Robert Silk
Since last summer, most mainline U.S. airlines have had periods of operational collapse.
Spirit, JetBlue, Southwest, Alaska and American have each had at least one turn drawing headlines for a spate of exceptionally high cancellations and delays linked to poor operational planning.
But no airline has the potential to be hurt more by publicity suggesting poor operations than Delta, in large part because it has the most to lose.
For at least a decade, Delta has successfully positioned itself as the premium U.S. airline brand. Last year, Delta outperformed its legacy competitors American and United on the key metric of yield (revenue per passenger mile) by 3.7% and 6.8%, respectively, continuing a pattern that began pre-pandemic. Yield edges like that are no small matter in an industry where the largest carriers record annual passenger revenues in the tens of billions. In 2019, Delta recorded passenger revenue of $42.3 billion and net income of $4.8 billion. By comparison, United and American, though similar in size, reported net income that year of $3 billion and $1.7 billion, respectively.
Delta has earned its yield premium through a variety of initiatives, but critical among them has been excelling operationally. Indeed, Delta has spent years aggressively promoting its operational strength.
And I don't blame it. In 2019, Delta had one remarkable stretch in which it went 20 consecutive days without a single mainline or regional cancellation out of nearly 114,000 scheduled flights.
For all of 2019, Delta canceled just 0.7% of its domestic flights, third for mainline U.S. carriers behind perennial operational stalwart Hawaiian and discount carrier Allegiant. Delta's on-time rate that year was 83.5%, second only to Hawaiian.
Fast-forward to now, as Delta is emerging from the pandemic disruption and things have become much worse. From May 16 through the end of June, Delta and its regional subsidiary Endeavor, which operates just a portion of Delta Connection flights, canceled 6,471 flights, 3.9% of their schedule, according to FlightAware. Over the hectic weekend of June 17 to 19 those two carriers canceled almost 10% of their schedules.
It's no wonder that, during a mid-July earnings call, Delta CEO Ed Bastian told customers impacted by these operational failures that he "sincerely apologizes."
Bastian also recognized that apologizing won't be enough as he talked about how bullish Delta is about the coming months. The only potential fly in the ointment, he recognized, is not running a quality operation.
"I mean, that will keep people from the product," the CEO said.
Unfortunately, it's undoubtedly the case that some customers have already lost their esteem for his product. A friend of mine in New York who holds SkyMiles Diamond Medallion status recently summed up his feelings to me bluntly. "Very displeased, Robby. Very," he said, in addition to a few more choice words.
For now, at least, it appears that Delta has begun to right the ship. Through July's first 24 days, the carrier had canceled 0.9% of mainline flights, though the 3.8% cancellation rate for Endeavor suggests the Delta Connection network is still struggling.
Bastian explained that Delta's performance is improving due to changes such as shelving plans to grow its network further as well as scheduling more time for boarding.
"The issues we are seeing are temporary," he promised.
If Delta hopes to retain its reputation -- and profits -- as a premium airline, he'd better be right.