Delta bullish on the return of business travel, despite 'alarm bells' of skeptics
Not so fast on those predictions about the death of business travel following the coronavirus pandemic.
Delta Air Lines aggressively forecast that corporate travelers would return in the second half of 2021 and credited its strategy of keeping the middle seat empty for luring an ever-increasing share of them.
“I think business travel has a very strong opportunity to return over the next two years and we will be well-positioned to get it,” CEO Ed Bastian said Tuesday on Delta's earnings call as the carrier led off airline industry fourth-quarter reporting.
Bastian continued his assault on tech-inspired predictions of a permanent business travel decline due to the rise of Internet video conferencing. Notably, billionaire Bill Gates has pontificated that more than half of business travel "will go away" following the pandemic.
Delta does not share that view. When an analyst questioned the carrier's strategy of adding more premium seats as it rebuilds its fleet, Bastian responded, “I wouldn’t draw the conclusion that corporate travel is impaired at all."
“I don’t think we should be worried or ringing alarm bells as to the future of corporate travel,” he said, noting that cost-cutting Delta has 200 fewer airplanes than it did at the start of the coronavirus crisis.
Bastian said Delta expects that “sustained recovery will begin in the second half of 2021.” The carrier will be at breakeven or better by the second quarter, he said, after suffering a $755 million net loss in the fourth quarter. For the full-year, Delta's loss was a staggering $12.4 billion. Daily cash burn was $12 million in the fourth quarter and will total $10 million to $12 million in the current quarter.
“Demand will start to accelerate as vaccinations become more widespread,” Bastian said.
Guide: Which US airlines are blocking middle seats?
Delta President Glen Hauenstein said that keeping the middle seat empty is boosting Delta’s reputation among business flyers.
“The brand was never stronger (and) our revenue premiums have never been higher,” Hauenstein said. “Customers value the Delta difference (including) the least amount of sellable capacity,” as well as the carrier’s safety standards during the coronavirus crisis and its workforce.
Hauenstein laid out a scenario for a three-phase recovery.
In the first phase, which continues fourth-quarter trends, demand choppiness will continue, with ticket sales down 50% from 2019. In the second, likely to come this spring, customers will start to regain confidence and will buy tickets for travel farther into the future.
More: Delta moves up Boeing 717, many 767 retirements amid coronavirus fleet reset
In the third and final phase, which Hauenstein put in the second half of the year, vaccines will become more widespread and Delta will see “sustained improvement of demand and yield," he said, adding that leisure travelers will return before corporate travelers.
During the call, Hauenstein recalled a Delta slogan, “Delta Is ready when you are,” to indicate that Delta “will be ready to serve our corporate customers.”
Bastian cited a survey of Delta’s large corporate customers, which showed that 40% anticipate being fully back to 2019 business travel levels by 2022. Another 11% anticipate a full return by 2023. In contrast, 42% said they aren’t sure when they will be back and 7% said they will never be back.
Farewell: Delta says goodbye to the Boeing 777, the one-time ‘queen of our fleet’
Despite “all the dialogue and speculation about the death of business travel,” at least 51% say they will return by 2023, Bastian said. If just half of those who are reluctant return, “that gets you 75% of the way back no later than 2023,” he said, noting “that’s a very pessimistic view.”
Bastian was non-committal when a reporter asked when Delta will again begin to sell middle seats. So far, the carrier has said it plans to block them through March 30.
Hub outlook: Delta Air Lines ‘committed’ to new Boston hub; Austin, Raleigh focus cities
“We've not made a decision beyond the end of March relative to when to unblock the middle seats," Bastian said on the call. "We have some time to continue to look at that. I think it's going to be very much driven by customer demand, customer input, the confidence customers have in those seats."
Empty middle seats are “one of the important reasons why Delta has been able to earn an even higher revenue premium than we’ve always had,” he added. “We want to be very careful as we make that decision.”
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Intro offer
Annual Fee
Recommended Credit
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
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Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
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- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.