Delta’s Hardline Stance Limits its Ability to Rebook Passengers on Rival Airlines

When major U.S. airlines suffered operational meltdowns in the past, they could usually rebook passengers on competitors, allowing more travelers to reach their destinations faster. But as both Delta and Southwest customers have learned recently, airlines no longer cooperate as closely as they once did.

The good news is that Delta’s operation has improved, and the airline canceled far fewer flights Wednesday than on Monday and Tuesday.  But it will take some time before Delta, which suffered a technological outage Monday morning, will resume normal operations, and the airline is still permitting passengers to rebook for another date for free. Delta is also giving $200 vouchers to customers whose flights were canceled or delayed more than three hours. 

A massive computer outage would have been a major issue for an airline in any era, but it perhaps more problematic today, as carriers can no longer to re-book customers on other airlines as seamlessly as they could as recently as two years ago.

There are several reasons why. One is that load factors are higher today, so airlines have fewer empty last-minute seats available for another airline’s customers. Also, in recent years, carriers have started more fiercely competing with each other, and they do not always want to help adversaries.

Agreements between competing airlines — they are called interline agreements — have been around for decades, and often have three key provisions. They allow airlines to sell tickets on one each other, permitting passengers to fly one leg on one airline, and the next on another. They also usually require airlines to cooperate on checked baggage handling, so a passenger flying multiple airlines only must check a bag once. And they call for airlines to help each other when one carrier has an operational problem — one airline usually transports another’s customers at a reduced rate.

Because these agreements are so old, newer airlines did not always see the need to join. Southwest was among the first big airlines to implement an independent strategy, declining years ago to negotiate deals with competitors. Its agents cannot easily rebook customers on American, United or Delta. The agents can buy tickets for customers using a site like Orbitz, but because Southwest gets no discount on competitors, agents are often reluctant to do so. Delta also has no easy way to book tickets on Southwest.

“If Delta wants to rebook on Southwest, they’re buying tickets like everyone else,” Southwest spokesman Brad Hawkins said.

Similarly, JetBlue, another upstart, has few interline agreements, and does not have one with Delta. But until very recently, major legacy airlines like American, United, Delta, US Airways, Northwest and Continental generally all helped each other during crises. That was still the case until last summer, when the three largest surviving legacy airlines — American, United and Delta — all had reasonable agreements to help the other’s passengers.

But in September 2015, Delta balked, saying it did not like carrying displaced United and American passengers at cheap rates. Delta noted it was the most on-time U.S. carrier — it has trademarked a logo calling it “The On-Time Machine” — and last July, the airline claimed American put five times as many passengers on Delta as Delta put on American.

Delta apparently issued an ultimatum to both carriers. They would need to negotiate higher rates for displaced passengers, or the agreements could not continue. American did not agree to higher rates, but United did.

This means Delta has not been able to re-book passengers on American as it could have a year ago, leaving passengers scrambling to buy tickets on American through other means.

“It is true that we no longer have an interline with Delta,” American spokeswoman Leslie Scott said. “We’ve seen increased bookings in the last few days, presumably from people rebooking themselves, or [through] their travel agents and corporate travel companies.”

In an interview with the Associated Press, Delta CEO Ed Bastian downplayed the interline issue, saying it probably only affected passengers in “isolated situations.”

While Delta retains its agreement with United, it’s not clear how many passengers the airlines put on each other. In a September 2015 internal communication, United told employees to only book passengers on Delta as a last resort.

“Delta should only be considered when all other options have been exhausted as our settlement rate with Delta is significantly higher (typically 40% higher) than with most carriers,” United told employees.

A United spokesman declined to comment about about many Delta passengers it has helped this week.

Delta retains interline agreements with many international airlines, including AeroMexico, Aer Lingus, Japan Airlines and WestJet, as well as Hawaiian Airlines and Alaska Airlines in the United States. But losing the relationship with American, the world’s biggest airline by most metrics, is a big blow.

In a blog post written after Delta canceled its agreement with American, airline industry analyst Brett Snyder predicted Delta eventually might regret its decision.

“It has this delusional belief that because its operation is so great, it should be able to charge non-partners a ton more money to take passengers.” Snyder wrote. “I understand Delta recently went to American and at least one other large U.S. carrier and demanded hefty rate hikes above the standard industry settlement rates. It offered to pay the same rates in return, but it knew that it wasn’t re-accommodating nearly as many passengers because its operation is running well. This was a money grab.”