Skift Take

Bastian’s drive for simplicity at Delta follows a disastrous week for rival American Airlines, which cut ties with its chief commercial officer and lowered its financial outlook. 

If last week was one American Airlines would rather forget, consider 2024 the year Delta Air Lines never wants to end.

Speaking on Saturday, Delta CEO Ed Bastian delivered an upbeat assessment across multiple key metrics for the airline. “Business is doing quite well, summer is progressing strongly and looking healthy. We expect our full-year [results] to be well within the guidance.” 

It was a message echoed by Delta President Glen Hauenstein, who described “continued strength through the spring and into the early summer.” Hauenstein said further record revenues were predicted, with the airline able to “fill up aeroplanes at very good fares.”

Both Bastian and Hauenstein were speaking to reporters in Dubai on the eve of the IATA Annual General Meeting – the year’s largest gathering of senior airline leaders. 

Delta Doubles Down on Simplicity

Asked by Skift if missteps by American on its fare distribution strategy had directly benefited Delta, Bastian delivered a measured response. “We’re not going to talk about our competitors’ strategies, but we certainly use NDC [New Distribution Capability] as a form of distribution. Our strategy is very simple, we’re going to serve our customers where they’d like to be served.”

NDC refers to a new-generation technology platform that can offer airlines and other travel stakeholders greater upselling opportunities and personalization options. While it is broadly accepted as the logical next step in the ongoing digitalization of travel, how and when it is adopted is deeply controversial

American Airlines, under the lead of outgoing chief commercial officer Vasu Raja, took a hardline stance on the rollout of NDC. Travel agencies faced a July 11 deadline that would have seen its AAdvantage miles no longer earned on certain bookings.

American CEO Robert Isom said last week that the airline had now dropped the idea. He acknowledged that the airline had lost business due to the botched project and said American had threatened “too many sticks” and not enough carrots.

Bastian on U.S. Airline Consolidation

Asked by Skift if he agreed with United’s Scott Kirby that so-called ultra-low-cost carriers (ULCCs) have “a fundamentally flawed business model,” Bastian suggested the sector was in transition: “I think the ULCCs have well-documented challenges in the market. Over the past few years, they’ve had a hard time finding profitability. Anytime you’re an airline that hasn’t been able to find its ace of profited return and positive cash flow, you’ve got some work ahead of you.” 

Pressed on if he thought consolidation was inevitable within the U.S. airline industry, the Delta CEO said: “I think there’s work to be done, and I think that could take various forms,” without going into further detail. 

Although JetBlue’s tie-up with Spirit was canned, Alaska Airlines executives remain optimistic about its planned merger with Hawaiian.

Speaking in March, Alaska CEO Ben Minicucci expressed confidence that the deal would pass regulatory hurdles. “We have their support. It’s hard to say that there’s a lot of negative with what we’re trying to do. I think [as] the 49th and 50th state, there’s so many similarities in terms of serving remote communities.”

Low-Cost; High Pain?

Delta’s enviable operational and financial performance in recent quarters is not representative of the broader U.S. airline sector.

As well as challenges at American, United is navigating a wide-reaching FAA audit which has limited its near-term expansion prospects. It follows a series of high-profile safety incidents earlier in the year. It led to United CEO Scott Kirby penning an open letter to passengers reiterating that safety is the company’s highest priority.

Even low-cost airlines – historically one of the U.S. industry’s more profitable niches – have been struggling. Southwest Airlines, once a darling of Wall Street, has faced turbulence. It has been particularly hard hit by Boeing delays to the 737 Max 7 plane, which is yet to be certified. Rival carriers, including more traditional network operators, have also stolen ground by mimicking its once-distinctive ‘no change fees’ policy. 

At the ‘ultra’ low-cost end of the scale, there have also been problems. In February, Spirit CEO Ted Christie described speculation about the carrier’s ability to survive as “a misguided narrative.” It came as the company’s proposed $3.8 billion merger with JetBlue was blocked by a District Court judge

Frontier too is navigating challenges. The Denver-based budget carrier has seen its profitability plummet, partly due to an oversupply in capacity in popular leisure markets. Executives are overhauling the company’s strategy as it tries to boost its bottom line. Last month it presented ‘The New Frontier’, scrapped most of its change fees, and introduced business-friendly products in a renewed bid to stay relevant. 

Watch Delta’s Managing Director of Customer Experience, Ekrem Dimbiloglu at the Skift Aviation Forum 2023:

Airlines Sector Stock Index Performance Year-to-Date

What am I looking at? The performance of airline sector stocks within the ST200. The index includes companies publicly traded across global markets including network carriers, low-cost carriers, and other related companies.

The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more airlines sector financial performance

Read the full methodology behind the Skift Travel 200.

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Tags: airlines, american airlines, booking technology, delta, delta air lines, distribution channels, Ed Bastian, ndc, southwest airlines, united airlines

Photo credit: Delta Air Lines CEO Ed Bastian. Delta Air Lines

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