Thursday, January 06, 2005

Delta's Hidden Agenda

Delta slashed its fares across the board, ostensibly to compete on price with the low cost carriers. They had to know, however, that all the other legacy carriers would match them. Therefore, I can only guess that their real intended end game is to bankrupt at least one other legacy carrier, most likely US Airways (which had proposed union cuts rejected today). That would make sense and, if enough seat miles were removed from the market, it could improve the currently miserable industry economics. Perhaps they think the US government will stop bailing out airways rather than letting them fail. It's possible. I am a little surprised that Delta is making this move rather than one of the carriers with stronger balance sheets (relatively; none of them are good).
In the meantime, the price cuts should be good for consumers.

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