How Much Did Severing Ties with the NRA Cost Delta?
Joe Cortez April 08, 2018
In the wake of the Parkland, Florida school shooting, Delta Air Lines made the move to cut their public ties with the National Rifle Association – a move that was unpopular with gun owners and the State of Georgia. Considering lost ticket sales and a redacted tax credit, how much did Delta actually lose in taking a stand?
Last month, thousands of students across the United States walked out of their classes and took to the streets to protest America’s gun laws. The march coincided with the February 14 attack on Stoneman Douglas High School in Parkland, Florida, where 17 souls were lost at the hands of a shooter.
Less than a month earlier, both Delta Air Lines and United Airlines made a stand of their own. In just two weeks after the attack on the school, both airlines announced they would end select discount programs with “America’s foremost defender of Second Amendment rights:” The National Rifle Association.
Prior to the Parkland school shooting, both airlines extended a discount program to NRA members attending the organization’s national meeting. In a media statement, Delta said they ended their discounted fares contract and asked the NRA to remove their information from the annual meeting website. The carrier justified their move based on a previous episode where they pulled sponsorship from a public performance of Shakespeare’s “Julius Caesar.” United did not issue a press statement, but confirmed their cancellation to media outlets.
Immediately, those on all sides of the firearm legislation debate expressed their opinions on the airlines’ announcements. Those seeking tighter regulations on gun sales praised the move, while backers of the Second Amendment accused Delta of buckling to public pressure and called for a boycott of both carriers. Georgia legislators reacted differently, by ending a jet fuel tax credit to Delta valued at $40 million.
With threats of ending tax credits and boycotts, the potential for an economic blow-back appeared real. But did Delta really stand to lose anything for taking a political stand?
First, let’s consider the lost ticket revenue from the discounted program. Through the end of the contract, Delta sold 13 tickets to Dallas under the NRA program. At the average airfare of $354 in 2017, Delta put a discount on just over $6,000 in airfare.
Extrapolated to an estimated attendance of over 80,000, only .02 percent of expected attendees purchased a Delta flight before the discount ended. So in actual airfare, Delta did not feel a significant hit.
What about the effects of a larger boycott? If the estimated attendance of 80,000 decided to stop flying with Delta altogether (which is only 1.6 percent of the NRA’s estimated membership of five million), the airline could stand to lose $28.3 million based on the average price. Compared to their 2017 total GAAP pre-tax earnings of $1.1 billion and transporting 124 million domestic passengers, the threat of a boycott may not slow down Delta.
This brings us to the issue of the tax credit, valued at $40 million. Under the original legislation, Georgia House Bill 918, the tax credit would have extended to: “The sale or use of jet fuel that is pumped into an aircraft in this state and the use of jet fuel that is pumped into an aircraft in another state.” The tax credit extended only to “any form of fuel that is designed for or used in the operation of aircraft powered by jet turbine or turboprop engines, including but not limited to Jet-A, and excludes aviation gasoline designed for or used in piston engines, including but not limited to avgas.”
Alongside this definition, the tax breaks were granted at multiple state levels, including city and county, special district transportation sales and use taxes, mass transit taxes, and city and county special districts. While many airlines who did business in Georgia may have benefited, Delta – Atlanta’s single-largest employer with over 31,000 staff members in the city alone – stood to gain the most.
But what was the actual price to pay? In 2017, Delta and their regional carriers spent $6.8 billion on fuel, or $1.68 per gallon of fuel, on nearly 4 billion gallons. Comparatively, a $40 million tax break does sting Delta, but not to the extent it will severely impact their bottom line or worry investors.
Writing in his notebook in 1904, Mark Twain observed: “In the beginning of a change the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot.” The students of Stoneman Douglas High School who are calling for change embody true patriotism – and it costs Delta nothing to join them. While it may be considered an admirable move, Delta’s move may not hurt them, but gives them everything to gain in the court of public opinion.
I don't know how that particular discount worked; but the usual such way is a small percentage off relatively high fares. Anybody buying this far in advance could almost certainly find lower fares on their website, so it's a bit surprising they sold any tickets at all yet. I would expect that almost all the tickets sold with that discount would be sold in the last couple of weeks, when the only available fare classes were eligible for it. Additionally, there are websites that gather and publish discount codes, so the tickets sold might not even have been to NRA members, just people aware of those sites who were traveling to the same city in the same timeframe. Finally, Delta owns a refinery. If they ship their own fuel in (or trade fuel at their refinery for fuel in ATL), there's no purchase and hence no sales tax involved.
Completely useless article about companies punishing an organization of 5 million members who had nothing to do with the Florida shooting. PETA has more mass shooters than the NRA, yet they dont blame PETA. Ignorant Hypocrites.
SandmanDFW: Wouldn't it make more sense to read the article before posting, so you could make a comment that in some way relates to the subject matter presented? If that's too time-consuming for you, here's a synopsis: The article is about the effects of a company position/decision on Delta's revenue. It has no stance whatsoever on gun ownership, beyond acknowledging that a group of students held a protest that addressed gun laws. Even that was simply a statement that the protest happened. To pretend someone said something and then become outraged about it simply makes you look like a fool. There was also mention of a company decision to pull sponsorship of a theater production. Should there now be lengthy arguments about good screenplays and bad screenplays and how, by mentioning it, Cortez is taking an obvious stand against all actors?
Oh please so if they listen to the 'pro-gun' side then we should consider them mature, and knowledgeable? No where in the 1st amendment is there an age restriction to free speech, and you don't need to listen to them if you don't want to. The best thing to do is to vote out the politicians that allow special interest groups to bankroll their runs whether it be liberal or conservative. The conservatives like finding way to kill us and controlling our freedoms, and the dems like finding ways to keep us poor and enslaved by corporations.
The students of Parkland are just puppets and have no clue what they are talking about. Those kids are the same age group that think eating Tide pods is a good thing. If they are so correct about their age group not being responsible enough for guns then why are we listening to them? They're already stating they are immature, lacking knowledge, and easily influenced by others? try to push your anti-gun views somewhere else. Your propaganda here is insulting.