Delta CEO Bastian: Return of International Flights a ‘Last Step’ for Airline’s Recovery
The Biden administration’s announcement that will open U.S. borders to vaccinated international travelers starting in November is a welcome sign that the “last step” toward recovery is soon to be taken, Delta Air Lines CEO Ed Bastian said Tuesday in Atlanta.
Delta hit industry-record revenues of $50 billion-plus in 2019, only to see its sales drop to just 3 percent of prior-year totals in the 30 days from Valentine’s Day to mid-March last year, just after the pandemic was declared.
“It was as dramatic as it sounds, and it still gives me shivers when I say that, but we picked ourselves up,” Mr. Bastian said during a wide-ranging conversation at the Kiwanis Club of Atlanta Tuesday.
With 20,000 employees taking voluntary retirement packages, a strict trimming of its route map, especially internationally, and an infusion of federal recovery loans, Delta was able to survive last year’s hit without any layoffs. Now, Mr. Bastian said, the focus has been on refreshing the passenger experience while waiting for demand to fully rebound.
“We’ve been very deliberate and intentional. It’s not just getting through it; it’s getting through it better than ever before, because as the old saying goes, you don’t let a crisis go to waste,” he said, noting travelers returning to the skies will be greeted with new faces, planes and technology.
While leisure travel has fully recovered, business travel has lagged, and international traffic has trickled to almost a halt amid border closures, entry restrictions and uncertain protocols around testing and quarantine.
This summer saw a brief upswing, only to see the Delta variant of the COVID-19 virus — a nomenclature the airline’s CEO has understandably refused to adopt — disrupt the trends again. Mr. Bastian estimates Delta is about two-thirds of the way back to its pre-pandemic sales levels.
“In terms of revenues coming back, we still have a lot of our business travel that’s yet to return, and once we get this variant under control and in a better managed state, business travel I know is getting ready to come back again. And then finally getting international borders open is the last step of the recovery that should happen.”
The Biden administration’s new travel rules will allow entry by vaccinated travelers with a negative test result within three days of departure. When these kick in, country-related restrictions like those on most of Europe’s Schengen area, India and other locales will drop off, a “big deal” for Delta and the broader industry in Mr. Bastian’s view.
“That was the last thing that we really needed to have happen to then sort of put the pedal down and get our company and get our city back to where it needs to be,” he said.
Remote Work: A Threat to Airlines?
Overseas traffic will strengthen the holiday travel season, which could also spur increased business travel at the beginning of the year, Mr. Bastian said.
“I often chuckle when I talk to CEOs that haven’t opened or aren’t ready to begin travel yet. I said, ‘Who do you think all these people in the airport are? They’re your employees, they’re traveling; they’re good with travel.’ It’s the last obstacle.”
But some believe that the dip in business travel could become a permanent “new normal,’ given how the pandemic drove the adoption of virtual meeting software. Mr. Bastian had little patience for that view.
“Video technologies will be a complement to what we do; they are not going to be a substitute, and I can find as many reasons why video technology is going to enhance mobility as it will limit it,” he said.
While remote connections can be good for introductions and initial meetings, he argued that they will end up inspiring more face-to-face interactions as new partners go from the “transactional to the relational.”
Mr. Bastian, who never worked remotely during the crisis, said the entire Delta team is back to in-person work, partially in solidarity with the other team members who don’t have the option of telecommuting, as they’re on the front lines fixing planes or serving customers. Vaccination rates among all Delta staff are at 82 percent, perhaps in part due to a monthly health surcharge of $200 that Delta introduced for unvaccinated workers as a way of offsetting the risk of infections.
Atlanta’s hometown airline is now ramping up hiring, with plans to add 2,500 workers in call centers to keep up with a 50 percent increase in call volumes (and lengths) as customers seek answers about travel restrictions and ticket changes. But it is also moving its tech assets to the cloud with Amazon Web Services, investing in self-service tech like its app and website.
Delta hasn’t faced any difficulty recruiting staff, despite such reports in other industries.
“We just announced a few weeks ago that we’re going to be hiring 3,000 new flight attendants, we had 35,000 applicants come in in the first few days. We had to shut it down, it was just overwhelming. So the brand is strong; people want to work for us, and you’re going to see us continue to grow, and it’s going to be good for Georgia.”
Pressing Challenges: Sustainability, Wellness and Debt
Mr. Bastian was frank about the challenges facing the airline on many pressing issues of the day, from sustainability to diversity.
The airline industry contributes about 4 percent of U.S. greenhouse gas emissions now, but that proportion is poised to increase as other industries pivot to cleaner energy sources.
The problem for airlines is that alternatives to jet fuel have not been scaled up to the point where they are economically viable at scale, he said. Without a good solution, this could become a liability to the industry. Already in Europe, travelers are being “flight shamed,” he said.
“I told our team if we don’t have a sustainable path to the future, we’re not going to have a sustainable business model,” Mr. Bastian said. “It’s a really, really important and difficult topic for us all in the in the aviation industry. We know we don’t want our customers to have to decide between seeing the world and saving it. We need to be able to do both.” He added that Delta achieves carbon neutrality by purchasing offsets.
Delta is also growing more strategic about how it handles its internal workforce needs. Diversity is improving, especially representation among Blacks and women in leadership, and the pandemic has brought a newfound sense of the need to care for employees holistically, Mr. Bastian said. Mental health professionals and financial counselors are among the many investments the company has made in personal wellness, he said.
When it comes its own financial performance, Delta’s former chief financial officer said the amount of debt the company took on to get through the crisis — about $8 billion — is of concern, especially in view of the potential for interest rate hikes in the coming years.
During a question-and-answer session, Mr. Bastian also put forth his less-than-positive views on supersonic flight, which he said may emerge as an expensive option for “elites” that want to save a few hours, but that it “goes in the wrong direction” when it comes to sustainability and perhaps the rhythms of the body.
“I think people have learned from the pandemic that we should try to rush through life,” he said, noting his prior experience with the Concordw, the transatlantic mach-2 aircraft he said can’t compare from a comfort standpoint with larger (albeit slower) jets.
“There’s no better way to see the world in first class on Delta.”
This article originally appeared on Global Atlanta