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Delta CEO Edward H. Bastian made some exciting announcements this morning at the Skift Global Forum in New York City. We’ve rounded up some of the top takeaways from his discussion:
Seat Pitch — Bastian made a bold statement about his airline’s seat pitch: “As long as I’m CEO, Delta Air Lines is not reducing its seat pitch below 31 inches.” Delta is a premium airline and that it offers a premium product, Bastian said, without naming competitors. American recently announced that it was reversing its decision to install seats with 29″ of pitch on its new 737 MAX 8s.
Free texting on all flights — Starting this weekend, Delta will offer free text messaging on all its aircraft that are equipped with WiFi. The only planes that won’t offer this service are small ~50 seat regional jets. What about phone calls? “We are not going to have out-loud telephone conversations on our airline. Not going to happen.”
Free Wi-Fi? — In the long term Bastian believes Delta will offer free Wi-Fi on its aircraft but in the near future he believes Wi-Fi stability and reliability will improve with the introduction of the 2Ku satellite service on the majority of mainline aircraft by the end of the year. Eventually, travelers will be able to stream anything they want on an aircraft, say Netflix or Hulu. Bastian joked that he calls the CEO of GoGo Internet, Michael Small, “NoGo” because of the company’s reputation for spotty connections.
SkyMiles and Loyalty — Tuesday’s announcement that Delta would be increasing the spend requirement to $250,000 to receive an MQD waiver for Diamond Medallion status, which enraged many elite customers, makes more sense after listening to Bastian’s talk. The CEO hit on this point saying “We are going to sell our first class seats.” Bastian stated that paid domestic first class seats have gone from about 15% to 50% and that upgrades are way down as a result. Delta wants to reward customers who spend to fly on the airline, he said, which is one of the reasons the airline switched its loyalty program to a revenue-based system. Any business that gives away its product for free is going to fail, Bastian said — but he made sure to add that he still wants his loyal customers to ride up front sometimes.
Delta realizes, Bastian said, that with MQDs, MQMs and MQSs — Medallion Qualifying Dollars, Medallion Qualifying Miles and Medallion Qualifying Segments — the loyalty program has become pretty complicated. The CEO said Delta “will get to a point where we simplify the structure” of SkyMiles.
Bombardier Controversy and the new Delta CS100s — “We think it’s absurd,” said Bastian about Boeing’s call for a 220% tariff on the import of Bombardier’s new C-series aircraft. Still, Bastian doesn’t think that the tariff will be implemented and says the move is a technical dispute that’s been instigated by Boeing. He’s confident that the right minds will come together and make the right decision, meaning that Delta will get its new short-haul jets at the price it originally agreed with the Canadian manufacturer. Bastian is quite excited about the CS100 and called it Delta’s best domestic aircraft, with wider seats, a more spacious interior, wide-body style windows and modern tech.
OpenSkies and the Middle East Three — The Delta CEO didn’t mince words when it came to the OpenSkies agreement and how the big Middle Eastern airlines are receiving “illegal” subsidies from its governments. He called airlines like Qatar, Emirates and Etihad “government agencies” and said that it’s impossible to compete with a nation-state. These carriers use government subsidies to offer an incredibly luxurious product but at the same time keep fares artificially low, Bastian said, an argument that the US majors have been making for years and which the ME3 dispute, saying they aren’t state-subsidized. Still, Bastian reiterated his position that if the governments pulled subsidies the airlines would fail —especially considering that Etihad announced a loss of $2 billion last year.
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