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Song's Selvaggio: 'We'll Be Just Fine'
Interview · April 4, 2004

Song Airways, the low-fare startup from Delta Air Lines, celebrates its first anniversary on April 15. Despite positive reviews from many air travelers, the carrier has been singing a different tune recently. Its operations are under review by its corporate parent, and it just lost its biggest supporter, Delta's president Frederick Reid, who left April 1 to help create a low-fare airline in the U.S. for the Virgin Group. Christopher Elliott recently spoke with John Selvaggio, Song's president, to find out what was going on.

Q: Song was created to compete "more effectively with low-cost carriers in leisure markets," according to Delta's annual report. Why was Delta unable to compete with these airlines?

Selvaggio: The biggest challenge was to get costs low enough so we could become profitable in the Northeast to Florida markets. In Song, Delta created a product that is more efficient and productive, with costs 23 percent that of a mainline 757 operation. We can compete on price and still make money.

Q: You've said that the carrier is performing "beyond what we expected." What did you expect - and how have your expectations been exceeded?

Selvaggio: We anticipated saving costs through technology and streamlined work processes, improving revenue with a new pricing structure, creating a new and highly differentiated brand, reducing ground-times, maximizing facility utilization, introducing food for sale on board airplanes as well as introducing the world's first all digital in-seat entertainment system, while we were cultivating a new employee culture, and finding new ways - every day - to make an airline-within-an-airline work, and we exceeded all of those goals.

We also anticipated positive customer reaction, but we exceeded that goal based on the extraordinary number of proactive compliments that we receive. The icing on the cake has been the recent articles by BusinessWeek and the Los Angeles Times that rated us the best of all of the low-fare carriers tested, being the only carrier to receive the maximum stars awarded.

Q: Are there any areas where you've fallen short of your goals?

Selvaggio: It's been a struggle to convince the many skeptics and cynics that such achievements would be possible.

Q: What do you think your experience says about airlines with fewer amenities, higher fares and costs?

Selvaggio: Most of the airline industry needs to focus on new ways to innovate and transform their business models. We all need to focus on the productivity of our assets - people, technology, aircraft and facilities - and look for significant ways to control costs.

Q: Delta's new chief executive, Gerald Grinstein, has ordered a thorough review of the airline's operations, including Song. When do you anticipate the review will be done, and how do you expect Song to fare?

Selvaggio: Jerry has announced that the review will be presented to the board of directors in July. Song is a strategic, as well as tactical, initiative and should be well-positioned to contribute in any number of ways. Song presents a variety of interesting alternatives since everything that we do is scalable for the mainline operation.

Q: Which airline do you regard as your biggest competitor?

Selvaggio: It depends on which market you look at. Everyone compares our product to JetBlue, however, we only compete in four markets. Our biggest competitors are whoever is offering the lowest fares in our markets.

Q: Frederick Reid, Delta's president, left the airline on April 1 to join the Virgin Group, where he'll help create a new low-fare airline. Reid was one of the driving forces behind Song. How does his departure affect your operation?

Selvaggio: Reid provided the executive support that we needed to make Song happen, and he'll be missed. We have lots of supporters within Delta and Song's leadership team remains intact. As long as we continue to offer customers a great product and great service, we'll be just fine.

Q: Recently, several low-fare carriers have begun adding first-class sections. Good idea or bad idea?

Selvaggio: It depends on your business model, and if the first-class passengers are paying any premium. We chose to give all of our low-fare paying customers generous legroom, not just a select few in the front. We also chose to offer great food to everyone for a reasonable price. Eliminating first class reduces a lot of complexity too. Upgrades are very time-consuming in the gate area and we have a lot of customers to enplane and deplane within our 50 minute quick turn.

Q: With all the additional legroom, satellite TV and audio, and gourmet in-flight meals, what incentive to your customers have to fly on Delta, which offers few if any of these perks?

Selvaggio: It's simple. Song is offered on specific routes for a specific customer base. Song and Delta don't compete on nonstop routes.

Q: Have you flown on any of the other low-fare carriers? What did you think?

Selvaggio: I have flown a number of other low-fare carriers. While they all offer better service than most people have come to expect from low-fare carriers, I don't think any come close to Song. The real differentiator is our people. They provide great service. They are warm and friendly, and very professional at the same time. I'm very proud of the culture we've been able to create.

Q: Song just opened a store in Boston, which your marketing vice president, Joanne Smith, called "a get-to-know-us experience." How have the stores been received? Was this something your customers were asking for?

Selvaggio: The stores are for our potential customers. We are a new brand, offering a dramatically different experience. We thought it would provide valuable word of mouth if customers could actually give us a test drive. So far customers have loved it. New York was so well received that Boston was a no-brainer.

Q: Are low fares still the most important thing to your passengers?

Selvaggio: I think that choosing an airline starts out as a question of price, but the tie-breaker will be service and product. We offer customers low fares and we offer them a better product, thus a greater value for the dollar. I think as more people get to know Song, we'll be differentiated in their minds as their service of choice.

Q: How can a carrier like Song afford to offer all of these amenities plus lower fares and still turn a profit?

Selvaggio: We took 10 percent of a larger operation and transformed how it does business. By focusing on the productivity of our assets - people, technology, aircraft and facilities - we're able to optimize our resources. Plus, we changed the model around food, selling customers food they're happy to buy. Our program is not a cost but a profit center.

Q: Where will Song be in five years? Will Delta more resemble Song - or vice versa?

Selvaggio: You'll need to stay tuned for the answer to that question.

Christopher Elliott is a travel journalist based in Key Largo, Fla. All e-mailed questions may be edited, condensed or republished at the site's discretion.

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