Delta, Song and the tech industry

Delta announced yesterday it would shut down its Song unit - the Jetblue look alike with live TV, cheerful colors, low fare costs. In corporate speak, it is "merging" the concept back in to mainline service and adding first class and other frills - but it is giving up on competing with the low fare airlines.

It's a shame (it was one of the few reasons I still flew Delta), but it was predictable.  In the late 90s, it tried a concept called Delta Express modeled after Southwest Airlines. Flew 737s, no first class, no meal service. It shut that down too.

I once protested to Delta when on an Express flight to Boston I was charged $ 600 one way. I told them if they wanted that they needed to provide me full line service. Otherwise they should match Southwest's full fare of $ 275. To my surprise, Delta agreed and sent me a $ 300 credit voucher. A year later they started to de-emphasize Delta Express.

What the Song move tells me is Delta's DNA has not changed. They want the pricing to stay where it was 10 years ago, and clearly a segment of their customer base will still pay that. I imagine it is a shrinking segment.

I write about this as Oracle rolls out its own answer to the open source threat from the likes of MySQL. Or as EDS and other western firms build their own offshore capabilities. Their DNA has not changed.  I am not convinced even EDS with its association with GM has learned enough about market segmentation and that Cadillac buyers are very different from Saturn buyers.

They still want premium pricing and they will likely thrash through their own versions of Delta Express and Song. Their mainline business will look down on the low price option and fight like hell to kill the "channel conflict".  Customers will see repeated attempts to charge more for the so called low cost option - like my seat to Boston.

Even with our advances in gene mutation, leopards cannot change their spots. Corporate DNAs are even more difficult to change.