lost 1/2 billion cash. Wow, so after the merger and merger "savings" Delta/NW will be - close to breaking even.
At this moment, NWA is trading at 9.96, DAL at 8.6. The merger premium should be 25% as 1 NW share will be worth 1.25 DL share. The implied premium 15.8%. 15.8/25= 63.2, thus my intrepretation is that the market thinks there is a 63% chance of the merger actually occuring.
Operating function was referring to the departments directly related to the day-to-day operations of the airline.
Quote:
I never said anything about accounting or HR departments. While there are savings there, they alone won't provide the magnitude needed.
Operating under two certificates/brands significantly increases both the cost and complexity of operations. Outside your affinity towards the NW brand, what reason is there to take this unnecessary step?
So, you seem to have much more knowledge on FAA's requirements for keeping two certificates. Enlighten me here again - What are the operating functions that must be kept separate per FAA? Maintenance? Well, NW's mechanics don't know how to fix 737/767/777, while DL people have no clue on 320/330/747 - No much saving here even if you combine them. Same things for pilots. Combining a few dozens of DL/NW agents into NW/DL workforce at DTW/ATL? (Even fewer at other airports) That doesn't create lots of savings.
That's why I said the majority of savings are in the back office - Account/Finance/IT, etc, given DL/NW's incompatible/no overlapping fleet/hubs/routes.
Last edited by PVGMSP; May 2, 08 at 11:55 am.
Reason: Typo
So, you seem to have much more knowledge on FAA's requirements for keeping two certificates. Enlighten me here again - What are the operating functions that must be kept separate per FAA? Maintenance? Well, NW's mechanics don't know how to fix 737/767/777, while DL people have no clue on 320/330/747 - No much saving here even if you combine them. Same things for pilots. Combining a few dozens of DL/NW agents into NW/DL workforce at DTW/ATL? (Even fewer at other airports) That doesn't create lots of savings.
That's why I said the majority of savings are in the back office - Account/Finance/IT, etc, given DL/NW's incompatible/no overlapping fleet/hubs/routes.
Each operating certificate requires separate processes and procedures, which in addition to duplicating staff in many departments, duplicates efforts in others.
I'm not denying that immediately combining corporate functions, or eventually combining operations at contracted outstations will not save money. However, the level of cost savings and revenue enhancements required to make this merger viable can not be realized without moving to a single brand and operating certificate.
