Delta's plans to wrap Song, its discount "carrier-within-a-carrier" into mainline - "grown-up" - Delta may have led to false joy in some quarters.
For nearly a decade, the airline had gone back and forth on attempts to fend off expanding low-fares East Coast competition with such attempts as the ill-fated Delta Express, and this week, about six weeks after it went into bankruptcy, Delta said Song was gone. Sort of.
That's led some to say it a swan song, but we wonder if this may be a premature obit. Delta plans to migrate the more successful features of Song, including its leather seats and its in-flight entertainment, to about 150 of its 757s used on high-demand, long-distance routes throughout its domestic network.
It will get rid of the slightly nauseating greenish blobs that have decorated Song's 48 dedicated 757-200s. But underneath the plain old red, white, and blue Delta paint scheme that will cover the blobs on about 150 of Delta's planes in all will be a new look and feel inside. By May, the 150 upgraded 757s will have Song's live Dish TV, its MP3 music, its on-demand, videos, films and games. All are infinitely preferable in-flight entertainment to the Delta offering of none or a wobbly movie. They may also have Song's designer menu items, which are certainly preferable to the traditional fare even if it's not really gourmet. (This last is undecided).
As the ever perceptive Jamie Baker of JP Morgan says: "In contrast to proclamations of Song's underperformance, its expansion appears to validate the product." Song's 757s will lose some capacity as Delta mainline adds first-class seating, bringing seats down from about 199 economy seats to about 185 per plane.
That's good news for revenue in general since it does take some capacity out of the system while giving Delta more of the widely demanded premium seats for sale or upgrade.
Good news for Delta maybe, but maybe not for JetBlue Airways. Song had long considered JetBlue its main competitor, and had in fact inflicted some injuries, JetBlue chief executive David Neeleman conceded at the last quarterly. If the new Song-heavy, or perhaps we should call it Sequel, is deployed widely on transcontinental routes where JetBlue has performed strongly, it will be a test for both.
We'll never know if Song made money, as Delta would not break out Song earnings, even though Raymond James analyst Jim Parker thinks it was losing as much $58 million a quarter. Similarly Ted by United won't give separate results either. However, United claims Ted's 47 planes are full, and that Ted pays his way enough to earn nine more A320s by next year for a total of about 15% of United's domestic system capacity.
It's an interesting case of corporate survival: in September 2004, Song, begun in April 2003 for about $65 million in one-time costs, won a last-minute reprieve from a widely expected termination when Delta chief executive Gerry Grinstein announced his major transformation plan.
Coming in a few months earlier, Grinstein said he had doubts. Most observers thought that Grinstein accepted their conventional wisdom, that Song, like Delta Express, or Shuttle by United, or Continental Lite, or US Air's MetroJet, was a failure, but Grinstein said a year before the bankruptcy that Song's bold plan had value; a loyal choir, he said, had persuaded him.
Even though some of the choir left Delta around the time of the bankruptcy, Grinstein let it be known that Song was a viable laboratory for finding out what works. And rather than being confined to the lab, the successful parts of the experiment are to be transplanted throughout the company.
If it succeeds in creating a personality for Delta domestic long distance, and makes Song not a sub-brand but a service mark, well, the lab will not have produced a monster after all.