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Delta's big buy-out: the carrier's acquisition mean new connections for Utah.

Delta's Big Buy-Out

Recently, Delta Air Lines made a big splash in the travel industry with its offer, and subsequent approval by the bankruptcy court, to acquire a huge portion of Pan American World Airways.

One carrier's acquisition of another is not surprising these days. Since deregulation occurred in the early '80s, dozens of airlines have come and gone and several others have merged. Some, like Eastern, have folded.

Over the past 10 years, carriers have entrenched themselves into a domestic route system which forced some out of business and others to join forces for survival. American acquired Air Cal for strength in the California corridor. Delta acquired Western to beef up its western regional presence. United acquired Pan Am Pacific routes to enhance its domestic feed through Portland. TWA bought Ozark; Continental acquired Frontier; US Air bought Piedmont; and Northwest acquired Republic; all of which added muscle to the airlines' domestic route systems. Also, each carrier gained valuable gate space which might have been impossible to acquire without merging with another carrier.

Some carriers continue to struggle in today's aggressive deregulated environment. Continental, America West, and TWA continue to search for partners who can help them survive.

Delta's New Strength

Pan American World Airways, now a mere shadow of what was once the world's largest airline, came extremely close to ceasing operations. While other carriers such as United, American and Delta were beefing up their domestic route structure through "hub and spoke" systems, Pan Am rebid primarily on its international route system for most of its revenues. The carrier was forced to begin selling assets in the '80s, including its Manhattan headquarters, international hotels, and its Pacific routes in 1985.

In the meantime, several strong domestic carriers were chipping away at Pan Am's international market share by feeding their own international routes with "single carrier" domestic traffic.

According to Aviation and Space Technology, in addition to Pan Am's lucrative East Coast Shuttle, Delta will gain the following:

1. Pan Am Route 132 from U.S. points through a variety of routings to dozens of destinations throughout the Middle East and Europe, including a major hub in Frankfurt and destinations such as St. Petersburg and Moscow, USSR.

2. Pan Am Route 133, Segment 1, from U.S. to Johannesburg, South Africa, via Boston, the Azores, Lisbon, and nearly a dozen other destinations, many on the African continent.

3. Aircraft: 24 Boeing 727s, 7 Airbus A310-200s and 14 Airbus A310-300s.

4. A 45 percent ownership in the "New Pan Am." Note: The new Pan Am, with cash infusion from Delta, will now primarily serve Latin American and Caribbean destinations.

The Benefits to Utah

Delta advertises and promotes its routes and services from around its global flight network. The acquisition of Pan Am, therefore, will provide Delta substantial additional opportunities to focus on its domestic U.S. route structure from 23 new cities across the Atlantic. "Our hubs will be a major focal point of our efforts, and our Salt Lake City hub should benefit in many ways," reported Fred Rollins, district director of marketing for Delta.

"Our expanded route system, for example, should enhance Salt Lake's accessibility as we continue to seek the 2002 Winter Olympics," he said.

With its newly acquired international cities, Delta will be even more aggressive in promoting Utah's economic development. "I believe you will see more and more international skiers, conventioneers, and businesspeople come to our area. Our acquisition with Pan Am also opens a vast network of new international cities to our current Frequent Flyers, allowing them to use their accrued mileage for business or pleasure trips. Pan Am World Pass/International customers will also benefit from Delta's 158 domestic-city route structure, many of whom will come to or through Salt Lake City," Rollins added.

We already have outstanding attractions here for foreign visitors. Our skiing and other outdoor recreation opportunities and scenic areas have attracted European groups for many years. Add to those attractions Temple Square and the LDS Church's genealogical library, and you have a very unique destination for international travelers.

Additionally, as communism crumbles throughout Eastern Europe and now in the USSR, whole new markets will open for Utah's resources. Leisure and business travelers alike will come to Utah as a destination in record numbers. And even if they don't stay in Utah they will likely make a connection at the Salt Lake International Airport, leaving thousands of dollars in our state.

Foreign trade opportunities for Utah companies may also increase due to more convenient schedules and routings via Delta Air Lines' expansion. Access to these new Delta cities will become much more convenient for the people of Utah from the Salt Lake City hub. "Hopefully, future flight schedules will allow international travel to originate on single-plane service from Salt Lake City to major European destinations," said Rollins.

Schedule - Top Choice by Travelers

Delta and other carriers realized early on that the No. 1 reason a traveler chose an airline was due to its convenient schedule.

According to a study published in Aviation Daily on September 3, 1991, these are the reasons, in order, for travelers choosing one airline over another:

Also, business and leisure travelers alike prefer to stay on one carrier all the way to their final destination whenever possible.

Here's to safe and savvy traveling.
 Table : Reason Percent of Respondents
Schedule 20.1%
Price 12.9%
No Choice 12.3%
Frequent Flyer Program 10.6%
Safety Reputation 9.3%
Airline Loyalty 9.0%
Cabin Service 7.5%
On-time Performance 6.4%
In-flight Comfort 5.2%
Airport Facilities 3.4%
Aircraft-Type 3.2%
COPYRIGHT 1991 Olympus Publishing Co.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Delta Air Lines Inc.'s acquisition of Pan American World Airways Inc.
Author:Hunt, Randall A.
Publication:Utah Business
Date:Nov 1, 1991
Words:933
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