After another round of quarterly earnings reports, American and United remain no closer to catching Delta, which is often the world’s most profitable global airline. Is there something structural about Delta that prevents its competitors from closing the gap? In a wide-ranging interview last week at Delta’s Atlanta headquarters, CEO Ed Bastian answered that question and others—including what he claims is the real reason Delta relaunched its interline agreement with American last week.
Airline Weekly: You’ve said recently that all your hubs are showing year-over-year yield increases. Can you characterize how they’re doing relative to each other?
Ed Bastian: All the hubs are doing well. They’re all at different states of evolution and maturity….. Close to half of our traffic touches Atlanta. So you would expect as long as we can avoid some of the weather challenges we had last year and then the power outage, Atlanta is doing fabulous…. The younger hubs or focus cities, depending on your definition—whether it’s Boston we’re building out, or Seattle—they’re all doing well, and they all have a different set of objectives. The bottom line, though, is our customers are responding well to the investments we’re making in those cities. And I feel good about the state of the structure we’ve got.
AW: You mentioned Boston and Seattle. Should we picture Boston as the next Seattle?
EB: No, I don’t think so. Boston is very different from Seattle. As you know, we did Seattle primarily because we knew we were going to lose our footprint in Narita over time with Haneda opening. So it gives us a great outlet to Asia, and we needed to build a strong traffic base feeding that, since we couldn’t count on Alaska as an exclusive partner. Boston is very different. First of all, it’s got a different demographic. It’s focused on short Europe. It’s a facility we’ve already built, and we’re allowing others to use it. And so we said, why are we spending billions of dollars on airport infrastructure everywhere you turn when we’ve got existing great infrastructure, and we just need to fill that facility back up again? So that’s part of the reason. With Virgin, with Air France/KLM, with the strength of our European franchise, I think Boston is a natural fit. And then clearly the local economy there is doing quite well.
AW: You’ve seemed rather relaxed about oil prices being…
The article you have previewed is premium content and available only to our paid subscribers. To continue reading become an Airline Weekly Subscriber today.