Contracts Shift More Risk to Regional Partners

Pressures will be increasing to perform for Delta Connection partners because newer contracts shift more of the compensation to incentive payments rather than the more traditional guaranteed revenue. Delta has completed its current round of Requests for Proposals but may issue another in the fall as the fleet requirements for 2008 and 2009 become clearer. “We have major corporate initiatives this year,” said Wayne Aaron, vice president of Delta Connection. “First, is improving Delta Connection performance such as the completion factor and baggage mishandling, but we have an absolute focus on improving the customer experience, making it more consistent with the mainline product. So, we put more weight on performance so their margins and additional revenues depend on hitting their targets. Of course we are interested in lowering our costs so carriers have to have really competitive costs to win the bid. In addition, the pressure is coming from shifting the risk to them to perform in order to get paid.” For a complete report see the June 12 issue of Regional Aviation News.