Skift Take

Few travelers would say they admire airlines. But among business executives and analysts, the sentiment is different. They see a few airlines as being well-run businesses worthy of admiration.

Travelers love to complain about airlines, but business insiders seem to like — and even admire — some of them.

Fortune released its annual ranking of the world’s Top 50 most admired companies, and while only four travel-related firms made the list —or five, if you count Walt Disney Co. — three were airlines. Southwest Airlines ranked eighth, while Delta Air Lines was 31st and Singapore Airlines was 32nd.

Marriott International, the only hotel company on the top 50, was 24th. The list had at least two other companies that occasionally bleed into travel — American Express, at 14th, and Visa at 46th.

Fortune’s annual survey is different than many, because it doesn’t query customers. Instead, it asked 3,900 executives, directors, and securities analysts to select companies off a pre-set list.

The list was weighted toward larger U.S. companies, Fortune admits in its methodology, though many high-revenue foreign firms were also included.

The top three most admired companies were Apple, Amazon and Alphabet, parent of Google.

Admired Airlines

There’s no doubt Southwest, Delta and Singapore are all admired by airline industry insiders, though for different reasons.

Southwest is lauded for its simplicity, and its unwillingness to stray from its business model. It does not have first class, and still only flies Boeing 737s — the same plane it started with almost five decades ago. Southwest also continues to permit passengers to bring two free checked bags, though its competitors don’t allow any.

In a recent Tweet to Skift, Andrew Watterson, Southwest’s chief revenue officer, said, “no bag fees was the most successful airline business model of the last decade.”

Southwest had been lauded for its employee relations, but that’s not as true anymore. Over the past five years, some Southwest employee groups, including flight attendants and mechanics, have complained about the carrier’s sometimes antagonist labor relations strategy. In 2016, some of the company’s unions called on the board to remove CEO Gary Kelly. He remained, but the airline’s labor relations head stepped down.

Today, Delta probably has the best labor relations of any major U.S. airline, and CEO Ed Bastian consistently credits “the Delta people” for the carrier’s competitive edge.

Amazingly, in one of the world’s most unionized industries, Delta’s flight attendants repeatedly decline to seek collective bargaining. Other airlines have tried to prioritize culture to discourage unionization, but that rarely works over the long term, making Delta’s situation more unusual. To management’s dismay, Virgin America flight attendants unionized in 2014, and JetBlue flight attendants late last year filed for an election.

Delta is also consistently a top financial performer, producing $5.5 billion in 2017 in pre-tax income, with an operating margin of 14.4 percent. For four consecutive years, it has paid out at least $1 billion in profit sharing.

Singapore’s strength, meanwhile, is not its finances. It has been hit hard by falling average ticket prices, as it struggles to compete with low-cost Southwest Asian carriers and large global airlines, including some in Mainland China that undercut it on price. Last year, it announced a three-year transformation program, designed cut costs and improve profits.

But Singapore’s brand remains powerful, and airline earns high marks for its sharp service, opulent cabins and solicitous cabin crew. It is also innovative with cabin design, introducing a new first class suite last year that includes a double bed for couples.


The Daily Newsletter

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Tags: delta air lines, marriott, singapore airlines, southwest airlines

Photo credit: With all-coach service, Southwest isn't the world's most luxurious airline. But it knows its strengths, and business insiders admire it. Southwest Airlines

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