A little competition in wooing corporate accounts is a good thing. Delta is laying down the gauntlet to American and United about on-time performance, although it's unclear how large the payouts would be if Delta fails since they would range from $1,000 to $250,000 depending on the degree of failure.
Basking in an on-time rate that beats rivals, Delta Air Lines Inc. promises to pay up if it can’t get road warriors to their destinations more reliably than American and United.
Delta is pitching a new program to its corporate clients that would award travel credits to those accounts if the carrier falls behind its two biggest rivals in on-time arrival and flight completion rates.
The initiative is novel in an industry where airfare discounts and flight selection — not reliability — typically win corporate travel buyers. It’s also a move by the airline to capitalize on operational successes to woo customers by convincing them that Delta’s punctuality will save them time and money.
“We’ve been focused on relentless operational success, because any carrier could replicate anything we do, whether it be seats or food or Sky Clubs, but they can’t replicate our performance,” said Bob Somers, vice present of global sales, in an interview.
For a long time, no one wanted to. In 2010, two years after merging with Northwest Airlines, Delta was 15th in on-time arrivals among 18 U.S. airlines, according to U.S. Department of Transportation data.
Delta jumped 10 spots in 2011 and now is in third place — ahead of American Airlines Group Inc., United Continental Holdings and Southwest Airlines Co. and behind only the non- global carriers Hawaiian, a unit of Hawaiian Holdings Inc., and Alaska. The government defines flights as on time if they’re within 15 minutes of their scheduled arrival.
Delta’s mainline flights were on-schedule 83.7 percent of the time in the 12 months through December, the Transportation Department data show. They don’t include flights by carriers’ regional affiliates, such as SkyWest Airlines and ExpressJet Airlines.
If American and United beat Delta’s on-time and completion rates for a year, Delta would award travel credits of $1,000 to $250,000 to businesses with a contract. Those who suffer the most delays and cancellations get the biggest payouts.
There are enough caveats, however, that it’s unlikely Delta will have to pony up, said Barry Rogers, a corporate travel adviser in Eugene, Oregon, with TCG Consulting.
By measuring on-time or cancellation rates over a full year, it can’t be held accountable for short-term hiccups. The offer also excludes international flights, the regional affiliates, which have spottier reliability records, and industry leaders Alaska Airlines and Hawaiian Airlines. Delta also must trail both American and United – not one or the other – and United has been mostly stuck in the bottom half of U.S. carriers in recent years.
A few airlines have given a reliability guarantee “lip service,” Rogers said, but no one else has moved forward. Neither American nor United offer such a program, representatives for the companies said.
Big companies have many considerations to weigh when making corporate travel decisions, and discounts on airfare are huge motivators said Brad Seitz, a corporate travel consultant with Topaz International. Some businesses can command half off pricey last-minute fares. Still, Delta’s on-time guarantee is generating some buzz, he said.
“Now they’re saying, ’Does this mean anything or is it just a marketing ploy?’ ” Seitz said.
This article was written by Michael Sasso from Bloomberg and was legally licensed through the NewsCred publisher network.
Photo credit: A tribute to employees as part of a Delta advertisement, 'The people who drive the on-time machine,' that appeared in The New York Times. Delta Air Lines