These days, Delta is all about running a tight ship, betting that operational excellence—maximizing on-time flights, minimizing mishandled bags—is the key to winning market share and boosting profits.
As members of Delta’s SkyMiles frequent-flyer program know all too well, a high price has been paid for that single-minded focus on efficiency and cost-cutting: The program is now widely viewed as among the industry’s least rewarding. What little Delta does by way of loyalty marketing is now reserved for the company’s high-frequency, big-spending customers. For the average leisure traveler, Delta’s pitch is that they’ll get you where you’re going on time. Frequent-flyer miles? Not so much.
While the strategy has left some longtime Delta loyalists fuming, it’s been a winner with Wall Street and industry analysts. As the airline’s operational performance has improved—Delta recently ranked third in on-time arrivals —its stock price has spiked. And for all the grumbling from disaffected SkyMiles members, Delta isn’t hurting for passengers; in July, the carrier flew 87.9 percent full, more than American, Southwest, or United.
Buoyed by its success, Delta is leveraging its operational prowess in a novel bid to increase sales to the business-travel market. As reported by Bloomberg, Delta is offering to reimburse some of its corporate clients if its on-time arrivals and flight-completion rates fall below those of American and United for a full year. The compensation would take the form of travel credits, worth between $1,000 and $250,000, depending on how disruptive the delays are.
Commenting on the new program, a Delta sales executive boasted as follows: “We’ve been focused on relentless operational success, because any carrier could replicate anything we do, whether it be seats or food or Sky Clubs, but they can’t replicate our performance.”
Whether other airlines can match Delta’s operational performance remains to be seen. But it’s sheer arrogance to assume they can’t, and won’t. In the meantime, Delta might want to shore up SkyMiles. Just in case American and United start running their own on-time operations.
Reader Reality Check
How is Delta’s focus on reliability, and its lack of focus on miles, working for you?
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This article originally appeared on FrequentFlier.com.
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