Delta Embraces Hard To Get Status, Hard To Beat Quarterback And Premium Seat Shifts

Delta Air Lines has been the premium U.S. airline since Continental deteriorated in a 2011 merger with United. It wants to stay there.

As a symbol of its dynastic intentions, Delta two weeks ago rolled out renowned NFL quarterback Tom Brady, a seven-time Super Bowl winner, as strategic advisor. As an indication of its status, Delta last week made status and entry to its clubs harder to obtain. As a commitment to remaining the premium of premium carrier, Delta President Glen Hauenstein said Thursday that the carrier’s next move will be to segment its premium seat segment.

That puts Delta in its usual spot, ahead of competitors. They are still working out how to separate coach customers from premium customers and Delta is already moving to separate premium customers from other premium customers.

Delta’s move last week to alter its frequent flyer plan produced groans from several leading airline bloggers. David Slotnik of The Points Guy wrote, “Delta’s SkyMiles changes have convinced me to stop chasing airline status.” Gary Leff of View From The Wing wrote, “Delta is demanding more from customers, and not pretending to offer anything new or more in return.”

Leff even suggested that Delta, under pressure, could consider reversing some of the changes. More likely, Delta will dig on, relying on its commitment to the industry adage, “If everyone has status, then no one has status.”

Delta’ claim to industry leadership has recent justification. Delta signed a pilot contract in March, months ahead of competitors. (United pilots are voting now.) Delta has decided the industry will have free Wi-Fi. During the pandemic, Delta kept middle seats empty longer. Delta generates half of the industry’s profits. Also, at an investor conference last week, Morgan Stanley
MS
analyst Ravi Shankar told Delta President Glen Hauenstein, “You guys have arguably the best brand in the airline industry, probably in any kind of US brand.”

Speaking at the conference, Hauenstein provided insight into Delta’s thinking.

What Brady brings, Hauenstein said, includes “the culture of winning, the culture of teamwork and how you create a dynasty. And that’s really, I think, where we are. We’ve had an incredible amount of success. And I’d say one of the things about success is that it’s actually harder to stay there than to achieve it.”

Hauenstein noted that recently, Delta profits have been fed by the American Express
AXP
Credit card, which will provide $7 billion this year, and demand for premium cabins. Last month, he said, premium-paid load factor was 74%, up from 13% over the past decade.

What will Delta do next? Hauenstein said that while the carrier has segmented its coach classes by introducing a Basic Economy ticket, “We really haven’t touched any of the premium products. And as you think of our revenues now coming close to 50/50 premium versus main cabin, the ability to now start working to segment the higher-end and offering even better experiences” is in the plans.

“That’s a hint towards what’s coming,” he said.

.