Delta chief executive officer Ed Bastian\u00a0has spent much of 2021\u2019s first quarter talking about the\u00a0\u201cyear of recovery\u201d\u00a0to come.<\/p>\n
Buoyed by the hope that vaccinations will restore consumer confidence in aviation and give fuel to the fire of pent-up demand, he is preparing to turn a profit by midyear- something that\u2019s sorely needed after record losses of $12.39 billion in 2020.<\/p>\n
The company saw improvement at the end of last year: It slashed its cash drain in half from the third to\u00a0fourth quarter, and fourth-quarter\u00a0net losses of $755 million paled in comparison to those of American and United\u2014both around $2 billion.<\/p>\n
But\u00a0Delta\u00a0and its competitors still expect\u00a0a bumpy road ahead. \u201cIt\u2019s always darkest before the dawn, and that\u2019s exactly where we are,\u201d says Bastian.<\/p>\n
He expects the US to reach some initial stage of herd immunity in the early summer, barring the emergence of vaccine-resistant mutations\u00a0of Covid-19.<\/p>\n
\u201cThat will be the key to getting travel going\u2014though it will just be one stage, one meaningful step, as we build back to a new normal.\u201d<\/p>\n
The same milestone, he says, may be the trigger that allows Delta to reopen bookings for middle seats, which it has blocked for social distancing throughout the pandemic.<\/p>\n
Another meaningful step, he says, will be the reopening of international borders. \u201cSpecifically in Asia, they will be very conservative (about this),\u201d says Bastian. \u201cBut in 12 to 18 months, I believe international travel will be back.\u201d<\/p>\n
That\u2019s a while to wait. But the upside, he explains, is that travellers will return to find the aviation industry improved in many ways.<\/p>\n
The pandemic and the events of 2020 have led companies and their leaders to reinvent themselves with an eye toward sustainability, resiliency, and inclusivity\u2014inspiring industry-wide improvements that will far outlast Covid-19.<\/p>\n
Sustainability, diversity\u00a0<\/strong><\/p>\n Last February, Delta made a commitment to spend $1 billion on greening its operations over the next decade, with the goal of becoming the world\u2019s\u00a0first carbon-neutral airline\u00a0through the use of alternative fuels, carbon offsets, and improved recycling and waste-reduction efforts.<\/p>\n \u201cWe have to set the stage for the next generations that will follow me and follow us,\u201d says Bastian, framing sustainability efforts as both moral\u00a0and economic\u00a0imperatives. \u201cYou can\u2019t have a business opportunity and platform for growth if the world does not see your product and service contributing to society.\u201d<\/p>\n Certainly, it would be easier for many to accept the socioeconomic benefits of the\u00a0$1.7 trillion travel industry\u00a0if massive quantities of jet fuels were not required.<\/p>\n \u201cWe know, within our industry, the footprint we create is somewhere around 2% to 3% of the world\u2019s carbon footprint,\u201d says Bastian. \u201cLeft unattended, that number will double in the next 10 to 20 years\u2014so the more that join us on this mission, the better.\u201d<\/p>\n Counterintuitively, sustainability is also a lynchpin to\u00a0restoring business travel\u00a0after the\u00a0pandemic.<\/p>\n With ESG (environmental, social, and corporate governance)\u00a0investments taking a more important role than ever, many companies that use Delta for\u00a0business travel needs are reevaluating their carbon footprints\u2014particularly in the tech sector.<\/p>\n \u201cWe don\u2019t want them to get to net zero by eliminating air travel,\u201d explains Bastian, \u201cso we have to ensure that the work that Delta is doing to save its own footprint can relate to [their] strategies.\u201d<\/p>\n The same can be said about the company\u2019s\u00a0diversity and inclusivity efforts, which have been a personal focus for Bastian since the 2020 protests\u00a0surrounding George Floyd\u2019s death.<\/p>\n Delta committed to doubling Black leadership roles within the company by 2025, doubling its spending with Black-owned businesses, and overhauling its talent acquisition strategies to create a better pipeline for Black professional development. (The company is also tracking its progress on those goals\u00a0in a public way, for accountability.)<\/p>\n Like the greening plays, these inclusivity goals are also good for Delta\u2019s bottom line. \u201cWe will best serve our customers and connect the world if we reflect the world,\u201d Bastian says.<\/p>\n \u201cWe\u2019re stronger when we have more points of view expressed around the table, and we can better anticipate our customers\u2019 needs\u2014better relate to them when they get onboard our planes\u2014if they are being served by people that look like them.\u201d<\/p>\n In an environment in which traditional loyalty\u2014the points and miles kind\u2014has been\u00a0increasingly devalued, these efforts may also serve as an important way to attract and retain customers.<\/p>\n \u201cThe younger generations of today are demanding this,\u201d explains Bastian. \u201cConsumers are demanding it in increasing numbers and giving their loyalty to companies that reflect their own values.\u201d<\/p>\n The changing definition of leadership<\/strong><\/p>\n Waiting for government to fix the big problems of our day is\u00a0not an option\u00a0either, says Bastian, especially as many are so politically fractured. With such topics as\u00a0sustainability and diversity wielding\u00a0global impact, it\u2019s important that global companies shoulder some responsibility in designing solutions.<\/p>\n \u201cWe all have our roles to play. In as divided a time as I can ever recall, we can\u2019t leave it all to government. The business world has to step up and be accountable,\u201d he says.<\/p>\n That\u00a0focus on sustainability and diversity has earned Bastian\u00a0plenty of praise,\u00a0as well as critics who say he\u2019s become too political.<\/p>\n But Bastian believes that 2020 rewrote the rulebook for a lot of things, including how to be a good leader.<\/p>\n \u201cAs a corporate CEO, you\u2019re trained to stay out of the firing line of any topic that generally is not specific to your exact business mission and purpose,\u201d he says.<\/p>\n \u201cBut that\u2019s maybe more broadly defined than ever these days\u2014and I think our customers, our society, and our leaders throughout the world have a voice when they see inequity. Or else, silence speaks as well.\u201d<\/p>\n The future for middle seats<\/strong><\/p>\n Delta\u2019s commitment to blocking middle seats during\u00a0the pandemic has been a public relations triumph for the company\u2014one that is currently\u00a0slated to last through April.<\/p>\n Pressed as to\u00a0whether that expiration date would stick, Bastian concedes that the popular policy is\u00a0likely to be extended until summer.<\/p>\n \u201cWe know it\u2019s safe to sit there,\u201d says Bastian, \u201cbut we\u2019re going to follow the confidence and comfort of our customers.<\/p>\n When we see demand for those middle seats start to pick up, that\u2019ll be the signal to us to start selling them.\u201d<\/p>\n While Bastian is bearish on international travel in 2021, he feels strongly that domestic air travel will make a strong return this summer, in step with the US vaccination program.<\/p>\n If that prediction pans out, so will his current plan to start booking middle seats at the same time.<\/p>\n What won\u2019t change are all the new protocols put into place around cleanliness and safety. Antimicrobial bins at TSA, mask-wearing rules, and state-of-the-art air filtration systems are here to stay.<\/p>\n Business travel reborn<\/strong><\/p>\n Bastian also sees a new version of business travel supplanting the traditional two-meetings,\u00a0in-and-out, road\u00a0warrior style\u00a0of years\u00a0past.<\/p>\n It\u2019s\u00a0one in which a new generation of digital nomads will benefit from cultural exchange wherever they can connect to the internet. \u201cPeople will travel because they can remotely work, and companies will find it helps with retention and costs,\u201d he says.<\/p>\n This version of business travel, says Bastian, \u201cwill be similar in scale from what we know, but the purpose and form will be different.\u201d<\/p>\n That, along with a continued emphasis on private space for leisure travellers, will keep demand strong for seats at the front of the plane, he expects, resulting in a more resilient business model that\u2019s not as strongly dependent on steady business from large corporations.<\/p>\n The bottom line, says Bastian, is that once the pandemic ends, \u201cthe real value for travel will be clear\u2014and people will place a higher premium on that.\u201d<\/p>\n
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