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Delta to Cancel Pinnacle Regional Contract

And you thought it was just Mesa who Delta didn't like? Apparently, Delta, having failed in the courts to cancel its contract with Mesa, has now turned to another regional provider, Pinnacle, to do the exact same thing. I'm curious to see why they think this is going to end differently.

On the surface, this looks just like the Mesa fight. Delta is claiming that Pinnacle has failed to meet performance goals, so they're going to walk away on July 31. But looking a little deeper, this seems to have a slightly different twist.

The Mesa deal seemed clear to me. Delta has more 50 seater jets than it probably wants to be flying around, so it thought it could use the breach argument to walk away. Apparently, the judge didn't like that argument. But one thing that isn't often mentioned about the Delta/Mesa spat is that this would only have pulled Mesa's 50 seaters out. Mesa would continue to operate the larger CRJ-900 aircraft regardless of what happened.

So, when I look at Pinnacle, I find myself scratching my head. The airline operates only the CRJ-900 for Delta, and there are only 9 out of 16 currently flying as the ramp-up continues. Why would Delta want to ditch this contract? I'd think they would want more of the 90 seaters right now. It makes me wonder if they have a legitimate case here.

We can look at arrivals by airline by airport in DOT data, and since Pinnacle flies out of Atlanta for Delta, it's worth a look. The airline operated on time in Atlanta in April at 71.3%, March at 62.2%, and February at 66.0%. Those numbers are worse than Delta, but they don't look to be contract-breakingly bad. Then again, we don't know the threshold.

So, we'll have to wait and see as this one winds its way through the courts. All I know is that if I were a regional, I'd be pretty hesitant to sign a deal with Delta right now.

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