The U.S. Airline Industry Remains Fiercely Competitive
For decades, U.S. airlines, unable to cover costs of capital or invest in better service, were plagued by cycles of bankruptcies and layoffs. Customers and employees both felt the impact of the “lost decade” following 9/11, when the entire U.S. airline industry suffered severe financial issues.  Over time, mergers, deregulation, and restructuring fortunately have helped stabilize the industry, allowing U.S. airlines to reinvest in their businesses and employees at historic levels.

The U.S. airline industry reflects different business models to provide customers with maximum choice:

  • Global network carriers, like Delta, American and United provide worldwide reach and connect the world through a hub-and-spoke model,
  • Regionally focused network carriers like Alaskan and Hawaiian,
  • Carriers which provide point-to-point service such as Southwest and JetBlue,
  • and ultra-low-cost carriers such as Allegiant, Frontier and Spirit.

The competition within and among each model drives prices down while providing for the best customer service possible. Today’s all-time high measures of customer satisfaction and airline operating performance reinforce that the industry is taking the right steps and delivering substantial benefits to customers.

 

FOR OUR CUSTOMERS: For its part, Delta is undergoing a broad renewal of its fleet, retiring older aircraft and bringing in new, state-of-the-art jets that are transforming our in-flight service.  In 2017 Delta welcomed the A350 to its fleet – the airline’s new flagship aircraft introducing the award-winning Delta One Suite and Delta Premium Select cabins. The airline is also taking delivery of the new A220-100 domestic aircraft, formally called the Bombardier C Series that features the airline’s widest coach seat.

In addition, over the next five years, we are investing $12 billion in new terminals and improved airport facilities across the country. Delta also is investing hundreds of millions in new technology to make the travel experience more convenient and transparent than ever before. We also continue to invest in our already-unmatched reliability. For example, In 2018, Delta operated a record 243 days with zero cancelled mainline flights, (other than weather other factors outside Delta’s control).  Combined with our Delta Connection partners, we had 135 “brand perfect” days—days without a single cancellation across the entire system.

FOR OUR EMPLOYEES:  Delta’s employee profit sharing program is unrivaled in the world. In the past six years, we’ve shared more than $1 billion per year with our employees, totaling more than $6 billion—a record no other company has matched. Total annual employee compensation has increased an amazing 80 percent since 2008.


FOR OUR FUTURE:
 We’ve placed the airline on the best financial footing possible by paying off more than $10 billion in debt in the past decade and investing nearly $9 billion in our pension fund, steps that ensure Delta’s long-term financial health. 

Global Partnerships
Airline passengers today expect seamless travel options across the globe.  However, various laws and practical limitations prevent any single carrier from providing direct service to every destination to which its passengers want to travel.  As a result, airlines have established cooperation and built partnerships between carriers to provide passengers more seamless service.  This international cooperation can range from arms-length “interline” arrangements between carriers, to codeshare arrangements, to fully integrated, international airline joint ventures (JVs).  

 JVs are the functional equivalent of a merger between carriers on certain routes.  They allow U.S. and foreign airlines to achieve a high level of economic integration that provides substantial consumer benefits.  JVs currently are the most efficient means to link separate and complementary airline networks.  By linking their networks, Delta and its international partners offer their customers attractive offerings (in terms of price, schedule, and efficiency) across a much larger global network with nearly the same efficiency as a single carrier.  For example, a customer traveling from a small town in the United States can travel to almost any city in Europe by purchasing a single ticket that will take them to their final destination via the partners’ hub airports.

Greater Consumer Choice
Consumers have many choices when it comes to which airline they fly, and they can buy a ticket at a price that fits their budget. When the industry was regulated, there were only two classes of services—first class and economy. Both were relatively expensive and inaccessible to most middle-class Americans.  Delta now offers four options for our customers to select the product that is right for them—Basic Economy, Main Cabin, Delta Comfort Plus, and First Class/Delta One. At Delta, we are refining our offerings to provide service options that are tailored to specific customer segments, including business travelers, leisure travelers, families and college students.

Smaller Carriers are Expanding and Adding Competition
Since 2000, Southwest, Alaska Airlines, Frontier Airlines, Allegiant, JetBlue and Spirit have all expanded operations, fleet size and destinations, making the industry even more competitive. Not only are smaller carriers expanding in the number of passengers but they also have grown their share of the market, showing that competition is robust.

Deregulation was a Success
In 1974, when the government still regulated U.S. airlines like a public utility, dictating where they could fly and what fares they could charge, an airline had to charge $1,442 in inflation adjusted dollars for a one-way flight between New York City and Los Angeles. When the airline industry was deregulated in 1978, airlines were free to innovate new business models based on free market principles, which led to better service and lower fares.1  In 2017, the average cost of that same New York-Los Angeles flight was $351.


There are a record number of flyers year-after-year because the ability to travel within an affordable budget continues to expand.  Delta, for example, experienced the busiest summer travel season in its history in 2018.  Yet in many ways the airline industry remains among the most regulated (and heavily taxed) industries in the United States, subject to thousands of regulations across 20 different federal agencies.  The FAA can and should have a strong role in regulating safety—the safety of the traveling public is the highest priority for Delta.

However, the current success of airline deregulation—evidenced by record low fares and record high numbers of air travelers—is a result of the government reducing its role in the business of aviation. Today, consumers have clear choices when it comes to travel, choices that have been created as a result the government giving airlines the economic freedom to innovate and develop different business models, all while maintaining the world’s greatest aviation safety record.

[1] Airlines for America
[2] U.S. DOT Data for 2017