Delta CEO Ed Bastian's Priorities for 2018

Delta CEO Ed Bastian talks:

• Delta's broadening alliance strategy
• The "airport experience of the future"
• Free in-flight Wi-Fi

Delta has undertaken a flurry of activity this year in building global alliances and joint business ventures, including significant investments in several of its international partners. Those moves earned Delta CEO Ed Bastian a spot on BTN's 2017 25 Most Influential list, and Bastian spoke with transportation editor Michael B. Baker about Delta's progress on that front, as well as its recent record-setting performance in BTN's annual Airline Survey.

BTN: What's the update on your alliance strategy?

Bastian: In Europe, we're well established with Air France-KLM and Virgin Atlantic, and we're working hard to try to harmonize the two JVs to a single JV. That will be one of the things we will accomplish in 2018. We closed the transaction and now are 10 percent owners of the Air France-KLM group and are inside the company and their boardroom, which is a big part of what we're doing here: trying to build foundational relationships for customers. We're not doing it as airline investors. We're doing it to have the greatest impact and influence for our customers as they travel internationally. We found that while commercial relationships or contracts are a great start, the real value, the real alignment and the real investment decisions need to be occurring as owners with similar outcomes. We have a good year planned for 2018 in Europe, and that ownership alignment across those entities will help us make the seams continue to disappear for customers.

In Latin America, with Aeromexico, we closed that in 2017, as well. We feel great about the relationship and what we're building for the future. It's a unique type of JV. It's the narrowbody, and we share the same continent. It's very different than any of our international [JVs]. It's more like a U.S. domestic relationship than a classic international relationship. We currently have more than 100 people we share between our two entities, people working in Mexico City or their people working here in Atlanta.

In Brazil, with Gol, we've seen a nice turn in the market, as well as the economy. 2018 will be hopefully a year of strong growth. It's a market with great potential, and we have a wonderful partner. Gol is doing very well in Brazil. They are the market leaders in the domestic market, and I anticipate we'll have some development there in the new year to speak to at the right time.

In Asia, we're making a lot of changes on our network, bringing our latest technology, the Airbus A350, to Asia, which is an important step in that region. We have a renewed partnership with Korean, where we have gotten [U.S. Department of Transportation] consent, and we're working with the Korean authorities to receive the same support… in 2018. It will bring our two companies very close together, and it will be the largest transpac JV and relationship in the industry.

BTN: Are there still some holes in the network you're looking to fill?

Bastian: There are always a couple of things to work out. You'll be hearing news soon on a couple smaller things [editor's note: two days after this interview, Delta announced a joint business agreement with WestJet], but we have our main partnerships and territories covered at this point. We'd like to have a better long-term solution for India. We started working much closer together with Jet [Airways], and our partners with Air France-KLM have announced a closer relationship, which will help us coming across the transatlantic, as well.

BTN: Virgin Atlantic also has moved to your reservations system. Will we see more movement like that from your other partners?

Bastian: Yes, there will be. We're continuing to improve the technology platform here at Delta. Virgin Atlantic—the implementation went well, but it was the first stage and there's a lot more to come, which we're working closely with them to develop. Based on the success of that, we'll have other partners interested, as well.

BTN: In BTN's recent Airline Survey, travel buyers rated Delta as the top airline for corporate travel managers for a record seventh year in a row. To what do you attribute that performance?

Bastian: The No. 1 reason is our people. When reading the article, I took great pride in seeing the comments from customers about the quality of our sales team, the relationships and our people having our customers' backs and finding a way to get to "yes" no matter how difficult things tend to be. It's a powerful team, and we're going to continue to invest in them and provide support. It's also the people in the business. The sales folks can't do the job they do without running the most reliable airline for business travelers in the world. And the quality of that service, whether it's in the operations or flight teams or maintenance crew. We're investing heavily in continuing to improve the experience for corporate customers, whether it's the new Premium Select [premium economy cabin] we've added to our international product offerings or technology, which we continue to see as a huge differentiator going forward. I don't think we're where we need to be yet, but with the money that we're investing in digital and personalization and the relationship with corporate travelers at Delta, it's a big opportunity for the future.

BTN: Has this year been as strong operationally as past years?

Bastian: [As of Dec. 4, we were in the midst of 49] days in a row now where we haven't had a cancellation on the mainline. We went the entire month of November without a cancellation. That's never been done by anyone on any scale, much less our scale. It's not just the mainline. We're up to Day [18] where we haven't had a cancellation across our entire brand, including all the regional brands. We had to overcome some challenges with the hurricanes, but the team responded in great Delta fashion. [Editor's note: Winter weather in the Mid-Atlantic and Northeast U.S. led Delta to cancel about 375 flights on Dec. 9.]

BTN: What's your outlook for 2018, and what will Delta's priorities be in the new year?

Bastian: 2017 will be our strongest traffic and passenger count in our history, which we're quite proud of. It's something we're seeing across all our regions, not just in the U.S. On transatlantic routes, we're very impressed with how things have rebounded and recovered. The priorities for 2018 might sound a little boring, but it's doing it the same but even better. The operational performance will be a hallmark of ours, and we have continued investments in that, [including] enhancements to our baggage services.

There's a lot of work in the airport department in 2018. We have many investments going on across our airports: LaGuardia, Los Angeles, Seattle, Salt Lake City and here in Atlanta. Many of our big hubs in our network are undergoing a significant amount of spend, and we're building an airport experience of the future for our customers. We want to utilize not just technology that we know but what we see on the horizon, biometrics being a big part of that to enable better screening and more effective and efficient queues and wait times, shortening those through the airport. We're investing in better technology at gates to enhance the boarding process.

We have a lot of work going on in the international space in 2018. The other thing is our visual applications. One of the most important projects we have for the company moving forward is the development of what we call a single view of the customer. We have a treasure trove of information about our customers. Unfortunately, it sits across many databases and applications, and we can't utilize them to the benefit of being able to service our customers in the most effective way at all times. We have big infrastructure and technology architecture work going on to unify our data sources and be able to give our agents and flight attendants and the people handling the sales agreements an account on a personal level so we understand our travelers, their history, our experience with them, what their expectations are and how we can more closely and better personalize their relationship with Delta. 

BTN: What's Delta's distribution strategy going forward, especially with your partner Air France-KLM introducing a global distribution system fee next year?

Bastian: Our strategy is to ensure that we have the most robust and vibrant distribution environment that's going to support the needs of all of our travel partners. We want transparency, and we want to enhance the quality and the access of our products to provide it to as many passengers as possible, and we want to make certain that we have the ability for our customers to meet their travel needs to our individual preferences. I'm not speaking to what's going on in Europe, but our goal is to make our fare and product information as widely available as possible while making certain our customers have the best options and best knowledge of our products. Our products are becoming increasingly segmented, with branded fares and other product attributes that require a deeper knowledge by our customers of the options available to them, and we support platforms that provide a high-quality awareness and transparency and availability of distribution of those product attributes so our customers can make the most intelligent choices they can.

BTN: Delta has been at the forefront in assertions that the Gulf carriers are in violation of Open Skies agreements. Do you see any action from the government on that front?

Bastian: We've had more than 300 sitting members of Congress who have written and fully requested an investigation of the subsidies and the allegations. It's no secret that it's hard to get the majority of any of our representatives, either in the House or the Senate, on the same page; this is a bipartisan issue, and it speaks loudly that it's one of the single biggest violations of U.S. trade agreements that's occurring. It's an issue that's complex, so obviously it's taking time, and we have a number of folks in Washington. I spend a lot of time myself, as I know [American Airlines CEO Doug Parker and United CEO Oscar Munoz] have from their end, on the topic, and I'm optimistic that we're going to hear news from Washington of some breakthroughs on this.

BTN: You've mentioned elsewhere that you expect inflight Wi-Fi will be free sometime down the road. Are we anywhere near that?

Bastian: We need to improve the quality of it before we can talk about making it free. We're investing in satellite technology. Gogo is actively turning on more and more 2Ku satellite technology on our planes, and we're working hard on the certification process and the implementation. The majority of our mainline fleet will be satellite based in the first half of 2018. There are still quality issues that we're working aggressively with Gogo to potentially enable our customers onboard to have the same bandwidth and speed and service level in the sky as on the ground, and once we get there, then we have to discuss the affordability. Where in the world do people pay for Wi-Fi any longer? That's got to go away, as well, so we'll be working on improving the price point as well as we move forward.