While the travel sector overall presents a mixed outlook for 2023, consumers are booking air travel as seen in the performance of Delta Air Lines in the first quarter of this year.
Reporting Q1 earnings on Thursday (April 13), Delta CEO Ed Bastian said, “2023 is off to a strong start for Delta with record advanced summer bookings, the launch of free Wi-Fi,” and a string of indicators showing that consumers continue booking despite a gloomy economic outlook.
With Q1 advance bookings nearly 20% higher than in 2019, Delta President Glen Hauenstein said consumer demand “was well ahead of pre-pandemic levels” in both domestic and international travel. He added that business travel improved in the quarter “with small and medium businesses ahead of 2019 levels, while managed corporate travel showed steady progress led by international diverse revenue streams.”
Given the demand, Bastian told analysts and investors that “we are planning to grow [Q2] capacity 17% over last year to meet strong customer demand. This growth is, though, a couple of points below our initial plan to fully restore capacity this summer, as we focus on delivering the best operation in the industry and remain prudent in our capacity restoration.”
Digital booking behaviors played a significant role in the uptick. Bastian said going forward Delta will place more emphasis on “innovation in digital technology where we continue to grow our leadership position. Increasingly it’s one of the reasons customers are choosing Delta with significant growth in direct bookings and higher engagement through our digital channels.”
In addition to now offering free Wi-Fi, a project that began before the pandemic, Bastian said improved consumer experience and a redoubled focus on loyalty helped Q1 figures and figure prominently in plans for the rest of the year, especially the key summer travel season.
This all aligns with recent PYMNTS research. According to “The ConnectedEconomy™ Monthly Report: Digitally Divided – Work, Health and the Income Gap” study, “The most significant increase we’ve seen is in the share of consumers using digital to support their travel and commuting needs, using apps, aggregators and platforms to help them do everything from commuting to planning vacations. On average, 14% more consumers reported using these types of digital tools in January 2023 than one year prior.”
In terms of loyalty, Bastian noted that in April Delta “begin rolling out Delta Sync for SkyMiles members, which will unlock a more personalized customer experience in the air and on the ground,” with features including seamless boarding, free Wi-Fi on most domestic U.S. flights and greater trip personalization capabilities.
He added that “new SkyMiles memberships have accelerated at a record pace. Growth has been particularly strong among younger customers, with a record 3 million total enrollments during the quarter. Thanks to the size and growth of our loyalty program, the value of our Amex cobrand card portfolio continues to reach new highs and leading brands are joining our consumer ecosystem.”
Hauenstein said that moving ahead Delta is “sunsetting comparisons to 2019 and returning to year-over-year metrics,” a reporting strategy being embraced more widely as COVID restrictions have faded into near-total obscurity in the travel sector domestically and internationally.
To that end, Delta is increasing international seats by more than 20% in the June quarter compared to 2022, with Hauenstein saying, “We already have about 75% of our bookings in hand.”
He called out high-performing international hubs and destinations including transatlantic where “we’re seeing strong demand on our largest ever summer schedule,” adding that Latin America momentum is building as Delta leverages its partnership with LATAM Airlines.
“Pacific demand is accelerating, and we expect record margins meaningfully ahead of pre-pandemic levels,” he said. “Our multi-year restructuring efforts in the Pacific are paying dividends and our partnership with Korean Air is performing extremely well providing future growth opportunities.”
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