Delta is proactively trimming its schedule, even cancelling flights just a couple of days before the big Memorial Day weekend. Cancelling in advance instead of at the airport may be better, but this is going to be a huge headache for some travelers.
This comes after a weekend in which they were cancelling upwards of 10% of their flights, and their operation was such a mess they even assigned a pilot to operate a flight they weren’t qualified for.
Delta Air Lines used to have a reputation for almost never cancelling a mainline flight. Their unique selling proposition was their reliability. They accomplished this with a fleet of generally older aircraft, and built a maintenance capability so effective that it became a profit center.
This isn’t a new problem for Delta, in fact Delta was first to begin having operational meltdowns in the Covid world. They fell apart for Thanksgiving 2020 and again over Christmas 2020 followed by Easter Weekend 2021.
To be sure, customers are still going to fly Delta tickets. They key hubs in Atlanta, Salt Lake City, Detroit and Minneapolis (but really the entirety of the ‘Upper Midwest’) But it’s their reputation that matters for success in New York and Los Angeles. And it’s that reputation that drives not just ticket sales, but adoption and use of their co-brand American Express card (which is to say, attraction to the SkyMiles program).
Delta even explains that their overall value proposition (greater reliability, friendlier employees) means they do not have to offer as generous a SkyMiles program. Losing their halo from operational reliability has far-reaching implications – from the revenue stream for SkyMiles, to a material impact on their partner American Express. Without the operational halo, their SkyMiles program is at a disadvantage.
American Express is tied to Delta through 2029 in a deal that became far more expensive 8 years ago after they lost Costco. Delta was left as their biggest cobrand partner, and they paid a big premium to lock in that relationship – a cost structure that spread to the rest of the consolidated industry in which there were fewer airline partners to work with. That premium might make sense in a world where customers are willing to accept a less valuable currency for their spend, which is reliant upon the Delta operational halo.
I don’t know that I would pin Deta’s challenges all on the departure of Gil West. I suspect they lost a lot of organizational knowledge and capability when they shed 31% of employees during the pandemic. But I am sympathetic to the view that without much of the talent below the C-Suite, current leadership may not be well-suited to fixing the problem – in other words, that it isn’t just a blip and new hiring and flexibility in schedules alone may not solve the problem.