Under Ed Bastian, Delta Air Lines has taken a prudent approach to managing through this pandemic. The airline is not expecting a recovery for about two years.
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Delta Air Lines is expecting a “two-year journey” before its operation resembles its pre-pandemic structure, CEO Ed Bastian said Tuesday at the Skift Global Forum, though to get there, the airline may need to rely less on business customers than before.
“I don’t think it is a five-year journey,” Bastian told Airline Weekly editor-in-chief Madhu Unnikrishnan and Senior Analyst Jay Shabat. “I do think a portion of business travel is going to be lost for good because of video tools we have all been forced to learn how to use. That’s OK. That is travel that isn’t resilient. That isn’t sustainable.”
Like many U.S. airlines, Delta has shrunk, retiring and temporarily parking airplanes, asking employees to leave, and slashing its flight schedule. Delta is operating about half its originally planned domestic schedule, Bastian said, and carrying 30-35 percent of its normal passenger volume. International demand is worse, because many countries have closed borders to Americans.
This may remain the status quo for the foreseeable future, Bastian said, though airlines could further cut schedules if the U.S. government does not extend state aid past Oct. 1, when it is slated to run out. Bastian said he supports more government assistance.
Long term, he said, the U.S. airline industry will be fine. Over the past decade, consumers showed a near insatiable desire to travel, and airlines added aircraft and routes to accommodate them. Bastian said he expects those customers to return — with gusto – when they believe it safe.
“When that’s been taken away from you, I think you appreciate what you had,” he said.
What About Business Travel?
Big global airlines racked up hefty profits over the past decade with a two-pronged strategy. One, they filled planes with leisure travelers, who were often willing to pay relatively high fares for travel during peak periods. And two, they catered to business travelers, who were not as cost sensitive and paid a premium for convenience.
Earlier this month, American Airlines Chief Revenue Officer Vasu Raja told investors business travel effectively has been non-existent, down 95 percent, year-over-year. But Bastian gave a slightly rosier picture.
“We are starting to see business travelers come back,” he said. “Of our big corporates that we measure, about 80 percent of them do have people traveling. Though they may be small numbers, people are starting to put the toe back in the water.”
Longer term, Bastian said he’s not know when business travel will fully (or near fully) return. But he suggested it may have more to do as much with how governments attack the virus than anything else.
“This is based on the science,” he said. “This is based on our ability as a society and as the world to contain the virus. The better job we do, the more opportunity there will be for people to start to restore some sort of normal activity back into their daily lives, including travel.”
‘Take Everybody Forward’
When racial-justice protests gripped the U.S. earlier this year, Bastian was among the most outspoken corporate leaders calling for the need to reckon with systemic racism. Inequities have marred the U.S. for “centuries, one would say,” Bastian said at the Skift Global Forum, but this moment in the U.S. presents corporate leaders with the chance to begin to address the problem more meaningfully. “Governments have a hard time with a a lot of this,” he said, pointing to increasing polarization and divisive rhetoric. “Businesses have the opportunity to pull everyone together.”
About 40 percent of Delta’s employees overall and 18 percent of the company’s officers are people of color. Half of the company’s minority employees are Black, but only 7 percent of officers are Black. This is an imbalance Bastian is focused on changing and one he says he takes “personally.”
The company is investing in local schools in Atlanta, where Delta is based, and is re-examining its hiring policies to broaden the pool of candidates. The company is working with community groups to increase the number of Black candidates that seek employment at Delta. Delta also is working to ensure that new employees are mentored and are equipped with the tools they need to succeed. “It is time for us to show up and be accountable,” Bastian said.
Photo credit: Delta Air Lines is expecting a "two-year journey" before its operation resembles its pre-pandemic structure, CEO Ed Bastian said Tuesday at the Skift Global Forum Angus Mordant / Bloomberg