5 takeaways from Delta’s CEO on the future of travel
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If you’re holding out hope for a major international trip later this year, you might want to reconsider.
That’s according to Delta’s chief executive officer, Ed Bastian, in his Monday interview with New York Times editor Andrew Ross Sorkin as part of the Dealbook DC virtual conference.
Bastian discussed the demand outlook, a vaccine requirement, the future of travel and more, as the carrier looks toward recovery from the industry’s worst crisis in decades.
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2021 is the year of domestic travel
Bastian began by acknowledging that there’s an incredible pent-up urge to travel, both domestically and internationally. With many pandemic-weary travelers under lockdown or stay-at-home orders, it’s no surprise that Bastian thinks the latter half of 2021 will usher in a new era for the industry’s recovery.
“The U.S. is our focus for the rest of the year. I don’t see international travel coming back in any meaningful form for probably another 12 months; maybe spring 2022 will be the real start,” said Bastian.
As for why international travel will take longer to recover, Bastian blames “the lack of testing and vaccine distribution” across the world.
Of course, a rumored domestic pre-travel test requirement would nearly decimate any prospect of a meaningful recovery in travel. According to Bastian, “domestically, it would be a nightmare scenario. It would cause our industry to go back at least six months in time in terms of any demand we created.”
Fortunately for Delta and the rest of the travel industry, it appears that the Centers for Disease Control and Prevention won’t implement any domestic pre-travel testing requirement.
Vaccines will be required internationally
As vaccine rollout ramps up across the nation, the “vaccine passport” concept has been floating around boardrooms and newspapers in recent weeks.
Will you be required to have one? Not if you stay within the country, according to Bastian. “A domestic vaccine passport likely won’t be required… I do however expect one to be required for international travel,” he said.
“To force people to get a vaccine to use public transportation gets more complicated,” he continued.
As for Delta employees, Bastian said that those flying internationally will likely be required to get the vaccine. He isn’t ready to mandate vaccines across the entire workforce, however. (Whereas, United chief executive officer Scott Kirby has committed to implementing a company-wide vaccine requirement.)
Bastian is proud that the airline is hosting Georgia’s largest public vaccination clinic at the Delta Flight Musuem.
The future of the mask requirement
Since mid-2020, every major U.S. airline has required passengers to wear face coverings throughout the entire travel journey, from the check-in counter all the way through baggage claim. Then, earlier this year, the Biden administration put the mask mandate into law.
“The government will eventually need to ease up on mask compliance standards. At some point, a mask is a detractor for travel at scale,” Bastian admitted.
Once the virus is contained, some people will likely still choose to wear masks. Others, however, will remove the mask once it’s no longer a requirement.
Blocked middle seat strategy
There’s more to Delta’s blocked middle seat strategy than you might think.
For one, it’s not necessarily an anti-coronavirus measure. As Bastian has repeated time and again, “our goal is to restore confidence in travel.”
The blocked middle seat is just one of the many tools that Delta’s using to convince customers to take to the skies. The move is about “comfort” and “space,” and it’s designed to ease some of the return-to-travel anxiety.
According to Bastian, capping capacity is currently paying off. Delta sees a revenue premium for its commitment to blocking the middle seat.
But, when will the policy end?
“Eventually, we’ll need to sell the middle seat. Right now, demand is quite soft at 35 to 40 percent of our normal revenue base… If consumers tell us that they want those seats to fly with Delta, that’ll be the trigger [to end the block].”
Delta’s environmental impact
In February 2020, right before the pandemic came stateside, Delta announced that it would pledge $1 billion to become fully carbon neutral by 2030.
After nearly a year into the pandemic, Delta’s still committed to its carbon-neutral pledge. “The pledge got cheaper this year since flying levels were much lower than we thought they’d be. For 2020, the cost totaled roughly $25 million, and we’re in the process of making the investments as we speak.”
At the end of the day, “You can’t have a sustainable business model if you’re not creating a sustainable environment for your customers to feel good about what you sell,” Bastian concluded.
Featured photo by Zach Griff/The Points Guy
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