ON DECEMBER 5 Delta Air Lines became the first US carrier to serve the SA – US market with the launch of a daily direct service between Johannesburg and Atlanta via Dakar, Senegal.
FTW’s Joy Orlek caught up with managing director Delta Air Logistics, Ben Darnell, regional manager cargo for the Atlantic region, Helena Haubova, and local GSA Anne Sanders of GSAfrica, who provided their perspectives on global and local market issues as well as the implications of the proposed US Airways takeover bid. FTW: What are the key global issues facing the airline industry? Delta: First is the security picture around cargo. It’s a matter of making sure that you can adapt quickly to the changing requirements. Second is the directionality of cargo – trying to find a balance in the market that you serve. For carriers flying pure freighters it’s more of a challenge than for us where we’re filling belly space, and we see South Africa as one of our better cargo markets in terms of demand and yield. FTW: Bearing in mind that most airfreight services are passenger-driven, how important is the cargo market to Delta? Delta: Cargo is getting more and more attention as we have been able to demonstrate the true value of cargo and how much of a difference it can make to the bottom line. In some markets it’s the cargo revenue that swings the decision to launch. Our expansion over the past few years has been enabled by moving widebody international aircraft out of the domestic US market and redeploying them on the international longhaul market so that the potential for revenue production from a cargo perspective is increased exponentially. We work very closely with our network department to ensure that we have the heavy lift aircraft in the markets where there is most demand for cargo. FTW: What has been the response of the local market to the service? Delta: In a word – phenomenal. The market has in the past been dictated by certain carriers and the South African freighting fraternity is comfortable with the fact that they now have an option – and not just an option that gets into America but one that goes beyond the entry point of Atlanta. On the date of launch, flights were fully booked for 10 days ahead. FTW: What are the operational implications of the Chapter 11 process and the possible US Airways takeover bid? Delta: Chapter 11 is largely misunderstood outside of the US. It’s a chapter in the US bankruptcy law which allows a company to reorganise its debts while continuing to operate – so from an operational point of view it changes nothing. From a Delta perspective we worked very hard to reorganise outside of Chapter 11 but the combination of high fuel prices and the impact of Hurricane Katrina were too onerous. On fuel alone we’re paying $3bn a year more now than three years ago. This month, December, we’ll file our plan of reorganisation and if everything goes according to plan we’ll exit the restructuring process by the second quarter of 2007. On top of that we have an unsolicited offer from US Airways. We have to look at it because it’s a valid offer, but it’s a hostile offer and we would prefer to emerge as a strong, stand-alone company. We feel if we entertain the US Airways offer it would prolong the restructuring process and would ultimately be worse for our creditors than the plan we have filed. FTW: If the US Airways deal goes through, will the Delta brand continue? Delta: The idea is that we would be known as New Delta, but at this point we look at it as nothing more than a proposal. We believe it could be problematic from a competitive and regulatory standpoint because Delta and US Airways have so much domestic overlap. FTW: Are you looking at interline agreements with local carriers to better serve the wider region? Delta: We have just signed an agreement with Nationwide so we are already bringing passengers from beyond Johannesburg and we are looking at expanding it to include a freight interline agreement. FTW: How important is South and Southern Africa to Delta and are there any expansion plans on the table? Delta: Africa and a lot of secondary points in Europe are a great opportunity for us now because we still have a lot of aircraft we can use for international expansion. Our network people are looking at it all the time. With several Boeing 777s on order for 2008, this could release larger aircraft for expansion on a range of routes, including South Africa.
