EUROPE'S AIR-transport markets will soon face major structural change as the influence of low-cost carriers begins to spread, according to Delta Airlines chairman Ron Allen.

Speaking at the US Federal Aviation Administration's Commercial Aviation Forecast conference in Washington on 5 March, Allen said that low-cost airlines, which now accounts for 15% of the US domestic market, will alter marketing strategies worldwide.

To date, Europe's major carriers have largely escaped the problems faced by their US rivals and caused by such low-cost operators as ValuJet and Southwest Airlines. Small carriers, (such as Ryanair of Ireland and EasiJet in the UK) are having some success, but the real start of the low-cost threat, could be signaled if the purchase of Brussels-based EuroBelgian Airlines, by a combination of Continental shareholder David Bondiman and Virgin Atlantic's Richard Branson goes ahead (Flight International, 28 February-5 March).

The main plank of Delta's response to the low-cost threat has been to cut costs. Pilots are voting on a labour contract, which includes a 2% pay cut and other cost savings. Approval would allow Delta to launch a low-cost, short-haul, operation using lower-paid staff.

The pact is part of Delta's Leadership 7.5 cost-reduction programme. Allen expects the airline to hit the interim cost target of just below 13¢ per available seat kilometre (ASK) by June and move towards the goal of just over 12¢ per ASK.

Allen confirms that Delta's 19 Lockheed L-1011 TriStars being pulled from transatlantic services will replace the oldest of 55 being used on domestic routes. The phase-out is part of Delta's strategy to simplify fleet composition. The airline has already eliminated Airbus A310s. Delta is evaluating the types and number of aircraft, which will eventually replace the domestic L-1011 fleet.

Delta will retrofit in-service Boeing 737s and 727s with hushkits to comply with Stage 3 noise limits and keep the aircraft in service for longer than planned. It is buying more Boeing 767-300ERs for transatlantic routes, but has cancelled its outstanding orders and options on 737-300s.

Source: Flight International