The airline industry — hammered by the coronavirus pandemic — has seen a recovery that’s been “quite choppy,” according to Delta Air Lines (DAL) CEO Ed Bastian, who insisted that passengers are slowly coming back.
The COVID-19 outbreak is continuing its relentless spread, with the U.S. setting new daily records in confirmed cases, raising fears about the willingness and ability of consumers to continue traveling. In the process, major air carriers like Delta are struggling to survive — having to lay off and furlough thousands of employees.
“It's a couple year journey. Domestic is going to come back faster than international and [leisure travel] is going to come back faster than business,” Bastian told Yahoo Finance’s All Markets Summit on Monday.
“But we're staying focused every single day and continue to see small signs, but encouraging signs, of light at the end of the tunnel,” he added.
Amid soaring new infections worldwide, fears of new restrictions on public life are raising fears over the economy.
However, Bastian insisted that air travel is a relatively safe mode of transmission. A recent study from the International Air Transport Association, IATA, showed just 44 people contracted COVID-19 out of more than 1.2 billion passengers who have flown globally this year.
“We haven't had a single documented case of transmission aboard our aircraft, even though we’re flying one million per week,” Bastian said. He cited low risks of transmission given the filtration systems and sanitation measures employed by airlines, among other factors.
“We're working with experts such as the Harvard School of Public Health, which is coming out with their analysis this week to indicate the safety and the really extraordinary low transmission risk aboard airplanes,” Bastian said, adding that protecting the health of passengers and employees is paramount to Delta’s recovery.
“Wearing a mask is among the simplest and most effective actions we can take to reduce transmission,” Bastian wrote in a memo last week. And, the airline added “460 people to our no-fly list for refusing to comply with our mask requirement,” Bastian said.
Delta also plans to keep blocking the middle seat on its flights, even though a recent U.S. Military backed study showed it was unnecessary. Other airlines are selling the middle seat, yet Delta plans to hold the line.
“Even with 40% of our seats not being sold, we had more average passenger revenue at Delta than the main competitors that we go up against,” Bastian said.
‘We are that good’
Delta is now flying more than one million passengers a week according to Bastian. It’s an improvement over April when passenger revenue was a paltry 5% of what it had been a year earlier.
The COVID-19 era is an entirely different reality when compared to 2019, when Delta posted pre-tax income of $6.2 billion, an almost 20% increase over 2018 and the best in the company’s history. The future looked so good that the airline returned $1.6 billion in profit sharing to its 90,000 employees.
“As we enter 2020, demand for travel is healthy and our brand preference is growing positioning Delta to deliver another year of strong results,” Bastian wrote in January of 2020 — one month before the pandemic decimated Delta and the other carriers.
According to the trade group Airlines For America, A4A, the industry hit bottom in April when passenger volume cratered, down 96% year over year. But, the Transportation Security Administration,TSA, reports passengers moving through airport security last week ran at 64% of what it had been last year at this time.
Bastian insists safety on board planes is drawing customers back, and has never been more important. “Most customers that fly our planes don't even think about their flight safety. We are that good,” Bastian told Yahoo Finance, but pointed out that Delta executives “think about it every moment of the day.”
Adam Shapiro is co-anchor of Yahoo Finance’s On the Move.
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