MJ on Travel writes that Delta is highlighting its strong operational performance in its corporate sales agreements. You fly Delta because they’re a reliable airline, not because they’re honest or generous with their customers.
The actual nuts and bolts of the agreement are almost meaningless in the near-term. They’ll pay a financial penalty to corporate customers if:
- Delta’s controllable performance over a whole year is worse than both United and American (and notably, not Alaska Airlines with whom they’re competing heavily against in Seattle).
- Despite this poor performance, companies still meet at least 95% of their committed travel spend with Delta.
They’ve designed the guarantee to be more a rhetorical tool (we have great performance and we’ll stand behind it) than to be an actual incentive (there’s only a payout risk if Delta becomes a worse performer, for reasons within its control, than both American and United… and if companies stick with Delta anyway).
Nonetheless it’s a notable shift in how they’re selling travel. Delta is a strong operational airline, though Alaska’s numbers are at least as good while also viewing their frequent flyer program as an important competitive advantage.
Delta knows what their comparative advantage is. And in air travel, a reliable on time operation is unquestionably paramount especially for the lucrative business market. No matter how good your marketing program is, your airline needs to run well. And when your airline runs better than your competitors’ products, you can get away with a ‘last in class’ loyalty program.