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Let’s start as I always do when talking about stocks and specifically Delta Air Lines or $DAL stock. I don’t ever buy or sell any airline stocks including Delta. Next, I really don’t care one way or another if the Delta stock price goes up or down – I care about the user experience and that is the data I am after in these types of calls. So let’s see what got my attention:
- SkyMiles redemption
- Branded fares
- Upgauging
- Monetize SkyMiles program
- Meltdown week
- United bump mess
- Aircraft retirement including the 747s
Delta’s President Glen talked about the fact that SkyMiles redemption was up 10%. I would love to know how much of these numbers is due to folks overpaying i.e. more than Level 1 awards (hello, paging ADAM) or due to more people booking or what. I doubt they will ever tell us the inside story. The key thing is they want folks burning miles for anything and folks do.
Next up we have branded fares. What are these? Think C+ or evil BASIC E class etc. Much talk about growth and such and the only thing that really got my attention is talk about more 1st class up sales. Nothing new, we know they want 20×2020 even though they did not mention that.
Then we have upgauging of aircraft – that is, taking what was once a smaller jet and inserting a large one into that route. We will see more of this. I love this as it means less horrid CRJ200s. Expect less frequent flights as a result but again I don’t care if it means more larger jets (with real 1st class seats).
Then there was a question about monetizing the SkyMiles program i.e. selling or spinning it off in some way as other airlines have done. This was flatly shot down with no plans at all or even to consider it to get a market value out of SkyMiles. The CEO Ed mentioned it is more important as a relationship between the company and the customers. Well, Ed, then stop destroying the value of the awards month after month? Just a helpful suggestion.
The total meltdown week was touched on. They all talked about the storm, the total shutdown, crews in the wrong places and other things we all know. There was still blame deflection but also somewhat taking responsibility and mentions of fixing the IT issues that did not “crash” but were overwhelmed. To me, if it does not work for hours and hours, it is just semantics in saying slow vs. crash. I, like many of you, don’t have a lot of trust in Delta IT.
United had to come up and it did. I really wonder if Ed looked over my post from yesterday as he said just about what I said. Delta is much better at bump situations than United ever will be. And clearly they don’t beat up paying passengers. 😉
Lastly of note was one thing that just shocked me. They said all the domestic 767s are retired. I missed that. These did have the worst 1st class seats in the fleet but the best coach seats. I have mixed feelings to see the dedicated domestic widebody ships go away. Also touched on was that some of the oldest international 767s will start to go away at the end of the summer. The A350 will be an amazing replacement and I cannot wait to try it. The 747s end were talked about and I reached out to Delta PR folks about the last flight and could not confirm what I have been told by others that the flight from ICN-DTW landing on the 17th of December will be the last one. Stay tuned to see if that is the last and final one!
So there you are. Nothing really earth shattering but a few gems to pique our interest. Did you also listen to the Q report? Any other bits that got your attention that I missed? – René
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as always, thanks for doing this, Rene!
When I was in the investment industry, these were often fascinating exercises in reading the ‘tea leaves.’ What they don’t say > what they do say 😉
The audience = big investors & Wall Street analysts. I would bet that your first question is spot on — is it people paying more miles or more redemptions… the first is less sustainable, the second would likely be a positive marker for the future. Gives the analyst/investor one more data point on whether management is smart or not. So, good on ya!
@Rene –
Actually, regarding the 767’s they stated
“We’re initiating our 767 retirement. We are retiring 3 of these this year; these are TransAtlantic aircraft. We have retired all of the domestic 767’s already.”
@laptoptravel – I think that is what I said. Mostly.
It looks like the 767s with lie flat seats are still being used for Delta One transcon flights. For example, on May 10th two out of seven non-stop flights between SFO and JFK are on 767s. I always try to book a 767 for these flights because it is a much nicer experience than flying on a 757 with lie flat seats.
The best domestic fight experience I ever had was a JFK-to-SFO flight on a 767 the day of the August 8th meltdown. Plus, Delta threw in 20,000 Skymiles and a $200 voucher.
@Dave – True but those are non-medallion upgrade routes and only for transcons. You could find the old 767s all over the place and on many routes even up to ANC.
At least Delta allows us to use the Regional Upgrade Certificates for domestic Delta One upgrades. IMO, it’s the highest value use of these certificates.
For a fight later in the day, I find I can get 3-4 hours of quality sleep in after the meal, which I can’t do in a first class upright seat unless I am very tired.
@Dave – Again true, but keep in mind a while back DMs got it free. I would take that over the need to burn a RU.
@Rene — Delta 1738 (SEA-JFK) is another example of a route where the 767 is still in use, albeit the version with lie flats. Comp Medallion upgrades available, of course.
@Mark – The rare exception. Until JFK-SEA, as was once talked about, also goes Delta One only.
Read this first thing in the morning, and my brain errantly registered upgauging as upgouging. Perhaps it was just blurry eyes, or perhaps it was my subconscious interpretation of Delta’s tea leaves. 😉 Given the documents of intent DL quietly filed with the [MSP] airport commission a couple months back, I’m inclined to think my transposition was more correct than not, at least for your MSP-based readers… 🙁
Thank you for the Q1-17 call summary, very interesting.
I think there may still be a few domestic 767 in the Delta fleet. SLC to ATL – in July. Its a 767 with a lot of small 1st class seats (no lie flat’s). I would imagine I may see a change in my itinerary. Certainly not a fan of 767 first, but less a fan of cramped 737-900 first. Rene, I agree with your IT trust comments – trust is earned in pennies and spent in dollars.
@Aland – Maybe the top brass forgot about that one jet 😉
About six month ago I flew from Shanghai to Xi’an on a newly renovated 767. This was a China Eastern flight operated by their subsidiary, Shanghai Airlines. The Business Cabin had a very spacious 2x2x2 layout, as shown in this brief video:
https://www.youtube.com/watch?v=ZozIJL-4W68
I am not sure why it felt so roomy compared to the Delta domestic 767s having a 2x2x2 layout. The seats appeared to be very similar to the business class seats found on the high-speed trains in China.
By the way, at the Pudong airport in Shanghai, China Eastern has mini-lounges every few gates one level below the main waiting areas. When the plane is ready to board the agents escorted everyone to the plane to board early. It was pretty cool.