Delta’s CEO spent 15 years turning the airline into a premium brand. Now it commands 20% more per seat than rivals |
Delta’s CEO spent 15 years turning the airline into a premium brand. Now it commands 20% more per seat than rivals
Delta Air Lines CEO Ed Bastian has never wavered in his commitment the same bet: that Americans will pay more for a better experience in the sky.
Fifteen years in, the strategy is paying off. The airline now commands roughly 20% more revenue per seat than its competitors, and premium cabin revenue is on the verge of overtaking main cabin for the first time in the company’s 100-year history.
“Delta is not a low-cost airline,” Bastian told Fortune‘s Editor-in-Chief Alyson Shontell in a recent episode of the Titans and Disruptors of Industry podcast. “We can’t win by trying to provide the cheapest. We have to be able to win by providing the best.”
Delta’s first-quarter earnings, released Wednesday, show that Bastian’s efforts are paying off. Premium ticket revenue hit $5.4 billion, which was just $41 million shy of the main cabin’s revenue. Premium grew 14% year-over-year, while main cabin grew only 1%, bringing the airline to the cusp of a milestone a year ahead of original projections.
Premium revenue includes First Class, Delta One, Premium Select, and Comfort Plus seating, while main cabin revenue is made up of standard and basic economy fares.
The playbook: Reliability first, then premium
Bastian described the transformation to Fortune‘s Shontell as a 15-year effort he originally called “de-commoditization.” When he first started pushing the idea, 80% of travelers chose airlines based on which one had the lowest fare. Today, Delta estimates that 80% of its customers choose the airline because of the brand.
But the premium strategy couldn’t come first, he said. Delta........