Delta’s ‘Song’ airline explains Vegas strategy

Friday, April 11, 2003 | 11:07 a.m.

When new low-fare Delta Air Lines subsidiary Song Airlines makes its debut in Las Vegas August, it won't result in the reduction of flights by the parent company.

Representatives of the Atlanta-based airline-within-an-airline said Thursday that Song would begin offering two round trips a day between McCarran International Airport and Hollywood International Airport in Fort Lauderdale, Fla., beginning Aug. 25. Song unveiled the first plane in its 36-jet fleet Thursday and will begin flying paying customers in East Coast markets Tuesday.

It's the second service announcement for Las Vegas by a low-fare upstart in two months. In March, Orlando, Fla.-based AirTran Airways said it would begin flights between Atlanta and McCarran June 11 as part of the company's westward expansion.

AirTran, formerly known as ValuJet, will operate twin-engine, 162-seat Airbus A-320 jets on its routes, with one round trip operating daily and another flying five times a week.

Song plans two round trips a day between McCarran and Fort Lauderdale, which currently is served from Las Vegas with one round trip a day by Tempe, Ariz.-based America West Airlines.

A spokeswoman for Song said Delta and Song would run independently of each other and have separate business models and goals.

"The two (airlines) are not necessarily related," said Stacy Geagan, a spokeswoman for Song. "Our business model is focused on high-volume leisure markets, which is a different part of the product portfolio offered by Delta. We feel we have the flexibility to meet different markets with different needs."

As an example, Geagan said most of Delta's Boeing 757 jets are fitted with business-class seats, which take more room on the plane, but generate more revenue per seat. Song, which will exclusively fly 757s, will have one class with 199 coach seats. Each seat also will have credit-card swipe slots and access to an entertainment center that will have video screens for pay-per-view presentations. Meals also will cost extra on Song.

The airline-within-an-airline concept has not worked for other carriers, including United, which scrapped its Shuttle by United concept. Even Delta found trouble profitably operating Delta Express, which it is replacing with Song.

But Geagan said Song would realize savings in technology as well as cut employee costs with new personnel productivity measures.

Geagan said operating costs of a Song 757 would be 22 percent less than the operating costs of a Delta 757 because of technological innovations, including improved baggage loading systems. She said 80 percent of the costs of operating flights would be nonemployee expenses. That's why she said the company can offer mainline wage scales on the subsidiary -- a point some analysts disagree with.

She said Delta is the least unionized of the major air carriers with only the airline's pilots represented by organized labor. As a result, the company did not have to bargain with unions to implement flexible work schedules that Geagan said would help the airline as well as employees.

"For example, the flight between Fort Lauderdale and Las Vegas takes about four hours," Geagan said. "With the time on the ground, a flight attendant could work 4 1/2 hours. Under Delta's rules, they'd have to overnight in Las Vegas because the flight back would take more than four hours and they couldn't work more than eight hours in a day.

"Under Song's rules, an employee could work more than eight hours in a day and get time off. So, the employees could be home with their families and the company wouldn't have to pay for their overnight stay away from home. It costs less and the flexibility keeps employees happier," she said.

As for the pilots, having one union-scale wage works best for the long term because it prevents bickering over seniority and pay issues if the Song pilots are under the same agreement. That's where analysts are in disagreement -- they don't see how Delta can save much money paying Song pilots the same wage scale as the mainline Delta pilots.

Song's route structure will be a point-to-point operation like Southwest Airlines, which is expected to be one of Song's biggest rivals. That differs from Delta, which operates on a hub-and-spoke basis. All of Delta's flights to and from Las Vegas operate to Delta hub cities -- seven round trips a day to and from Atlanta, five a day to and from Salt Lake City and four each to and from Cincinnati and Dallas-Fort Worth.

Another of Song's biggest rivals will be fellow low-fare upstart JetBlue, which has strongholds at New York's John F. Kennedy International Airport and Long Beach, Calif. Geagan said of Song's 28 planned flights between pairs of cities, only four operate as head-to-head competition with JetBlue, which offers a similar seatback live television system.

Does that mean Song won't try competing with JetBlue between New York and Las Vegas? Geagan wouldn't tip the company's hand.

"All I can say is, 'Stay tuned,' " Geagan said of the potential for operating from other East Coast population centers to Las Vegas.