Leslie Josephs penned an interesting piece about the race for the luxury air travel segment between Delta Air Lines and United Airlines. While Delta is currently ahead by virtually all metrics (including objective measures like on-time performance and profitability and subjective measures like “most premium”), CEO Ed Bastian explained the recent investments by United push Delta to find more ways to innovate.
Delta Air Lines CEO Says The Luxury Race With United Airlines Pushes Delta Forward
Delta’s new Delta One business class lounge opened in New York yesterday, which itself is a reaction to what United Airlines (and American Airlines) already offer to their premium business class passengers.
But Delta is not playing catch-up where it matters most: it’s leading US carriers in profitability and on-time performance this year, with enviable margins that exceed that of its closest competitor, United Airlines, by several points.
Bastian told Josephs that it began with bankruptcy, the restructuring that resulted, then a laser-focus on on-time performance (so employees are “not having to explain for a cancellation or mishandled luggage. They have time to serve rather than to apologize.”). Delta has an older fleet, but the fleet is (generally) well taken care of and Delta has invested in new interiors (mood lighting and seatback screens) that make even 30-year-old aircraft feel new onboard.
But another driver of success? United Airlines in the rearview mirror. Per Bastian:
“Knowing that there’s someone that thinks that they can take that mantle from us, that keeps us on our toes and keeps us continuing to drive hard.”
Bastian did not fly for the first time until he was 25 years old and has an accounting background, but has been at Delta for 16 years and now believes that Delta’s recipe for success, including its new premium lounge space, will continue to keep it as America’s most profitable airline.
But United’s Chief Commercial Officer, Andrew Nocella, has similar aspirations…and sees the path to reach that point through “great service and great products and great network.”
“We haven’t exactly achieved the No. 1 profitability status in the industry, but I know we’re on our way,” said in an interview last month. “If we continue to invest in our customers through great service and great products and great network, we know that will feed upon itself and it’ll help us achieve the financial results that we’re looking for.”
This was echoed by United CEO Scott Kirby:
“Watching them succeed, I became convinced that the product mattered and service mattered, and we have done that at United now.”
(them referring to Delta, of course)
So what does Delta have to improve on? Consistency is key…and this goes back even to the Richard Anderson era, who CEO from 2007 to 2017. Anderson said:
“One of the things about being a premium product is consistency, consistency in policy, consistency in appearance. If you got on a flight in Tokyo we wanted you to feel like you were home.”
Bastian also sees room for improvement on the mobile app:
“They’ve done some nice things with their app. I still think ours is better, but … they’ve done a nice job in terms their communications with their customers and how they manage trip interruptions.
“We’re constantly pushing each other.”
And as United and Delta push one another toward more new routes, better service onboard, and reliable on-time performance, all consumers will benefit.
Funny (sad?) that AA isn’t even part of the conversation anymore.
For now. Once they return to BK and dump their pilot and (soon to be ratified) new FA contracts, I think they will be well-positioned to start playing ball again.
Good point– although I think they will also need to get some new leadership in. Their ops are still bad (middle of the pack when it comes to cancellations and delays, and at the bottom when it comes to IDB and baggage handling.). And it’s been awhile since AA has been truly invested in their soft product and doing anything to distinguish themselves.
Agree. First it was Parker (Former AA CEO) who brought American Airlines to the bottom. Now Robert Isom with his $31,000,000 2023 income while some of his full time employees are on food stamps is a disgrace. They need a full change of management to get things back on track.
I thought this comment was from 2012 for a second…
Delta doesn’t follow, Delta leads.
The real story is how United is trying to copy Delta, but started too late and does not have the route network or the product to compete. Delivery delays have already doomed expansion plans and built-in costs are higher at United. Plus employees are far happier at Delta, despite, or perhaps because of, fewer unions.
Delta will continue to outpace everyone, including United, on profits and if its recent stock surge continues, it was one of the best investments I have ever made.
Same logic could apply to delta, who is trying to copy other airlines. United isn’t copying delta, they’re just pushing for what the industry standard of luxury is. As someone who flies both delta and United, they both offer similar yet very distinct experiences
If I had put my money in Delta at its bottom in 2009, I would have made 598%. Had I done the same in pretty much any other large tech stock, I’d be up 793% (and this is without factoring in a chance to buy more Delta in 2020).
Oddly, United stock has outperformed Delta’s (not factoring in dividends) in that same period. The real Tim Dunn would acknowledge this.
When it comes to technology, United is clearly leading and Delta is following. United’s app is way better (even Bastian came close to admitting this), and their tech for irregular opps and rebooking is industry leading.
Is your investment in the company one of the primary reasons you keep shilling the company on here?
It’s always good to have competition as it will allow for companies to create incentives for consumers to choose one over the other.
The other thing in my opinion is that the JV with DL and KE have really pushed DL to make these changes. Before the JV, DL was pretty bad and I avoided them as much as possible for KE if I wanted to maintain FB Plat, hop ship to JL to maintain BA Gold, or to NH to keep LH Hon (at status respectively to get to Asia. But now, on the JV routes to Asia, the catering is pretty similar with KE along with service levels and would sometimes take DL over KE on certain routes (i.e taking DL from YYZ-DTW-ICN over KE’s direct because the catering at YYZ is pretty bad).
Depends on aircraft, but don’t you find the seats often better on DL than KE?
DL’s product in J for the A350 and A339 is pretty cozy and gives better privacy. But I’ve been finding myself to sleep on my side lately and found KE’s product to be better. I guess trade-offs for each product but these days DL’s soft product probably has me going to them over KE to be honest.
Wait…you’re rooting for AA to be able to pay its crew poverty wages again?
I’m rooting for AA to survive.
No, I think all crews should be paid a living wage and junior FAs should make a lot more. The difference between starting pay and senior pay is ridiculous. No full-time employee should have to rely on social assistance.
I don’t think he worries about Alcoholics Anonymous paying wages or not. This is a travel blog.
Oh, wait…. My mistake
Delta Diamond here and domestically, it’s DL all the way while internationally, it’s JV or Polaris over the tired fleet DL serves up at twice the price (if one is lucky). Bastian has some catching up to do imho.
I think the tired 767s are not great and even the D1 Suites are inferior to both United Polaris and especially AA reverse herringbone, but people seem to love it?
People who either don’t know better because of Stockholm syndrome — the hub captives in Detroit, Minneapolis, Salt Lake City, Atlanta — or they’re flying with other people’s money and are grateful for whatever they can get.
I can regularly get Air France business-class out of Mexico City or Cancun (and sometimes Miami) for $2,200 to $2,800, which is sometimes the price of premium economy on Delta out of a Delta fortress hub and regularly $2,000-$4,000 cheaper than business-class. It’s a no brainer. Sure, it’s longer and I need to position myself somewhere, which adds a marginal cost, but 11-12 hours of Air France business-class for $2,800 is better than 6-8 hours of Delta One business-class at $5,000.
Not even sarcastic but if DL can copy a thing or two from UA, they probably need to buy a hunnit 787s (or maybe 339s if they stay loyal to Airbus) to replace shitty 767s, and maybe more direct flights from their fortress hubs.
AA has an issue with leadership where all of the top brass were of American West which had a LCC mentality and tried implementing it with AA despite this reason being the cause of the downfall of US Airways. But AA had flagship lounges and better bells and whistles before UA and DL but kinda blew their lead.
I’d say DL is ahead of the other two but the product in J varies wildly which usually isn’t great.
So the Delta CEO has acknowledged that it is United that is pushing them to attempt to be a premium airline. The motivation does not come from within the company, but from an aggressive competitor.
It’s ONE of the motivations, not the sole motivation.
This is how capitalism works. Without competitors, we’d all be flying Spirit-like airlines.
There’s nothing luxurious about the UA premium class food (or lack thereof on many flights), about denying elite flyers access to contract lounges, about not opening the business class counters until after check in for the first flights has closed (that happened to me in IAH) etc.
What Mr Bastian is really saying here is that the existence of competition prevents DL from abusing its best customers in an even worse manner (both Skymiles award pricing and their lounge access policies are abusive in my opinion).
United will be the leader in best routes and tech for sure. Delta seems to just give flying to partner airlines and has awkward bases(outside of Atlanta and JFK) for international.
It will be interesting to see how much growth will be happening with UA over the next few years. Kirby has more than hinted at a mega expansion and wanting to be the largest we will see if it actually happens.They have the best hubs and so much potential
The term “luxury” adjacent to US airlines is laughable.
United has some advantages over Delta. It’s premium cabins (Polaris that is) are uniform for the most part across the fleet, far more than Delta’s hodgepodge of Delta One seats. United has a slight edge on tech, like bluetooth. UA’s network is formidable, notably internationally, and customer service nuances continuously improve. The Polaris Lounges are more plentiful than the yet to be tested Delta One lounges, but overall, Delta is a better airline than United, which is still plagued with delays and has some truly unpleasant hub airports across its network. The United of today is systemically better and far from its worse moments, but is still an airline that under-delivers often.
I’m sorry but United rules and Delta drools. On the latter you never you know what you’re getting, the hubs and connections suck and their partners are even worse.
UA have their faults, which I’ll freely admit (unlike that moronic Delta cheerleader) but of the US3 they’re still the one I’d choose.
Shouldn’t they be aiming a bit higher when it comes to improving their airlines? Granted it seems these comparisons are based on the domestic situation, but even so, why not look at what airlines are doing to improve their long haul as well, like with Qatar, Air France, ANA, JAL, etc? Heck even if you go by the domestic situation, look at Australia, which one can argue is a better experience overall (business class seat, usually a meal, lounge access, etc).
Great. So pay your flight attendants more!
Look at that. Competition benefiting consumers. Who would have thought!