MIAMI — One of the world’s most prolific and thriving airline CEOs is Ed Bastian. He was appointed as Delta’s top executive in 2016 and, since then, has expanded the airline’s global footprint through innovative partnerships and a unique managerial style that will undoubtedly create a benchmark for future case studies.
Bastian took over the reins from former CEO Richard Anderson, who brought Delta out of bankruptcy and paved the way for the utter success that the Atlanta-based airline is today.
Airways Managing Editor and Senior Partner Chris Sloan sat down with Bastian in his Atlanta office, where he revealed interesting tidbits of his day-to-day chores as the CEO of the world’s most profitable airline.
Good afternoon, Ed. Very cool shoes you’re sporting today!
Thank you. Yeah, It was my birthday present last month. So I’ve been having fun with these.
You sit at the very desk that Delta’s founder, C.E. Woolman, occupied. That’s the equivalent of the Oval Office’s desk but in the airline world. How does it feel to be sitting there?
Yeah, (chuckles) in Delta terms I guess. It’s awesome.
You know, there’s a lot of honor that I feel sitting behind that desk. It’s an awesome opportunity to run this great company and to use the same.
It’s not just the desk, it’s the same building, the same office that Mr. Woolman operated out of and as a result of that, you realize the responsibilities you carry.
You have lots of responsibilities and pressure. But it seems you’re having a blast. Tell us what is it about this job that you love
I think it’s the greatest job in the world. I love the people. I love the company. I love the competitive aspect of what we do.
It’s a fiercely competitive business, as you know. It’s a dynamic business. It’s fast-paced and every single day’s got a different set of challenges and opportunities attached to them.
But it’s also a job where you’re out in the world and you’re making people’s lives happen.
Increasingly, we call this company a lifestyle brand because we do make business, travel, entertainment, and adventure, all come together, on a scale like never before. And we’re doing it at a level of performance and excellence that’s never been seen in the industry by any carrier.
[blockquote style=”1″]And so when you have a team like that that’s motivated to win; you just keep them fired up, hungry and humble at the same time.[/blockquote]
We also know how tough it is. But that brings great joy. So I, I look at it from my own personal standpoint as a great honor and opportunity, not a stress, not a burden to carry.
I wouldn’t have it any other way.
You have become somewhat of a celebrity to your employees. How does it feel to be a selfie magnet?
(Laughs) Selfies are fine. I’ve somehow got that reputation. So our communications team likes to build time in for those.
20 years ago people wanted an autograph. Today, everybody wants a picture, right? It’s cool. I’ll worry when they don’t want my picture.
Not many airlines are honored with the Fortune 100 Best Places To Work award. Delta doesn’t have a unionized frontline cabin staff, and it is also recognized as one of the top companies for millennials to work for. What’s the secret sauce in the Delta DNA?
Well, the DNA is the spirit of the company. The people really feel bonded to each other and bonded to the customers and a bond to perform.
I talk about a lot of companies and it’s common in corporate speak to be all about the customers and developing everything to focus on your customer. We like to say our leadership team is obsessed with our employees.
We really do spend a lot of our time talking about our employees. We talk about our customers as well. But employees, giving them the tools to then obsess on customers and that obsession with our employees penetrates.
People feel that direct connection and that direct relationship. And one of the reasons whether it’s the selfies or the videos or the enormous amount of employee events, we try to be as visible as possible.
[blockquote style=”1″]We want all those 80,000 people just to feel like they’re connected to what we’re doing. What Delta does is honorable. It’s a mission. We’ve got a calling in this business and we’re all together.[/blockquote]
Really, it’s the ultimate team sport. Another thing I love about the airline space as the ultimate team sport because if any one group falls, you know, that we are only as strong as our weakest link. And that is very true here.
You were close to Richard Anderson. But there are differences between you two from a managerial and strategic perspective. How do you see your leadership differing from Richard’s?
Well, Richard did a great job leading us out of bankruptcy. The company needed that strong core, that strong leadership style.
He was, as we all know a very direct, very candid leader.
People always knew what Richard was, where he was going and that attracted a lot of attention, particularly in an industry that, that had been rudderless for years. So his style, I think it was perfect at the time.
He also had the background at Northwest.
So as we’ve merged the two companies, the two cultures, and people, we knew where all the skeletons were in the closet before we opened the door. We knew what we had to do. It allowed us to be very, very focused in speed and a pace of activity.
We’re in a different phase now. I think that all leadership styles have a life to them and we’re now into the phase of life where we’re actually investing hard into the brand, investing hard into our customer experience, taking what we’ve built together, and bringing it into a new level.
Just like we did when we went through restructuring, the bankruptcy, many of us were there, including me, kind of got us off the floor and got us into a position where we could compete again.
Richard put us there.
He allowed people to believe we could win and inspired that and guided us to that point.
And now we’re to the level of let’s go, not just win. Let’s create a standard on a worldwide basis not just a US industry basis, or against any company out there in terms of how we look at ourselves.
We look at ourselves broader than just an airline space. I look at consumer brands and consumer products and consumer patterns to learn from.
We’re a consumer company—we’re a travel company, we’re an airline, but we’re also a consumer company. And in that consumer aspect of it, we have so much more to gain and learn.
The aviation industry has been a ‘story of addition’ in the front-end of the cabin, but a ‘story of subtraction’ for the rest of the customers. You, however, in Economy Class kept the embedded IFE, the Boeing 777 with nine-abreast, and you brought back hot meals on Transcon flights. What’s the ROI on these investments? And is there a revenue premium attached to it?
Well, we on several levels, decided that we weren’t going to win by being the lowest cost. You know, we had to have a revenue premium. We knew we couldn’t be a commodity player. We needed to differentiate ourselves in the market.
[blockquote style=”1″]A lot of it started with building that: The strong operational foundation, the on-time machine, the reliability that people came to expect of us, which is great. And so that’s the base premise.[/blockquote]
But then on top of that, now we’re about how do we delight our customers. We were the first with Wi-Fi (on all flights). We were the first out there among US carriers with lie flats. We were the first out there with direct aisle access.
And we’re on a theme here that we continue to push the revenue premium because that’s where our margins in the business are.
[blockquote style=”1″]You compare us to our biggest competitors, American and United. The reason why we have the margin advantage that we have, despite paying the best profit sharing in the industry, is we have the revenue premium to sustain it.[/blockquote]
Literally, the hub structure is part of it. You know we’ve got great hubs here in Atlanta, Minneapolis, and in Detroit, but it’s also the premiums over the US.
We estimate on a like for like basis, we get close to a 20% premium to the overall US industry. And internationally, that’s where we’re focused on what we can do to improve our premium scores not only domestically but internationally as well.
Let’s talk about the DeltaOne Suites. Are you actually extracting a premium over your competitors and previous DeltaOne product?
We are. And while it’s early because the product is still new into the market, I think it will continue to attract a premium. And it’s not just for the suites, but Premium Select that’s also exceeding expectations in terms of the premium we get over the main cabin.
Delta seems to be an ‘industry contrarian’… going completely on its own way. Your fleet decisions, Traynor, the Delta passenger experience, abandoning A4A, and even leading some controversial fights. Do you consider Delta an Industry Contrarian?
I guess that’s what happens when you’re a leader in the industry. You get out and you take the risks.
Ten years ago that we agreed that we were not going to be working in an industry where there were more things out of our control than within our control.
These are the classic airline concerns, whether it’s fuel prices or whether international challenges, you have to so much out of your control, you lose control.
We said we can’t adopt that mindset that we’re going to be victimized by others or other control factors.
We had to figure out how we’re going to take control of our destiny and that led us into different channels such as Traynor and the CSeries, and as you know, we’re the first one we got out of all the (50 seat and below) regional jets early.
We did the deal with Southwest to take the AirTran 717 fleet, which was a home run for us.
And that was a game changer, wasn’t it?
That was a Game Changer. I think that was probably one of the biggest deals of all the deals in terms of impact.
We’re investing in, in our international partners, not just being partners with them. We’re actually inside the boardroom and we’re influencing the direction and the strategy.
A lot of that’s just design on that we want to control the outcome here and we want to have that within our grasp. And we also have a bigger aperture.
We want to grow up, we want to be international.
[blockquote style=”1″]We believe while we may be seen as one of the strongest US carriers we want to be seen as the strongest international carrier. And that’s also pushing the boundaries.[/blockquote]
You’re seeing it’s allowing us to recruit different types of people from different industries.
Call it contrarian, and they don’t all work, but you also have to have an appetite to take chances.
I’ll tell you, that’s one of the hardest things with our success, that success actually pulls you away from continuing to be a contrarian. And continue to do unconventional things, but it’s been working for us.
In a global situation, where different countries and regions have different economic cycles, the notion is that you’re kind of buttressed. What do you think?
We are pretty balanced.
So, is the Bombardier CSeries—now Airbus A220—essentially filling a similar role to this game changer notion as with the Boeing 717?
We have had great success with the 717. And, since 2009, when we came out of the merger with Northwest, we have significantly reduced our 50-seat aircraft flying.
It was our largest fleet type and that number today is down to about 100 and that 100 is going to go away over the next several years. So we need to find ways to continue to up-gauge, to continue to create bigger opportunities. At the same time, while the 717 was a great option, it was a used aircraft strategy.
We need to find something that’s going to be more fuel efficient, something that’s going to create a greater range, and a greater bandwidth of options and the CSeries (A220) fit the bill. We got a great value out of it for being a launch customer.
When I look back, I think we’re going to say that was another opportunity where everyone was going left and we went right. And we’ll see.
Can you tell us what kind of missions the A220 will be deployed on that the 717 is currently not capable of tackling?
I think anywhere you see our two-class regional jets or some of our 717s that want to get larger.
We’ve invested in focus cities, whether it’s LA or hubs.
Many hubs want to take advantage of the range. You’ll see that flying longer distances then say our 717s or two-class RJ.
So I think those would be the types of opportunities we’re going to open.
Let’s jump on the CSeries dispute and the tariff tiff. You said, “We’re taking those planes for the deal we agreed on, regardless of the tariffs…” Did you know something we didn’t? Did you see any suggestions that Boeing’s interference in your business might have pushed Bombardier into the hands of Airbus?
No, I wish I had that level of foresight.
Everyone’s clear on what Boeing was trying to do. I felt so strongly about the fact that Boeing was trying to interfere in our business, wasn’t competitive in the marketplace and was hiding behind the government to create opportunities that should not be availed.
But I did not see Airbus coming in and stepping in and saving Bombardier or the CSeries.
I knew they were talking. I was aware of what was going on, but I think a lot of things had to come around to create the opportunity that we solved today.
But there’s a level of leadership that you take, you believe in this, and this is going to work.
It was obviously critical to Bombardier the opportunity to bring it to market. And we’re going to fight tooth and nail to create that opportunity.
At the same time, we do have a good relationship with Boeing. If you go to talk to the Boeing guys today, they’ll say that Delta did what it needed to do, and there’s no grudge.
With that behind you, you’ve gone on record saying that Delta would consider Boeing’s NMA as a launch customer. In your opinion, what would that plane’s perfect specifications be to Delta?
We think about that plane it would replace, the 767s and 757s.
We have 80 767s, about a hundred 757s. We want something in the 225 to 275-seat category.
We want to take advantage of the fuel efficiency and the lighter structure, the modern day amenities for that aircraft and I think the range is going to be an important determinant, as well as making certain Boeing isn’t overbuilding the aircraft.
And that’s why we want to be in there if given the opportunity to be an early, early customer.
Do you see a place for the Airbus A350-1000 in your fleet? Since the Boeing 747-400 was retired, perhaps an up-gauged A350 or even a 777-9X could become your new flagship.
We’ve been moving the other direction, as you know, but you never say never.
[blockquote style=”1″]The A350-1000 could be interesting. We’re growing internationally.[/blockquote]
I’ve set a long-term ambitious goal that our international revenues would rival our domestic revenues, which implies that we’re going to grow international over the next 10, 20 years at a faster clip than we will in the US.
And in order to do that, you’re going to have some greater fleet needs on the international side. So it could be a larger aircraft.
We’re opposed to four-engine aircraft, but we’re not necessarily opposed to a larger A350.
But it is quite interesting to see that Delta is no longer operating anything larger than a Boeing 777-200ER/LR or an Airbus A350-900
Well, when you think about where we’re going and you think about what we’ve built now in London, what we’ve built in Korea with Korean Air, where we’re going with many of these large partners, it’ll bring more and more traffic flows to those hubs.
So I can see opportunities for larger aircraft down the road.
Let’s move on to your network. Boston was underserved for years. Today, JetBlue moved in and established a strong business. Delta moved in as well, quite aggressively… just like it did in Seattle, on Alaska Airlines’ turf five years ago. If Delta’s move into Seattle was for Asian traffic flow, is Boston good for European traffic flow? What’s the end game goal here?
Boston is a good market. It’s got some great business. It’s got a good international base to fly from.
You don’t need the big international wide-body stuff to operate to Europe and we already had a great facility there.
It just thrills me as I go around our network and looking at all the airport needs we have.
We’re investing aggressively, whether it’s LaGuardia or LAX or even Atlanta.
At Boston, we already have the airport. So I asked, “Why aren’t we filling it up and what are the opportunities, what would it be?”
And then looking at the market, from a little different perspective and we’ve had good success with the growth as we started to build the growth back. I think it’s a perfect complement to what we do up in the northeast.
And do you see Europe increasingly as part of the Boston equation? You can do things in Boston that JetBlue can’t…
Exactly, and that’s how we see ourselves in Boston—with all due respect to JetBlue—as Boston’s international airline.
Can you draw similar strategic parallels between Seattle and Boston?
We came at it from a different construct.
Seattle was very much about Asia and again, controlling our destiny because Alaska was very clear that they wanted to remain open to doing business with any party, and were not interested in an exclusive arrangement with Delta.
So that forced our hand.
Boston’s a different set of considerations. We’ve already got the footprint there. We’ve got the facility there. We’ve got a good market there. It’s a good way to reach Europe at a low-cost base.
You said Delta can be profitable in a $100/barrel environment… Even with the dramatic run-up in fuel costs of 55% in the last year, increasing labor costs, and the industry-leading profit sharing program that you have, Delta is perceived as a high-quality, stable investment grade stock to investors. Does ‘One Delta’ play into this?
I’d say One Delta is different.
Let’s talk about fuel and rising costs. Absolutely, we need to figure out a way to combat rising fuel costs. The way we need to be able to do that is be able to pass it along in the ticket price.
And now there’s a period of time when you have 50% run-up in fuel prices. It’ll take some time: six, nine, 12 months to eventually get it into the pricing algorithm.
That’s where it needs to go. And we’re having success at it. Because it’s moved quickly, the pricing hasn’t been able to keep track with it, but I’m confident over time that we will.
One Delta is different, it’s about running a better airline. We are a company that has some very, very large operating groups. We call them divisions – flight ops division, our in-flight division, our maintenance division, and our airport’s division.
And we have really done a great job, I believe in optimizing within each of the divisions or silos, their operating responsibilities in how to create the most efficient, reliable cost-effective set of operations we can. But it’s been at the expense of working horizontally across the entire company.
And, anytime you have really strong verticals in a business—and I think the airline industry is somewhat unique for the strength of its verticals—each one of the verticals having to operate and move, with great technical depth but also be able to move seamlessly.
I think airlines probably haven’t done as good a job thinking about the horizontal and so when you have strong verticals, by that definition, you have weak verticals in terms of the handoffs. And One Delta very much is about being one company and thinking about the organization as a whole.
We’re thinking about the product that we’re delivering to the customer, about making longer-term planning assumptions, and sticking with them rather than keeping up kind of a short end focus and just kind of piecemeal the information or continue to tweak and make changes right up to the last minute on schedules.
That totally destroys your network efficiencies and your ability to plan for the longer term.
So, to me, it’s about running a healthier company, running a more effective company.
And I think taking the stress out of the system too because this is a stressful business and when you have all of the operating divisions tied down with a high level of distress, they look at where are we going to go now.
And the only way you can go outwards is with each of the operating groups involved. I think we’ll save an enormous amount of money that we can take and re-invest back in the business that we can grow from and we can actually give our employees a better product to serve.
Was One Delta triggered by some of the operational challenges that you have? Let’s re-visit the storm, the IT meltdown, the Atlanta power outage… Did you turn these bad events into learning moments?
A little bit. When we had that terrible set of thunderstorms that hit Atlanta and knocked us out for 36 hours… Oh yeah, we learned a lot.
We knew that our IROPS (irregular operations) of the situation was not what it needed to be, but we thought it was a hell of a lot worse than it should have been. And we used it as a learning moment to sit back and ask ‘What can we have learned from this process?’
What we did is we learned the biggest thing we had to do is improve the communications and the transparency and the flow of information amongst the operating groups and with our employees.
So it was small in isolation, but we started to think if we did this on a grander scale and we had plenty of opportunities last year to learn from it.
[blockquote style=”1″]We went from there to the hurricanes last summer to the snowstorm in Atlanta to the blackout at the Atlanta airport, to some weather events this year as well.[/blockquote]
Our IROPS management has gotten increasingly better. We said if we can do that in irregular times, we could also do it in normal times and run a better airline as a result of that. So, whether it was part of the impetus, not entirely, but it was part of it.
Well, let’s hope you’re not tested again… but, this time around, would recovery be any different?
It will be. You look at how long it took us last April with those storms when Atlanta was knocked out.
This past December when we had the blackout, we were basically up within 24 hours after just knocking out Atlanta, I’d say in the old world that probably would have had us down for several days.
Changing the topic to alliances, strategic investments, and joint ventures… Let’s chat about Virgin Atlantic first. They have a great onboard product, but they have had their fair share of economic and competitive challenges. How happy are you with your investment in Virgin Atlantic?
We’ve been really pleased with the Virgin relationship, what you said is right. We’ve learned a lot.
Very pleased with Richard Branson has stayed very engaged with us and in the process and he’s become a big Delta fan and loyalist as part of that. We got to pull him into the family.
The Virgin deal was very much about Heathrow and access to Heathrow and our ability to access it on a relatively cost-efficient basis.
Once you’re into Heathrow, that allows you from an international perspective—and a business perspective—to be able to be competitive in places that historically we hadn’t been.
Ten years ago we didn’t fly to Heathrow at all. We didn’t have access. We didn’t have rights to fly to Heathrow.
Not only did that limit our ability to be seen as a true international player, it also knocked us out of a lot of big corporate arrangements with banks and the big corporations because you needed to have Heathrow as part of your offering in order to be able to make the corporate deals work on the other side of it.
So, as soon as you have Heathrow, then you have knock-on effects in other parts of the business, including the US business and everything. So it was a statement about where we were going as much as anything.
It wasn’t as much about the Virgin company or the Virgin brand.
[blockquote style=”1″]And yes, they’ve had a tough time recently because of Brexit, because of some currency challenges but they’re doing fine. They’re cash positive.[/blockquote]
We continue to look for opportunities down the road, as Heathrow hopefully will expand at some point.
If the third runway ever does get constructed, that’s an opportunity for us to grow at Heathrow and they’re a really good partner.
We learned a lot about the consumer mindset there. We talk about the importance of brand in our business and competing on quality, rather than competing exclusively on price and Virgin is the ultimate competitive weapon that we deploy on brand and we’ve learned a lot about our product and the brand and how to manage a great brand in this business from them.
How about Korean Air? They’re your most recent joint venture. What are the opportunities you expect to have with them that you did not have at your Tokyo-Narita hub?
Well at Narita, even in its heyday I think we had 20 airports and beyonds that we carried past there and it never was terribly profitable.
Flying to Japan was good, but the airplanes stopped there and it was really utilization flying we were doing a lot of.
Today, we’re down to less than a handful of routes beyond Narita, but going over to Seoul where we have 80 beyonds that we can serve.
And so you think about the utility to sell to a US customer.
Now you’ve opened up all of Asia on a one-stop basis by going through Seoul. Which with Narita we didn’t have the access and the ability to do since we didn’t have a partner and we didn’t have extensive beyond flying there.
[blockquote style=”1″]So, the utility of that hub, Narita versus Seoul, is off the charts and it’s off to a great start.[/blockquote]
Korean is a great partner. Though we’ve had our ups and downs in our history over the last ten years, I’ve personally stayed very close to the chairman there and we were able to get things done. And it’s working well for both of us.
Looking ahead to the next five years, what concerns you the most and excites you the most?
What excites me the most is the opportunity to continue to lead the industry.
We may be sitting at the top of the industry rankings and in a lot of regards.
[blockquote style=”1″]We may be sitting at the top of the industry rankings in a lot of regards. For us to continue to improve, because “Keep Climbing” is more than a slogan—it’s the way we operate here.[/blockquote]
We’re looking at what’s the next mountain we’re going to go climb and where are we going to take the business next, it’s going to be investments we’re making in technology becoming even closer to our customers to be able to better leverage our data analytics.
While I think we are doing a nice job with what we’ve got, we have a lot of improvements in terms of giving our frontline workers the information to better serve customers and actually creating stickier relationships with the 200 million customers a year that we serve.
It’s incredibly important.
I get very excited thinking about the international opportunities. So I expect in the next five, 10, 20 years the international growth rate will outpace our domestic growth.
That will come about through the partnerships. That will come through investing in a better product.
It ultimately has to come by our customers choosing Delta over any other competitive source.
So, the brand preference, your fleet decisions, your partner choices, the success we’ve had with the Middle Eastern campaign in terms of getting our government to stand up and protect our rates to apply against subsidized carriers… I mean all of that comes into play and it’s creating an opportunity over the long-term to make international a long-term growth spot.
I think we’re the US airline that’s going to take to be able to take the best advantage of it.
I’m also excited about the airports. You think about all of the airport investment.
[blockquote style=”1″]We’ve got $12 billion dollars in investments coming in, so when you think about five years from now with the new LaGuardia, the new LAX, Seattle, Salt Lake City, Atlanta, go down the list.[/blockquote]
They’re going to be different experiences.
These are airports that I’m advocating for our people. They have to be built for the next generation, for the technologies that we don’t even know how we’re going to deploy.
So, whether it’s biometrics, light sensor technology, or taking podiums off gates so that people don’t feel like they need to go queue someplace.
Our roving handheld technology will be able to truly leverage an experience that puts our employees in a position where they can serve and host and not be ticket takers. I get excited when I think about that.
[blockquote style=”1″]And I’m excited about our people. Because we’re in the midst of a hiring campaign. We’re going to be hiring more than 25,000 people here over the next five years. A lot of people are retiring and a new generation is coming in.[/blockquote]
We were just rated as the fourth best place for Millennials to work in the US by Indeed.com. Just think about that. That’s including all the technology companies, and Millennials want to come here.
So, we’ve created a buzz and we’ve created opportunities and adventure that we’re bringing them along.
And I’m excited about bringing that next generation into our industry and what that looks like.
How about the largest concerns and threats to Delta and the industry, as a whole?
You are always concerned about a world that’s becoming increasingly polarized, concerned about people that are pulling away rather than coming together.
Our business purposes are to connect the world. And, we’ve got an anthem here that we’ve coined that no one better connects to the world and I really believe that’s Delta’s calling card.
That’s where we serve.
And when you see forces that try to pull away from that and, you know, whether it’s political, whether it’s economic, there’s a lot of fear and angst, not just in the US but on a global scale.
Those are things that you worry about.
But I know the Delta people are going to overcome that.
I know travel has become part of our lifeblood. It’s what we do.
[blockquote style=”1″]I always tell the story about myself. The first time I stepped foot an airplane, I was 25 years old. And so how I ever got this job, I’m not quite sure yet. But in my generation, flying wasn’t a given.[/blockquote]
You look at our generations today, our kids, it’s like every week, they want to go somewhere else. And so the ability for us to keep travel as part of their way of life and in the blood of how we do business and how we enjoy each other.
I think it’s a really special and cool business. And that’s why I believe even despite all of the angst and the polarized view that we have as a society, that we will prevail.