Delta says sequester hurt sales last month

Are cuts really to blame?


This is a rush transcript from "Your World," April 2, 2013. This copy may not be in its final form and may be updated.

STUART VARNEY, GUEST HOST: The blame game over the bottom line.

We have all heard companies using disasters like hurricanes and earthquakes for missing their financial targets, but the sequester? It's true. Delta is saying those mandatory government cuts are cutting into its sales.

Dave Maney says the airline should be pointing the fingers at those out-of-sight airfares.

Welcome, Dave. Good to see you again.


VARNEY: Delta says there's less money coming in and it's because of the sequester.

You disagree with that, do you?

MANEY: Look, I think there's a couple of big waves that are hitting in the face of the airline business. One of the really interesting things in this, first of all, let's get off the table is, their load factor, their percentage of seats was -- is up.

So the idea that somehow this is wiping out passenger miles is not happening. If you think about it, there's a number of technological advances that are making it easier and easier to do business and collaborate with people anywhere. So you have this giant sort of wind in the face of the airline business.

And if I were them, I would rather try to do a little misdirection and say, hey, guess what? It's not that -- it's not that we have a giant trend working against us. It's that the sequester is hurting our -- apparently our ability to price is the implication. And I'm just not buying it.

VARNEY: I fly a lot. And every plane I take recently is jam-packed full. And when I look at the price of the ticket, it's gone up from the last time I flew that route.

I think there's a problem here. I think people have reached the point where airfares are so high, and they're having to pay so much more for baggage or a pillow or for food, that they're saying, I will choose not to fly. What do you say?

MANEY: I couldn't agree with you more.

So, let's think about it. In the old days, when the only way you could do business with somebody other than a telegram or a fax maybe, you needed -- it was much more important for that face-to-face time. But if I can easily substitute -- this is economics 101, Stuart, which you know very well.

If I can easily substitute another good or service for what is going up in price, and those prices continue to rise, and it's not just the price, Stuart. It's all the stuff you just mentioned. It's the unpleasantness of the experience that they have created. So now if there's an easy way to do it, whether it's a Google meet-up or a Skype call, or whatever it is that I want to do technologically to substitute, is it as good? No.

But does is obviate a whole bunch of brain damage? Sure it does. And the substitution happens.

VARNEY: Do you think that maybe Delta is trying to buddy up to the Obama administration, saying, yes, yes, you were right, that sequester is a terrible thing, look what it's doing to us?


MANEY: Well, that may be.

In addition to buddying up to him by emphasizing the sequester, it also appears to me they're using the president's playbook. Right? He's the guy who last summer was saying, well, the economy is not doing well because of the Arab spring and the Japanese tsunami and everything else I can think of. It's not me, it's not my policies, it's that.

It's like Justin Bieber saying, well, the show got started two hours late because of technical difficulties.


MANEY: It couldn't have been that I'm a screw-up. Right?


MANEY: It's...


VARNEY: Do you think that all these fees -- and they really charge you for everything -- I -- a friend of mine was flying and they were charged more to move from the 24th row to the 20th row because that would be closer to the front of the plane. They had to pay more to move up four rows.

Do you think that kind of thing is beginning to backfire?

MANEY: I think it is.

I fly a lot. And I think that notion of either you give me all your business and be extremely loyal to me and then I might treat you nicer as an airline passenger, or else I'm going to in a very obvious way nickel and dime you for everything from your drink to your seating position to your bag, it gives you sense that they're not on your side and that they're going to do things which clearly don't cost them any more money they're going to charge you for.

VARNEY: You got it.

All right, Dave Maney, thanks for joining us, as always.

MANEY: Thanks, Stuart.

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