New CEO defends segmentation and lack of upgrades at industry forum.
Delta Air Lines’ new chief executive believes that cabin segmentation is good for the airline industry, all while defending the lack of upgrades for their most loyal flyers. Speaking at the Skift Global Forum, Yahoo! Finance reports Ed Bastian told the audience their multi-class plan creates actual value for flyers in each cabin.
“Ten years ago you’d have a business traveler paying $800 and sitting in a middle seat next to someone who bought their ticket six months earlier sitting in the aisle seat for $69,” Bastian told the audience, According to Yahoo. “You have to find a way to create differentiation in consumer minds, and you have to give them choice.”
In 2014, the Atlanta-based carrier refreshed their in-flight product by adding five different classes, ranging from the international and long-haul premium product Delta One all the way down to the no-frills basic economy. Each class comes with different amenities and offerings, with a wide range in pricing. According to Bastian, this method allows flyers to justify what they pay for their ticket, as he claims the “one size fits all” approach no longer works aboard aircraft.
The era of free upgrades could also be coming to an end as well. Bastian went on to explain that because premium seats represents the best of the carrier, offering them to elite flyers at no cost to them hurts the carrier.
“Any business where you give the majority of your best product away for free doesn’t work,” Bastian said, as quoted by Yahoo. “This is the best real estate on the planet, and while we appreciate the loyalty of flyers, we couldn’t continue to give it away.”
Despite the focus on purchasing tickets, Bastian said the new revenue was being injected directly into the carrier, citing a $3.4 billion terminal improvement project at New York’s LaGuardia International Airport (LGA). The comments mark the second time Delta has put loyalty aside in search of profit: In 2016, the carrier told Bloomberg that changes to the Delta SkyMiles program allowed flyers to “control their experience” instead of using miles for free flights.