Airline passengers are booking their tickets earlier in 2023 than they were from late 2020 through late 2022. For much of the pandemic people were booking at the last minute, unsure what their plans would be.
That’s part of why major carriers eliminated change fees on non-basic economy fares, to give customers confidence they wouldn’t lose out if they had to change their plans. That’s shifted, with people making earlier bookings.
The indispensable Airline Observer (subscription) covers Delta’s earnings call where the airline said it’s trying to sell seats earlier and not hold back as much last minute inventory – since people aren’t waiting to book for leisure, and not as many people are booking for business.
Without change fees on most tickets, though, people are changing plans at the last minute. Delta sells close to a full flight, but fewer people are on board because of cancellations when it’s too late to stimulate more demand. Their load factor dropped from 85% in the fourth quarter of 2021 to 81% in the fourth quarter of 2022 (though change fees were gone in 2021, and some of this effect is due to bringing more seat capacity back).
According to Delta President Glen Hauenstein, cancellation rates vary far more than they did before the pandemic so Delta plans to increase overbooking and ‘see what happens’.
If you were at 103 percent, on average, and you have two extra points, you just go to 105, in terms of what you’re willing to take. There’s a little bit of risk in that, so we probably won’t go to 105 right away. We’d go to 104 and see how that works. And then to 104 and a half. That’s why you have to retrain yourself and see what actual events happen.
By selling more seats on each flight, in a time where they can’t really bet on how many people will show up, they’re willing to risk having to ‘bump’ more passengers off of flights. That could make them a less reliable way to get to your destination. However Delta has been better than other airlines generally at offering significant compensation to get passengers to voluntarily give up their seats and avoid involuntarily denying anyone boarding.
Meanwhile both United and American have significantly tightened how much they’re willing to offer passengers to give up their seats when they overbook flights. Of course airlines don’t overbook nearly as much as they used to.
Delta is also trying other ways to generate more revenue out of each flights. They’re trying to restore the way they’ve been able to charge price-insensitive business travelers more.
- Airlines used to separate out business travelers from leisure travelers (and avoid charging lower prices to business travelers, while still filling up planes with low fares) with Saturday night stay and advance purchase requirements.
- Business travelers wouldn’t stay the weekend, and made their purchases last minute. But low cost carriers filed cheap one way fares and blew this up.
- More recently, United, American and Delta used basic economy fares for this purpose.
Delta wants to try minimum stay requirements as part of roundtrip fares, but not Saturday stays.
Meanwhile corporate business travel is back to 85% of revenue and 75% of traffic – this difference, of course, is inflation. Put another way, managed travel has continued to stagnate down 25% compared to before the pandemic. Unsurprisingly financial services has recovered far more than tech. Premium cabins still face strong demand, though, with premium leisure subbing in for corporate travel. Whether those passengers will actually be able to get on their next Delta flight – or will walk away with $4,000 in ‘bump vouchers’ – remains to be seen.
My girlfriend went to a family function on Bermuda last week on Delta (LGA to BDA) . The outbound flight was so overbooked (they needed 6 seats.), Delta offered $4,000 in flight credits to passengers willing to go the next day. She refused.
“Delta wants to try minimum stay requirements as part of roundtrip fares, but not Saturday stays.”So…2 one-way tix.
/\/\/\/\/\/\/\/\/\/\/\
While I’ve never been offered $4k, I have taken the “compensation” when traveling alone if it doesn’t completely mess up my schedule. But that’s when traveling alone. Never taken it with my wife, as a) she’s usually ready to go home, and b) she often has something important the day after we are scheduled to return.
for someone that claims to be the thought leader in travel, not only did Gary get what Delta execs said during the earnings call but so did its source.
Delta execs specifically said that the shift in shorter booking business demand to bleisure and leisure travel is resulting in the opportunity to accept more bookings earlier and then end up w/ the same amount of booked passengers. Delta’s President specifically said they do not want to overbook more and there is a risk of not getting the demand shifts right.
Delta has long had the lowest involuntary oversale ratio in the industry; they offer large incentives for those that wish to make big money by delaying their trips by a few hours. When the DOT is able to report that Delta’s involuntary oversale rate is 0%, the folks in Atlanta are doing their job.
Delta’s earnings call is available on its website and transcripts are available on many sites.
@Tim Dunn – “President specifically said they do not want to overbook more and there is a risk of not getting the demand shifts right.”
They don’t want to bump more, but as you say “there is a risk of not getting [this] right.” That’s the whole point of my post.
And the quote from Delta’s President is accurate.
Delta has the lowest involuntary bumps because they’re still willing to pay for voluntaries. As I write in the piece!
Nothing I said above is wrong, you just don’t find it positive enough about Delta, because you’re you. 😉
@Jason Brandt Lewis – obviously there needs to be some shift in pricing where lowest fares require roundtrip purchase for this to work across the board, something we’ve seen from Delta (also American) on awards already.
I don’t understand how the minimum stay requirement could be any different than Sat stays. Are they going to “try” this only on routes where they don’t have competition and also raise one way fares? Why would this be any more successful than Sat stay requirements if the competitive impediment to implement it is the same for both (flexible one way fares on competitors)?
@Gary, Delta and American pricing award RTs lower than OWs hasn’t gotten a lot of coverage, and I haven’t seen it in my award searches. Is this limited to certain routes/markets? This is a pretty important development for award search behavior, I’m surprised it hasn’t been highlighted. Would love to hear more about this.
Gary
You pick out a statement without context and draw a conclusion which isn’t supported. Read the Delta transcript in its entirety and post the comments in the appropriate context and you will see why your conclusion is wrong
Write quality, Gary. Not quantity
Airlines have made last minute fares too expensive again. On many routes you have to book 21 days out to get the cheapest fares. Fares within 7 days can be four times as expensive yet there are many empty seats. Airlines need to be more creative to get me to book optional or discretionary travel on shorter notice. When it’s too expensive, I’m not going. Some of these flights are leaving with a lot of empty seats. If the airlines trust their inventory management they can get high fares for the last seats regardless of when they are getting booked. I think they are leaving money on the table be keeping fares high for close-dated poorly booked flights
@Tim Dunn – here’s the full question and the full answer. Delta says they don’t want to do it too fast, get it too wrong, but there’s risk of more bumps. Just as I write!
https://seekingalpha.com/article/4593959-delta-air-lines-inc-dal-q1-2023-earnings-call-transcript
“Operator
Your next question is coming from Brandon Oglenski from Barclays.
Brandon Oglenski
Glen, I’m going to ask kind of a nerdy one, but your load factor did seem to step down sequentially in the first quarter. Did that have an impact from this actualization factor that you’re talking about? And I guess, can you expand on how you control for that in the future with your RM system? Do we even get to like backwardation on yields or no?
Glen Hauenstein
I think, really, there’s two things I talk about in that realm. One I just want to mention, even though it wasn’t in the question was there’s two things we need to do better next year. One is harness the demand set better that is the new norm and post-pandemic world. And I think we’re getting that real time now, and we’ll make those adjustments. And so materialization rate is relatively easy to combat because it just relates to your overbooking model. So, if you were at 103% on average, and you have two extra points, you just go to 105 in terms of what your ability to take is. There’s a little bit of risk in that. And so we probably won’t go to 105 right away. We go to 104, see how that works, 4.5. [Ph] And that’s why you have to retrain yourself and see what the actual events happen. Because these are changing in relatively condensed time periods, we don’t want to overshoot and cause a disruption. So we’re going to be a little bit more careful on getting that real time.
But the other piece is doing the whole network over better next year, right, is that we saw travel patterns of all that are very different than pre-pandemic and where people are flying. And so, as we get to — one of the things that gives us real confidence about improving next year over this year is when we look at what we did in January, being able to do that better in terms of where we have our capacity placed. And that’s the part I think I’m really excited about is we now have the real post-pandemic travel patterns, which are very different in terms of cities that fly to in places they want to go. If you take New York to Florida, which has never been bigger, there’s a reason why, right, as people have decided that they can live in Florida and work in New York. And those are the things that we’re now incorporating into our analysis as we move forward and things I think we’re really excited about in the future.”
A Q1 loss, increasing overbooking, I sense a financial issue brewing at DL. They have over paid their pilots and other services and now it’s coming back to bit them. Look for service cut backs, drop in satisfaction and more planes without working IFE (again, why streaming is better), plus free internet is turning into higher fares.
Please don’t return to the trend that requires booking RT to get the lowest fare. Booking one-ways is so much more flexible. It’s easier to construct three point trips and to mix carriers when necessary. You can book the outbound when you know the date but aren’t sure of the return. If you need to change one leg, you can do it more easily than having to rebook the entire itinerary. Etc. Horrible idea to push people back to RTs
“ Write quality, Gary. Not quantity”
The sheer irony of Tim Dunn writing this when he’s spent his entire adult life writing response after response after response of Delta passport plum drivel across the internet…
It would be interesting to know how much airlines are giving to bumped travelers. The “headlines” say x dollars in travel vouchers but how many of those dollars are actually redeemed and are they being redeemed over several flights or are they being redeemed for the more expensive seats. The vouchers usually have a one year expiration date (in my experience) so they can be more difficult to plan with (they may also have blackout dates). Of course cash is better but I believe there is a strong incentive for the airlines to not give out cash made more so if only 20% or 30% of the voucher dollars are redeemed.
Tim Dunn. I wish you would stop bashing the author (Gary) and just state your comments.
thank you, Gary, for posting the complete text of the question because it contains the essence of the question
“But the other piece is doing the whole network over better next year, right, is that we saw travel patterns of all that are very different than pre-pandemic and where people are flying.”
nowhere does Delta say they intend to overbook more but they will tune their systems to accept more bookings earlier.
those who want to shut down that discussion clearly don’t understand what is at stake. Either what is written on the internet is fact or its noise
sunviking,
get back w/ us at the end of earnings season and it will be apparent that your “senses” are biased and out of touch.
Delta indeed paid its pilots more but will ensure they have a steady stream of pilots even as other airlines will increasingly face the need to cut capacity because of high pilot costs including for RJs which can’t even be staffed at current rates or low cost carriers where Delta’s labor costs won’t work in their business models.
Delta is updating and expanding its fleet at 1/3 of the cost that United is spending and still generating more revenues at higher profit margins with fuel efficiency and maintenance costs that are a fraction of AAL and UAL’s. AAL is getting the benefit from its new fleet and domestic focus so they just don’t need to spend alot on fleet right now.
And DAL’s used aircraft are being put into service on schedule along w/ their new deliveries while the MAX faces YET ANOTHER delivery delay.
and Delta’s CEO told employees yesterday that they are still working with Airbus on a deal for the A350-1000 which will give Delta the most fuel and cost efficient very long range widebody in the US carrier fleet which is certain to result in network advantages that AA and UA simply can’t match.
And your “senses” missed that the refinery saved Delta 25 cents/gallon on jet fuel in the 1st quarter for a $222 million cost advantage – and Amex is on track to contribute more than $6 billion in revenue to Delta – both unmatchable by any other airline.
I was offered $1,050 on an AA flight from Wichita to Chicago. Would have loved to take it, but had a connecting international flight for LIS on a different itinerary so since they couldn’t get me to ORD on time that wouldn’t work. That’s the highest I’ve personally seen for a simple domestic flight and the person behind me took advantage of it.
@tim dunn “nowhere does Delta say they intend to overbook more”
“if you were at 103% on average, and you have two extra points, you just go to 105 in terms of what your ability to take is. There’s a little bit of risk in that. And so we probably won’t go to 105 right away. We go to 104, see how that works, 4.5. ”
Booking from 103% of capacity to 104, 104.5, then 105% of capacity is overbooking more.
Minimum stay? Reduced fare if purchased R/T tickets? What is this, a throwback to the 1990s? They’re going to see more business go to the airlines that don’t pull any of this nonsense–especially if the anticipated recession (ie, reduction in travel) occurs.
Imagine a world where Tim isn’t on every aviation blog desperately defending Delta, a company that fired him…
You may say I’m a dreamer, but I’m not the only one…
“@Tim Dunn – “President specifically said”
Sheesh Gary I would think you know by now it doesn’t matter what the President of Delta says. Tim Dunn is the know all and be all when it comes to the airline. Next time have your article pre-approved by Mr. Dunn to avoid this.
once again, Gary, the concept is that Delta is setting the EXPECTED load factor for a flight higher in advance because they are trying to compensate for the change in composition of business vs. leisure travelers. They are not going to have a higher booked load factor on the day of departure because that is a different calculation.
The point is that Delta is forcing the revenue management system to accept more bookings earlier in the life of the flight in order to end up at the same booked load factor on the day of departure.
There is a reason why the analyst called it a nerdy question and Delta’s exec gave a technical response that went way over your head.
as to the interlopers on your site that somehow feel a need to defend him, Gary may be a lot of things but at a loss for words or an inability to defend what he writes are not two of those things.
Let’s be real, though. What you interlopers really don’t like is anyone that can think since you can’t do more than complain about other people.
Shame on Gary for not running all of his articles by Heir Stabsoffiziere Dunn of Delta army intelligence first.
@Tim “once again, Gary, the concept is that Delta is setting the EXPECTED load factor for a flight higher in advance because they are trying to compensate for the change in composition of business vs. leisure travelers. ”
That is literally the concept of overbooking, selling more than 100% of seats on the flight figuring that people will no show.
Delta discussed that (1) more people have cancelled late than they used to, and (2) there’s greater variance in this. So they’re going to sell more seats (beyond 100%) and increase slowly knowing that this risks oversales (more passengers showing up than seats).
This is absolutely clear from the earnings call and transcript. It’s basic. And no one is saying they should not do this, or at least I’m not. I’m simply highlighting the change and the factors driving it. I can’t fathom why you’re gaslighting.
Nobody is defending Gary except Gary. The rest of us are asking you to stop being a troll and go somewhere else if you don’t like the content or agree with the opinions of a well-respected aviation journalist. I’m sorry you seem to hate that he is respected, but he is by multiple major media organizations. It’s just a bit annoying that you come on to every aviation blog trying to make a name for yourself in the comments section when your own attempts to build an industry-respected name for yourself have failed.
I agree with Gary sometimes. Sometimes, I don’t. But I don’t come raging on to the website and going nuts in the comments sections (or maligning Gary specifically in other blogs as you did today) every time he says something factually true about an airline I like, but that I don’t like. I don’t agree with his opinions about some of my preferred airlines, but again, I don’t go off the handle because of opinions of a respected aviation journalist.
For better or worse, I can realize he has a more unbiased view of the industry than I do due to some work history even if I disagree with him on some opinions.
Try it out sometime. It isn’t hard to read and just disagree.
You and only you are free to do for you what you think is best for you
I agree w Fary in comment on articles that have no disagreement or controversy Delta
I am not about to bow to your requests so move on. Gary will communicate w me if HE wants me to change what I post and I do and will respect what he says in that regard
…Gary and
@ Gary — I am lookging forward to pocketing some easy cash. I am almost always willing to give up my seat if the price is right.
@Tim Dunn “Gary will communicate w me if HE wants me to change what I post ”
You are welcome to sometimes post sense and sometimes post nonsense in the comments here. I am fine with that.
I do think your writing on another site “Please don’t use Gary as source material” (when the next statement you made was even wrong!) was more than a little dickish, but you can obviously post there whatever that site owner permits!
Gary,
with all due respect, this is the second Delta story that you and Ben both posted this week – regardless of source. This story and the return to Gatwick.
Why is it that Ben has multiple readers that immediately can understand what Delta is doing (besides me), Ben doesn’t defend what he writes, there is no arguing other than people that complain about other users, and Ben doesn’t ever come on other people’s sites (not that I have seen)?
Dickish or not on my part, if you are convinced you are right, then you don’t need to incessantly defend yourself and the comments of users about the topic – and not other users – will validate whether you are drawing reasonable conclusions or not.
I’m grateful that you are as thick-skinned as you are – but you might ask yourself if you work just a little too hard to create conflict and stimulate discussion – at the cost of your own “thought leadership”
that is yours to think about and decide – but other people do use different formulae, they do succeed in drawing a crowd, and they are perceived just as well as places where people want to go for information and to discuss industry issues.
“there is no arguing other than people that complain about other users, ”
Not true. There are MANY users on that site that fact check you and correct the lies you use with actual data. Actually far more on OMAAT than this site correct you over and over and you attack them personally just like you do here.
And on that site, you attack others that disagree with you factually just as viciously as you do on other sites.
I realize you’re desperately trying to make yourself look good, but don’t lie in the process. Every aviation website has plenty of users that counter you with actual facts given the enormous amount of Delta spin you use in every comment complete with your usual topic misdirects when you have no response.
There are plenty that find my contributions helpful
Walk away.
No one cares that you are incapable of getting along w the rest of the world
@Tim Dunn, have you ever considered starting your own site? Doing so will allow you to write what you want, turn the comment section off so that no one can ever challenge you, and you’d sleep easy at night knowing that you’re right in everything you’ve written. Anyone who disagrees will have absolutely no way to voice such on your site and you win by default.
Seems like you’d be a lot happier and so will many who have to sift through your book long responses in the comment section.