Thursday, January 27, 2005 Posted: 1136 GMT (1936 HKT)

As Song expands, its biggest competitor will be jetBlue Airways.

NEW YORK (Reuters) -- Worries about high oil prices, intense fare wars and the tough transcontinental market for U.S. airlines can take a backseat.

Delta Air Lines`s low-cost carrier, Song Airlines, is planning to grow its fleet by one-third this year, even as its parent company scales back in several markets, Song President Joanne Smith said in an interview with Reuters on Wednesday.

The airline - known for its trendy menus offering fajitas, sushi and Snickers bars - plans to begin nonstop coast-to-coast flights from New York to Los Angeles, San Francisco, Seattle, San Juan and Aruba.

``We are replacing Delta mainline service on these flights,`` said Smith, who became acting president at Song when John Selvaggio abruptly retired in October, and was permanently given the job on Wednesday.

``Delta is phasing out flights, and we`ll be phasing in,`` Smith said.

Delta, which in November narrowly avoided bankruptcy when its pilots ratified a concession package saving it $1 billion annually for five years, has been restructuring by slashing fares and cutting back service.

Song will add 12 Delta-owned Boeing 757 planes to its fleet of 36 on May 1, and will expand service by 36 new flights through September 2.

``We`ll be using Delta`s planes as they free up from the restructuring,`` Smith said, adding the airline will not be ordering any new planes for its expansion.

Last week, Delta`s Chief Financial Officer Michael Palumbo said a number of strategic moves will free up the equivalent of 19 additional planes.

Delta has also said it will cut about 7,000 jobs this year, while Song will be adding 300 flight attendants in 2005. ``We`ll recruit Delta flight attendants to fill our new positions,`` Smith said.

Reversal of fortunes

Last February, Delta put a much-anticipated expansion of its low-cost carrier on hold, saying it needed to find more ways of cutting costs.

``We are definitely seeing the benefits of Delta`s cost cuts,`` Smith said.

Song has been able to maintain a lower cost-structure than Delta mainly because of better utilization of its aircraft, Smith said. Song`s planes fly for almost 13 hours a day, as opposed to Delta, whose planes fly less than 10 hours a day.

Song`s turnaround time -- the amount of time a plane sits on the ground before taking off again -- is 50 minutes, also significantly less than Delta, whose turnaround time is nearly 90 minutes.

As Song expands, its biggest competitor on the transcontinental routes from the east coast will be New York-based JetBlue Airways, known for its LiveTV and leather seats.

But Smith said Song is ready to take on the competition, with its own in-flight entertainment systems, offering live satellite TV, audio programming, and digital MP3 programming allowing customers to create individual play lists.

The airline also offers movies on-demand, video games and an interactive trivia game that allows passengers to compete against one another.

Song was also the pioneer of trendy menus - offering a host of foods and various kinds of martinis. Revenue from in-flight menus has risen in the past two years, 60 percent of passengers now buy food on board, compared with 30 percent when the airline first began, in April 2003.

Smith takes the helm of the low-cost carrier at what are especially rough times for the industry - airlines are struggling with high oil prices and low fares stemming from tough competition, and most of them are struggling to stay alive.

``The challenge now is to improve our turnaround time, to cut it to 40 minutes from our current 50 minutes,`` Smith said. ``And to keep costs down.``