Delta Rebuffs AirTran on Deal

Delta Air Lines has told AirTran Airways it plans to scuttle an agreement that enables the two rivals to handle each other's stranded passengers, and AirTran says the move points to an increasingly tense rivalry.

Delta says it sends about 30 delayed passengers a day to AirTran under the so-called interline agreement but can handle that number with its own planes or deals with other carriers. AirTran says a slightly smaller number of its passengers wind up on Delta because of flight problems.

Ending the interline pact also will mean Delta and AirTran won't be listed together in multiairline itineraries on travel Web sites, according to both airlines. Such bookings, which can produce lower fares than single-carrier itineraries, accounted for at least 60,000 passengers from January through August, according to AirTran figures.

Delta spokeswoman Gina Laughlin said Delta concluded its interline deal with AirTran isn't cost-effective and plans to end it on Oct. 8. "This is not a Delta vs. AirTran ... event," she said.

But AirTran marketing chief Tad Hutcheson said ending the pact could mean "a major pain for the customer." He thinks Delta's move is part of a sharpening competition as Delta retools in bankruptcy court and AirTran continues growing.

Delta lately has ratcheted up competition over routes, airport facilities, corporate sponsorships and marketing venues, said Hutcheson. "We're out there buying billboards. They're out there buying billboards right next to us," he said.

Interline agreements allow for streamlined rebooking of stranded passengers at a negotiated rate paid by the carrier whose customer was delayed. The deals enable multiairline itineraries by facilitating baggage transfers between airlines without the passenger having to pick up bags and recheck them.

The accords are common among big airlines, although some discount carriers aren't party to them. Delta and AirTran, which both have hubs at Hartsfield-Jackson International Airport and jointly account for about 90 percent of its traffic, have had a deal since 2001.

Now Delta, which filed for bankruptcy protection a year ago, said it is ending the agreement to save money and because it no longer needs AirTran's help. Both AirTran and Delta say if the agreement dies, they can accommodate customers in their own operations or through similar deals with other carriers.

"We're confident that the extensive connecting opportunities we have will allow customers to reach their destination," said Laughlin.

While the number of affected travelers is relatively tiny, ending the deal may remove options that enable quicker rebookings of stranded passengers, said Ken Bernhardt, regents professor of marketing at Georgia State University.

"It's certainly going to complicate the customer's life," said Bernhardt. "When you have a cancellation you want to have the most flexibility possible to take care of your customers."

Few passengers affected

Delta didn't offer specific numbers on interline traffic, other than saying fewer than 30 passengers a day flew on AirTran last year because of flight problems.

AirTran said it transported 54,656 Delta passengers this year through August --- 10,453 because of irregular operations at Delta, or about 42 a day. AirTran said it sent 20,337 of its own passengers on Delta through July, with roughly 4,000 or just under 20 a day, affected bye of delays or cancellations. That works out to about 320 passengers a day flying because of the interline deal, including roughly 60 because of operational glitches.

Cancellation would also end a side deal in which the two airlines' employees fly standby at roughly a 90 percent discount on full coach fares.

Disputes erupted before

This isn't the first time Delta and AirTran have clashed over the deal. A spat erupted in 2003 when Delta said interline fares were too low. Delta raised interline fares to its highest coach fares --- $1,005, for example, for a one-way flight from Atlanta to New York's LaGuardia Airport.

In response, AirTran cut the number of delayed passengers it sends to Delta, said Hutcheson, and in many cases simply buys cheaper tickets online as needed.

"We're not going to pay a thousand bucks to Delta," said Hutcheson.

Laughlin said another reason it decided to end the deal is that AirTran "does not support" Delta's desire to meet industry guidelines that take effect in 2008 and call for completely electronic systems for interline ticketing.

"AirTran uses paperless tickets, but there's no electronic interline ticketing capability between the two carriers," she said.

Continental Airlines also cited a similar reason in July for terminating 20 interline agreements with other carriers.

Other deals scrutinized

Laughlin said Delta is reviewing its interline agreements with about 200 carriers for electronic ticketing capability --- most of them overseas --- and has canceled 10 in the past month.

Forty of its interline partners have already made the switch, she added.

AirTran officials said it's odd Delta is canceling the agreement 15 months ahead of the target date for paperless interline tickets.

"They haven't asked us if we would be compliant by Jan. 1, 2008," said AirTran Vice President Kevin Healy.

"They cancel more flights than we do," he said. "From a convenience factor, when it's irregular operations, they use it more often than we do." He said AirTran will be able to accommodate passengers either through its agreements with US Airways, United and other carriers, or by buying tickets online from Delta.

The end of the agreement "is probably not a huge deal" for either carrier, although some passengers may be delayed, said Daniel Kasper, managing director of industry consulting firm LECG. He said Delta probably hopes to capture more passengers from AirTran.

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