AA Pressing Distribution Deals, Preps Upgrade ProgramAmerican Airlines expects its distribution costs to drop in 2006 as it renegotiates contracts with traditional global distribution system operators and considers relationships with alternatives. "Through these discussions, it is clear that distribution environment will be significantly changed by the end of 2006," said American CEO Gerard Arpey this month during a conference call with analysts. "This may mean that we are not participating in all the traditional distribution channels that exist today. The only way we can continue to participate in the current distribution framework is at costs that approach our direct distribution costs and at costs that are reasonable competitive with low-cost carriers, which do not participate in the current framework." At the same time, American is preparing to relaunch CorporateAAccess, its direct portal for corporate clients. The portal was first introduced in August 2003
(BTN, Sept. 8, 2003). Separately, American CFO James Beer said, "We will soon be introducing a last-minute upgrade product which will be available on flights with lower first-class load factors."
Delta Overhauling Domestic, INternational ServicesBankrupt Delta Air Lines last week said it would "merge" its low-fare Song service into domestic mainline service as part of an effort to "tap the best features" of both operations. By next fall, Delta plans to offer the renewed Song service, including a first-class cabin, on all transcontinental routes. That service gradually will be expanded to cover all routes over 1,750 miles. Launched in early 2003
(BTN, Jan. 29, 2003), "Song will continue to fly as a separate brand and customers will be able to book flights on Song until May 2006," Delta said in a statement. "The aircraft will then be scheduled on high-demand routes throughout the Delta network during the transition, replacing widebody aircraft that will be redeployed from domestic to international destinations." That redeployment is intended to make Delta the largest operator across the Atlantic as it adds several new international routes. Those aspirations have angered some foreign competitors, including British Airways, who said Chapter 11 protection affords Delta an unfair advantage in aggressively pursuing international expansion
(see story). Meanwhile, details of Delta's revamped long-haul BusinessElite product are expected in first-quarter 2006, a company spokesman said. Chief marketing officer Paul Matsen last year said Delta was developing "the next BusinessElite," which he said likely would include lie-flat sleeper seats
(BTN, Sept. 20, 2004).Japan Airlines Intends To Join OneworldJapan Airlines last week broke from its promiscuous partnership strategy by announcing its intention to join the Oneworld alliance. JAL would join Cathay Pacific and Qantas in Oneworld's Asia/Pacific contingent, a blow to the SkyTeam alliance, which now lags both Oneworld and Star Alliance in regional coverage. The move would increase Oneworld's network roughly 10 percent by adding dozens of new destinations, and significantly would increase the group's total revenues, as JAL ranks fifth among the world's largest carriers. It has pre-existing bilateral deals in place with several existing Oneworld members, including American Airlines and British Airways. Royal Jordanian Airlines this month became the first Middle Eastern carrier to commit to a major airline partnership when it, too, said it would officially join the Oneworld alliance by early 2007. Meanwhile, Oneworld this month brought its BusinessFlyer program to Switzerland in an attempt to secure greater share of the business travel market. BusinessFlyer offers deep discounts on worldwide flights "in return for a more regular relationship with the alliance." The program launched in Germany in 2003, added France last spring and claims 2,400 enrolled corporate accounts.
Navigant Postpones Posting Third-Quarter ResultsTQ3 Navigant has delayed announcing its third-quarter results, originally planned for Oct. 25. Navigant was forced to delay the release while it secures waivers and amendments from its lenders because it was in non-compliance with certain covenants in its credit facility as of Sept. 25. Navigant said in a statement that the reasons for the noncompliance were the unexpected delay of $3 million due from vendors, which has now been paid, and the reduction in net earnings of about $350,000 due to hurricanes Rita and Katrina. Navigant expected to secure all waivers and amendments from lenders. Navigant, de-listed from Nasdaq when it fell behind on its Securities and Exchange Commission filings, has since filed its 10K. Once it releases its results and files its 10Qs for the first three quarters, it will be re-listed within a few weeks, said Joe Jaffoni of Navigant investor relations.