Delta Air Lines is focusing on millennials and gen z travelers for future growth, and counting on wealthy baby boomers to pay for expensive premium tickets.
As part of the strategy targeting younger travelers, Atlanta-based Delta said it is investing in more technology — including better Wi-Fi on its planes and personalized in-flight entertainment.
On 100 planes, the airline now has technology for SkyMiles members to log in on their phone, tablet or laptop to a portal with free access during their flights to Paramount+ with Showtime, New York Times games and other services.
It recently tested technology to customize displays on airplane seatback screens, for SkyMiles members to log in and see customized greetings and create lists of favorite shows similar to a smart TV. That will also give the airline access to vast amounts of data on its frequent fliers.
It’s driven by Delta’s rollout of free Wi-Fi on its planes for Delta SkyMiles members, which has prompted nearly 1 million more people to sign up for the frequent flier program.
“These folks are younger,” said Ranjan Goswami, Delta’s senior vice president of customer experience design. “They are more coastally located as well, which is really encouraging.”
Delta is also rolling out more technology for expedited passenger processing through airports.
At Hartsfield-Jackson International Airport, Delta recently added Digital ID bag drop lines in its check-in area on the main level of the domestic terminal, for frequent flier members who have their passport number and TSA PreCheck number in their SkyMiles profile. The airline in 2021 opened a PreCheck express lobby on the lower level of Terminal South with similar bag check using facial recognition.
The younger travelers Delta is targeting “love experiences. They love travel. They love services,” said Delta President Glen Hauenstein. “And they have more time. They’re working less hours in the office and they’re having more time to do what they want, where they want.”
During an Investor Day at its Atlanta headquarters on Tuesday, Delta detailed its strategy to grow revenue, expecting $54 billion this year. Delta also boosted its profit forecast with plans to hit a 10-12% operating margin this year, as many passengers pay more for tickets.
As more boomers retire and work through their travel bucket lists, Delta sees dollar signs and is counting on them to pay for premium seats, first class and other creature comforts for their trips.
For high-income consumers Delta is targeting, “their Number One big ticket purchase priority is premium travel,” said Delta CEO Ed Bastian. “More so than house. More so than car. More so than boat. More so than electronics.”
That’s one reason that even amid fears of a recession, Bastian thinks the current surge in travel will continue for years.
Meanwhile, Delta is still working to recover from some of the lasting consequences of the pandemic.
The Transportation Security Administration said Tuesday it expects record passenger volumes at airports over the Independence Day holiday period, with expectations for nearly 17.7 million passengers passing through security checkpoints from June 29 through July 5.
But Delta, like other airlines, continues to struggle with ramping up trained staff, aircraft delivery delays and regional jet pilot shortages until 2024 or 2025. Bastian has previously praised the lower costs due to the “juniority” of younger staff hired after early retirements during the COVID-19 pandemic.
Delta has been working to train the roughly 30,000 new employees it has hired since the pandemic recovery began, which has affected the airline’s performance. “From someone on the ramp to the cockpit, everybody has to be in rhythm,” said Allison Ausband, Delta’s chief customer experience officer. “That synchronization is starting to happen.”
Delta’s flight schedule at its Atlanta hub is still not fully recovered, and the airline now expects it to reach pre-pandemic levels by next summer.
The constraints have exacerbated the effects of flight disruptions.
With recent thunderstorms driving mass flight cancellations, “The last 10 days have been pretty sloppy,” Bastian acknowledged. “We probably still have another year or two before I’ll tell you that we’ve got the level of service excellence.”
He said the biggest risk to Delta’s growth plans “is our ability to execute that vision reliably,” noting that demand will falter if service is not reliable.
Operational disruptions have driven up costs ― and Bastian said, “gave the politicians a lot of fodder... to come at us” with pushes for more airline regulations to improve service.
Delta frequent fliers
- 130 million SkyMiles members
- Of the total, 25 million are active members, with engagement in the last 12 months
- Of the 25 million active members, 30% have a Delta American Express card
Source: Delta
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