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Delta Air Lines this year realigned its global sales organization to more closely link sales functions in other regions with those in North America, managed from headquarters in Atlanta. The changes coincide with the carrier's aggressive international expansion, which will include newly announced nonstop flights between New York and India, in addition to new services on other continents.
A critical component of the bankrupt carrier's restructuring, Delta's global network growth--it increased annual international capacity by 13 percent during the first five months of 2006--contrasts the airline's direction in the domestic United States, where capacity is down 15 percent, year-to-date.
Though the sales reorganization is part of a larger, companywide plan to reduce personnel and improve overhead efficiency, "Emphasis has been placed on maintaining and even reinforcing the strength of our front line sales staff," said Pam Elledge, Delta vice president of sales and distribution. "We made sure individuals in account-facing roles were not impacted."
In addition to "removing layers of management that separate our front line sales group from senior management," other specific adjustments included additional sales personnel in the United Kingdom; repositioned account management responsibilities in Europe to cover new routes to such destinations as Dublin, Edinburgh, Manchester and Shannon; and an entirely new presence in places like Kiev. Delta also recently added 20 people to its New York sales team to support services from that market to the 20 top business markets in the United States, as well as the feed to and from Delta's global network.
"Bringing our Europe/Middle East/Africa, Latin and Pacific sales teams together with our North America team will lead to new enhanced synergies both in the areas of account management and program development," Elledge explained. "Because so many of the companies we work with are global, it is helpful to have one united salesforce."
Delta also continues to work with partners on a coordinated, multinational corporate sales strategy. "We made excellent progress with SkyTeam, particularly Air France," Elledge said, alluding to a degree of antitrust immunity between the two carriers and Air France's continued support during Delta's bankruptcy reorganization. "The next step, for carriers with antitrust immunity, is to have a global platform instead of having to find a fix for the ways you work with one another for a given account."
Meanwhile, the European Commission (EC) this week told SkyTeam members it is concerned about stifled competition on certain routes within the European Union (EU), and between EU airports and other countries, including the United States. Airline members have 12 weeks to reply to the Statement of Objections, a normal step in EC antitrust reviews. Alliance carriers said they "remain confident that they will be able to settle the case amicably in due course."
Regardless of the outcome, Delta will continue building its own international operations. Already this year, the carrier added nonstop services from New York JFK to Kiev, Sao Paulo and several European cities. A handful of new overseas routes from Atlanta also debuted this year, including flights to Copenhagen, Johannesburg and Tel Aviv.
Overall, among the six U.S.-based airlines with significant international operations, Delta's Atlantic year-to-date traffic market share was highest at 24 percent, according to J.P. Morgan Securities and the Air Transport Association. American Airlines was second with 23 percent, followed by Continental at 20 percent. In Latin America, Delta's 17 percent traffic share lags American (47 percent) and Continental (24 percent). With just a 2 percent share in the Pacific market, Delta ranks last.
Those U.S. carriers, like Delta, are expanding international services to attract more lucrative overseas passengers, while slowing or reversing growth in the domestic market, (where lower-cost, point-to-point carriers are entering new markets and deploying scores of new planes). Year-to-date, American Airlines has grown international capacity 4 percent (including a 25 percent jump in the Pacific) while reducing U.S. capacity 2 percent. Continental, which has been adding seats everywhere, is growing more quickly overseas than in the U.S., and in recent months launched several new transatlantic destinations. Bankrupt Northwest, which is trimming services in all regions, has cut less deeply on international routes than domestic ones.
Delta's newest international service announcements include New York JFK-Mumbai, India flights, effective 1 Nov--"the first and only nonstop flight between two of the world's most important business centers," the company said--and accelerated service between JFK and Accra, Ghana, effective 11 Dec. As a result, Delta said it would become "the only airline to offer customers nonstop service to five continents from metropolitan New York." From Atlanta next winter, it will serve such new destinations as Dakar, Senegal and Johannesburg. According to Delta officials, revenue from the carrier's international operations by year-end will represent roughly 40 percent of total sales, nearly double since the start of the aggressive international expansion.
In noting an increase in the absolute number of destinations served, Elledge said there now is an "even greater emphasis on the need to grow and enhance our corporate and travel agency partner relationships, both on and off shore ... in a manner that complements and recognizes account performance in both [domestic and international] areas of our company."
Meanwhile, a Delta official said China still is a "top priority. We will make that happen if we are fortunate enough to have that awarded to Delta." The airline last year was stung by the U.S. Department of Transportation's decision to award rival U.S. carriers American and Continental with new rights for Chinese routes, but Delta is hoping to score next time DOT doles out approvals. In the meantime, Delta codeshare partner China Southern Airlines this week increased to daily the nonstop frequency for Los Angeles-Guangzhou service.
To improve its allure for long-haul business travelers, Delta announced several enhancements to its international premium class product, including more comfortable seats with power outlets and updated inflight entertainment systems. In all, the airline will refit 75 Boeing 767 and 777 aircraft by next summer. On the ground, it is refurbishing airport lounges and deploying more self-service kiosks with international capabilities in Atlanta, Cincinnati and New York.
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