Delta lost an astonishing $794 million—yes, three quarters of a billion dollars—in the first quarter of 2009. The world's largest airline actually claims it operated at "breakeven," assuming you ignore the $684 million in "realized fuel hedge losses and special items." Delta even asserts that "despite the worst economic recession in our lifetime, the fundamental strength of Delta's business allowed us to deliver breakeven results this quarter, excluding fuel hedge losses and special items." I guess this is good, because it shows the actual business is running fairly well, but it still strikes me as a wee bit disingenuous to include that kind of statement in a release announcing a nearly $800 million loss.
For travelers, however, the real kicker comes later in the release. Delta will implement a $50 second-checked-bag fee for all international travel, effective today for travel on or after July 1. That's right, $50 for the second bag next time you fly outside the U.S. The fee is double what Delta charges for domestic flights, and is projected to bring in upwards of $100 million in annual revenue.
The airline also recommitted itself to a 10 percent capacity reduction beginning this September.
Delta's new baggage fee strikes me as the wrong move at the wrong time. International travel is suffering, and routes have been reduced by virtually every airline, but international flights are also big-time money-makers in healthier economic climates. Delta's new fee isn't going to lure people back onto its international flights anytime soon, so why jeopardize service that could help the airline rebound? If no other airlines move to match this fee, Delta may soon find itself at a competitive disadvantage.
What do you think? Weigh in with your thoughts on the new fee, or Delta's big loss, in the comments section below.