Delta Air Lines' corporate revenue year-to-date has increased 7 percent compared with 2013 levels, executives reported during the carrier's annual investor day on Thursday.
Delta's biggest corporate gains have come from the financial services sector, from which year-to-date ticketed revenue is up 14 percent. Delta also reported growth from the media (11 percent), automotive (11 percent), banking (9 percent), technology (7 percent) and business services sectors (6 percent).
During the event, Delta executives also cheered the recent decline in jet fuel pricing, but they don't necessarily see that translating into lower fares. If current fuel prices hold, Delta next year is poised to net a $1.7 billion benefit.
"It's wonderful that fuel has run down—we love it," said Delta CEO Richard Anderson. "There's a $2 billion opportunity out there if we hold fare levels constant. But over the very long-term horizon, it's just more conservative and prudent to use a high fuel assumption when you're buying airplanes or making other investments, and then when it comes in lower, hang on to all of it."
If Delta is looking to "hang on to all of it," then it must convince customers that its product and services are not commodities, a philosophy reflected in Delta's new cabin layout and fare bundles. As of March 1, 2015, Delta will divide its cabin into four classes: the premium Delta One on long-haul international routes and some transcontinental U.S. routes and First Class for short-haul international and domestic routes; Delta Comfort Plus, a premium-economy product; standard economy service; and a Basic Economy fare that comes with several restrictions.
Delta chief revenue officer Glen Hauenstein said the carrier would be monitoring performance closely in order to "optimize price differentials" between the different fare types. For example, passengers offered a Basic Economy fare—which, among its restrictions, allows no seat selection or changes—so far have opted instead for a higher-tier fare 80 percent of the time, indicating the differential between it and standard economy is one most travelers are willing to pay.
Some corporate travel buyers have expressed concerns about the Basic Economy fare, which is only for select markets, currently 35, in which Delta competes against such ultra-low-cost carriers as Spirit, but Hauenstein said it was intended to benefit the corporate traveler.
"Travelers were buying [low-cost] seats historically early on in the process, leaving the center seat for the business guy who bought his ticket last," he said. "We were giving the lowest-valued customers the best seats on the airplane, and we were giving away way too much to compete with someone whose product is inferior."
Delta also will look to tweak amenities offered in premium cabins based on customer response data. Comfort Plus seating, for example, will include complimentary snacks on flights longer than 900 miles and complimentary beer, wine and spirits. In Delta One—renamed from Delta's BusinessElite, as the carrier positions it somewhere between the typical first- and business-class offerings of major transatlantic carriers—Delta is adding such amenities as celebrity-chef-inspired food and beverage offerings and "better movies and TV," Hauenstein said.
That commitment to a new price structure, however, means travelers are unlikely to see heavy discounts should fuel prices stay low.
"If you ask me what's the number-one matter that we need to do to make certain that we don't give back all the fuel savings through lower prices into the future is to make sure our product is seen and priced and realized as a premium product for the service we are providing, and not treated as a commodity as it has been in years past," said president Ed Bastian.
Indeed, Bastian said the decline in fuel prices is yet another opportunity for Delta to prove that the airline business has changed into a more rational one.
"There's no question that the level of fuel-price volatility has spooked a lot of people as to what's going on," said Bastian. "What will the airlines do? Will they give it all back in revenue? Is this a peek at the old days? Because we've seen that happen, we've seen that story play out, and we're very determined to make certain that people don't see our pricing strategy or our product and service as a commodity."