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  • Delta "Investor Day" Leftovers: Frequent Flyers, Narita And Integration
    Posted by Andrew Compart 11:25 PM on Dec 12, 2008

    Delta had plenty to say on "Investor Day," some of which you can read about here (AWIN First subscriber-only story) and in a prior blog postings here and here. But even that doesn't cover all of the noteworthy updates and musings from the four-hour long series of presentations. So here are a few more.

    On Northwest's Narita operations: Northwest has made full use of the Fifth Freedom services it has under the U.S.-Japan aviation treaty to carry local passengers from Tokyo's Narita airport to other points in Asia. That has made Northwest's U.S.-Tokyo services more viable, since it also can fill seats with local traffic for connections beyond Tokyo, and enabled it to build a powerful hub there. But Delta officials said Northwest has become too reliant on local traffic.

    On a daily basis, Delta said, 54% of Northwest's seats out of Narita are for intra-Asia services, which means less than half are used for transpacific services. That capacity mix makes Northwest too reliant on low-yielding Tokyo bookings, said Glen Hauenstein, Delta's executive vice president-network planning and revenue management. Hauenstein said inter-Asia capacity reductions combined with Delta's Narita service additions next summer--from Atlanta, New York and Salt Lake City--will reverse the seat mix to 54% transpacific and 46% intra-Asia. Hauenstein said the services will become more U.S.-point-of-sale oriented.

    On frequent flyer programs: Delta is finding a much lower overlap than it expected between the Delta and Northwest frequent flyer memberships--just 6% to 7%, said Jeff Robertson, Delta's vice president-loyalty programs.  Robertson attributed the low overlap to each carrier having its domestic network focus in different regions of the country.

    That means, post-merger, the program has 74 million members. the most of any U.S. carrier--with, Robertson claimed, 40% more active members than the next biggest frequent flyer program competitor. Robertston expects that to enable the airline to attract more high-quality partners at better rates. A lot of potential partners had not been interested in Delta's program as the third largest, but they are now, he said. Robertson believes there's a lot of money to be made here, in part because he believes the Northwest program has left so much on the table: Delta gets just over $100 of non-transportation revenue for every active customer, while Northwest has been getting just $40, he said. The program also could get a boost from Delta's plans to unveil a new "best in class" program for its Elite-level frequent flyers in 2009, for implementation on Jan. 1, 2010.

    On Delta-Northwest integration: Delta had its code on 90% of Northwest flights as of the end of November, the carriers plan to be on one operating certificate by the end of 2009, and Delta plans to have its livery on all Northwest aircraft by the end of 2010.




    Tags: tw99, Northwest, Narita, Japan, Delta, frequentflyer

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