A Loss Of Reliability Has Far-Reaching Implications For Delta

Delta is proactively trimming its schedule, even cancelling flights just a couple of days before the big Memorial Day weekend. Cancelling in advance instead of at the airport may be better, but this is going to be a huge headache for some travelers.

After a weekend in which they were cancelling upwards of 10% of their flights, and their operation was such a mess they even assigned a pilot to operate a flight they weren't qualified for.

Delta used to have a reputation for not canceling mainline flights. Their reliability was their selling point. They built a maintenance capability that was so effective that it became a profit center.

Delta was the first to have operational meltdowns in the Covid world. They fell apart for Thanksgiving 2020 and Christmas 2020.

Customers will still fly Delta tickets. Their reputation is important for success in New York and Los Angeles. Adoption and use of their co-brand American Express card is an attraction to the SkyMiles program.

Delta says that they do not have to offer as generous a SkyMiles program because of their overall value proposition. Losing their halo from operational reliability has far-reaching implications, from the revenue stream for SkyMiles to a material impact on their partner American Express. SkyMiles is at a disadvantage without the operational halo.

American Express is tied to Delta through 2029 in a deal that became more expensive after they lost Costco. Delta paid a big premium to keep their relationship with them because there were fewer airline partners to work with in the consolidated industry. In a world where customers are willing to accept a less valuable currency for their spend, that premium makes sense.

I don't know if I would pin Deta's challenges on the departure of Gil West. I think they lost a lot of organizational knowledge when they lost 31% of their employees. I am sympathetic to the idea that current leadership may not be well-suited to fixing the problem because they don't have much talent below the C-Suite.

The Delta Air Lines operation went down last weekend. They canceled 10% of their flights on Monday to keep from running up their cancel statistics. Many flights were delayed. They are beset by confusion.

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Delta Air Lines, which has developed a reputation for extreme reliability, has had to cancel more flights over the holiday weekend than they typically do in a year. Delta has canceled 258 flights so far on Thanksgiving. By comparison, American.

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Along with other airlines, American's operation melted down over the weekend. The flight attendants union reports that the airline didn't keep track of the flights that were canceled due to lack of crew.

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