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Delta Air Lines has been working very hard to retain its most loyal customers and spark elevated customer engagement among newer consumers, evidenced by it adding benefits for Silver Elite members of the airline’s SkyMiles loyalty program.
“We are constantly listening to member feedback and looking at ways to make the SkyMiles program more simple and more rewarding for our Medallion members,” Anthony Black, General Manager of Corporate Communications for Delta Air Lines, told Loyalty360 in October. “Historically, we only offered upgrades on award tickets to Gold, Platinum, and Diamond Medallions. Upon evaluation, we wanted to extend this benefit to Silvers as well. We want award redemption to be a celebrated moment. No better way to celebrate than to be eligible for a first-class seat when you are traveling on your well-deserved award ticket.”
And that persistence has paid off.
For Delta, 2016 was a big year, as CEO Ed Bastian noted during the airline’s fourth-quarter earnings call earlier this month.
“Operationally, we ran the best operation in the industry by a wide margin and we continue to raise the bar on ourselves,” Bastian explained. “We ended 2016 with 241 days of no mainline cancellations and 81 days with no system cancellations, a level of performance that no airline has ever come close to producing on our scale. We know that our operational reliability is a key driver of customer satisfaction and one reason why more customers than ever prefer flying Delta. With our operating performance, combined with the investments we have made in our fleet, products, and facilities, we have seen a consistent improvement in our Net Promoter Scores hitting a record 44 percent in November. All of this is due to the outstanding efforts of 80,000 Delta people and it’s an incredible honor to recognize that with over $1 billion in profit sharing for the third year in a row.”
Bastian is cautiously optimistic that the revenue environment finally appears to have turned the corner.
“In the short term, we will need to see a further firming of current revenue trends,” he said. “And over the medium to longer term, we will keep our capacity in check until we are achieving our 17 percent to 19 percent operating margin target because as we also said at Investor Day, 2017 is going to be a bit of a transition year. While revenues are on a better trajectory, we expect margins will decline 100 to 200 basis points year-on-year in 2017, given the current forward curve and the expense of our labor cost reset.”
But Bastian quickly added he expects margin pressure to peak in the March quarter and, by the back half of this year, “we would be in a position to expand margins as our unit revenue base improves. This should be a very good setup for 2018 and beyond. So as we look ahead, I am optimistic. By executing flawlessly against our core principles, we are confident that we are the right path to return to an improving margin trajectory later in the year. We will continue to be America’s best-run airline, focusing on producing the best operation every single day for our customers. Next, we will continue to strengthen our brand, improving our product and service in the eyes of our customers, and generating a sustainable revenue premium versus our competition.”
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