Published on May 2nd, 2016 | by Jim Lee0
Delta showcases a number of product and service enhancements as new aircraft orders announced
On 29th April, Delta Air Lines, Inc. of Atlanta, Georgia (Delta) hosted a media event, to highlight the transition of Ed Bastian from President, to incoming Chief Executive Officer (CEO), as well as a number of product, service and fleet enhancements, that Delta has recently rolled out across its domestic and international fleet. Attendees had the opportunity to tour six aircraft: the Airbus A330, the new Airbus A321 (with the inaugural flight scheduled to operate between Atlanta and Orlando on 2nd May) and the new Bombardier CS100 (which will join Delta’s fleet in the spring 2018). They were also able to view the upgraded interiors of the 757-200, 737-900ER and CRJ-700.
Delta has so far taken delivery of three Airbus A321-211s, N301DN on 17th March, N302DN on 13th April and N303DN on 30th April, and coinciding with the media event, it announced that it had reached an agreement with Airbus to acquire 37 additional A321s, as part of its efforts to renew its narrowbody fleet. The fuel-efficient A321s will replace older-generation aircraft, including the MD-88. These additional Airbus A321s are being acquired near the end of the model’s production cycle and increases Delta’s potential A321 fleet to 82. The additional Airbus 321s will join 126 A320 Family aircraft – featuring CFM56 engines – already flying in Delta’s fleet, and will also feature wingtip Sharklets, which will provide up to 4% improvement in fuel efficiency. The aircraft will be delivered with Delta’s all-new interior with cabin elements, including high-capacity overhead bins, the latest in in-flight entertainment, full spectrum LED ambient lighting, standard 110v power available at every row, as well as in-flight Wi-Fi and Delta Studio.
“The order for the A321s is an opportunistic fleet move that enables us to produce strong returns and cost-effectively accelerate the retirement of Delta’s 116 MD-88s in a capital efficient manner,” Edward H. (Ed) Bastian, Delta’s incoming chief executive officer, said.
The agreement follows an announcement the previous day, that that Delta would become the U.S. launch customer, for Bombardier’s C-Series small narrowbody aircraft, with a firm agreement announced for the sale and purchase of 75 CS100 aircraft, with options for an additional 50 CS100 aircraft. Based on the list price of the CS100 aircraft, the firm order is valued at approximately $5.6 billion (around €4.89 billion). This transaction is part of Delta’s domestic strategy to upgrade the fleet, allowing the company to achieve its long-term financial targets, including 15% EPS growth and generation of $4 billion to $5 billion (around €3.49 – €4.37 billion) in free cash flow annually, while replacing less efficient domestic aircraft. With the order of the C Series, Delta will no longer induct the Embraer E190 into its fleet as previously planned.
For the media event, Bombardier sent C-FFCO, the first production CS100 to Atlanta, where it arrived at 17:35 on the 28th April. For the visit, the aircraft had additional Delta titles, and it departed Atlanta the following day at 18:44.
Commenting on the C Series order, Mr. Bastian said; “As we reshape our fleet for the future, the innovative on-board experience of the C Series is a perfect complement for the top-notch service provided every day by Delta people,” He went on; “These new aircraft are a solid investment, allowing us to take advantage of superior operating economics, network flexibility and best-in-class fuel performance.”
The new Bombardier aircraft will be deployed on short to medium-haul routes throughout the airline’s network. As part of this transaction, For the 50 additional C Series options, Delta has certain delivery flexibility rights including the ability to substitute the larger CS300 aircraft. Delta has been steadily replacing inefficient, older technology aircraft, generating substantial cost improvement and increased customer satisfaction. Since 2009, it had retired 280 50-seat regional jets and more than 130 older, narrowbody aircraft, while refreshing its fleet with over 300 aircraft.
This has included the acquisition of additional Boeing 717 aircraft, the last of which, N987DN (ex OH-BLP), of Scandinavian Airlines’ Blue1 subsidiary, was delivered on 5th April. Adding the new-to-Delta aircraft to the fleet involved a host of both technical and regulatory work. With the three Boeing 717s purchased from Blue1, for example, the process took 10 months from start to finish and included an engineering overhaul that touched every inch of the airframe, engines, flight deck and interior – including a fresh coat of paint and red Delta widget on the tail. The delivery of the last of 91 Boeing 717’s also marked the delivery of more than 200 aircraft to Delta since the merger with Northwest Airlines in 2008, including a mix of MD-90s, Boeing 737-900ERs, Boeing 717s, Boeing 757s, Airbus A321s and widebody Airbus A330s – most of those arriving in the last three years.
With the phase out some of the airlines less fuel-efficient aircraft, fuel use per passenger mile has been reduced by 8%, since 2008. The C Series transaction, combined with orders for other narrow and widebody aircraft, will reduce the carbon footprint of the fleet and supports Delta’s financial and environmental strategy, to consume less fuel.
With an industry-leading global network, Delta and the Delta Connection carriers offer service to 324 destinations in 58 countries on six continents. Headquartered in Atlanta, Delta employs nearly 80,000 employees worldwide and operates a mainline fleet of more than 800 aircraft. The airline is a founding member of the SkyTeam global alliance and participates in the industry’s leading trans-Atlantic joint venture with Air France-KLM and Alitalia as well as a joint venture with Virgin Atlantic. Including its worldwide alliance partners, Delta offers customers more than 15,000 daily flights, with key hubs and markets including Amsterdam, Atlanta, Boston, Detroit, Los Angeles, Minneapolis/St. Paul, New York-JFK and LaGuardia, London-Heathrow, Paris-Charles de Gaulle, Salt Lake City, Seattle and Tokyo-Narita. Delta has invested billions of dollars in airport facilities, global products and services, and technology to enhance the customer experience in the air and on the ground.
Delta’s Irish services for Summer 2016
Delta is operating daily services on the Atlanta-Dublin, New York JFK-Dublin and New York JFK-Shannon routes for Summer 2016, with a peak schedule similar to last year. Delta has adjusted the operational aircraft on the Atlanta – Dublin route (DL176/7), substituting an Airbus A330-300 aircraft to replace Boeing 767-300ER aircraft on this route, from 3rd April. The DL176 departs Atlanta at 19:30 and arrives in Dublin at 08:15 the following morning. It departs Dublin as the DL177 at 10:10, arriving in Atlanta at 14:00. The flight time for the 3,926 mile (6,318 km) flight varies between 7:38 and 7:54 and there is a five hour time difference between the two airports. During the season there are slight variations in the departure and arrival timings.
The daily New York JFK-Dublin service (DL44/5) also sees a change of aircraft from the Boeing 767-300ERs used last year, to Airbus A330-300s, with effect from 1st May. The DL44 departs JFK at 22:10 and arrives in Dublin at 09:50 the following morning. It departs Dublin as the DL45 at 11:45 arriving in JFK at 14:05. The flight time for the 3,169 mile (5,100 km) flight varies between 6:22 and 6:42 and there is also a five hour time difference between the two airports. As with the DL176/7 there are slight variations in the departure and arrival timings during the season.
Finally, the New York JFK-Shannon service (DL406/206) also sees a change a change of aircraft, from Boeing 757s to Boeing 767-300ERs. Effective 1st May, the DL406 departs JFK at 23:00 and arrives in Shannon at 10:10 the following morning. It departs Shannon as the DL206 at 11:55 arriving in JFK at 13:55.
Delta introduces innovative baggage tracking process
As part of its investment in technology to enhance the customer experience, Delta is deploying Radio Frequency Identification (RFID) baggage tracking technology, a first for U.S. carriers, providing customers with improved real-time tracking of luggage throughout the travel experience. See video here. (https://www.youtube.com/watch?v=YwgxXkstbz0)
This move marks a historic shift for Delta and the 120 million bags it handles annually. RFID will replace barcode hand scanning – the industry standard since the early 90s. With this new technology, scanners use radio waves to capture highly accurate and consistent data stored on an RFID chip, embedded in the luggage tag, driving superior tracking and increased transparency.
With RFID, customers will see their bags on and off the aircraft during their journey via push notifications to the Fly Delta mobile app beginning in the fourth quarter of 2016.
“With a $50 million (around € 43.66 million) investment in RFID at 344 stations around the globe, we aim to reliably deliver every bag on every flight,” said Bill Lentsch, Delta’s Senior Vice President – Airport Customer Service and Cargo Operations. “This innovative application of technology gives us greater data and more precise information throughout the bag’s journey” he added.
Initial deployments of RFID integrated throughout the baggage process show that bags are tracked at a 99.9% success rate, ensuring proper routing and loading.
Delta teams have deployed 4,600 scanners, installed 3,800 RFID bag tag printers and integrated 600 pier and claim readers to enable hands-free scanning of baggage throughout the handling process. RFID will soon track bags on all Delta mainline and Delta Connection flights.
Spread throughout 84 of Delta’s largest stations, 1,500 belt loaders will give baggage the green light – literally – as it enters and exits the belly of an aircraft. The belt loader sensor will flash green when the bag is being loaded on the correct aircraft or red when the bag requires additional handling.
At present, when a customer misses his or her connection, agents on the ground manually scan each bag to find the customer’s luggage and ensure it is retagged for the new flight. With RFID scanners, agents have the ability to take inventory quickly or pinpoint a single bag.
“We’ve put every part of our process for baggage handling under the microscope and evolved it to the point of industry-leading performance,” Mr. Lentsch said, noting that RFID would give Delta people “a great tool to further widen the gap between us and our competitors”
Better baggage handling processes and enhanced technology have already shrunk the airline’s mishandled bag rates by 68% over the past 10 years, establishing Delta as the leading U.S.-based global airline for baggage performance. In 2015 Delta led U.S. global airlines in Department of Transportation (DOT) bag performance while setting six monthly DOT records and a full year record.
Delta cuts ticketing fee
In a further move to enhance its customer experience, Delta will no longer charge a fee, for customers who purchase their tickets over the phone through Reservation Sales, or in person at airports and other ticket office locations. Delta previously charged a fee of $25 (around €21.83) per ticket, when purchased over the phone through Reservation Sales and $35 (around €30.57) per ticket when purchased at airports and other ticket office locations. Charges varied for some locations outside of the United States and the fee waiver does not apply to tickets issued in select European locations. Delta does not charge a fee for customers who purchase tickets on delta.com or through the Fly Delta app. Eliminating the Direct Ticketing Charge is the latest example of the company’s commitment to assisting customers and responding to their feedback before, during and after their travel with Delta.
“This – and every decision we make – is based on engaging with our customers and employees every day,” said Charisse Evans, Delta’s Vice President – Reservation Sales and Customer Care. “By listening, caring and connecting with our customers, we have their backs every time they fly with us. I am extremely proud of our dedicated colleagues who, along with the support of nearly 80,000 Delta employees worldwide, continue to raise the bar by exceeding our customers’ expectations.”
Delta recently integrated @DeltaAssist customer support into its primary @Delta channel to offer customers a seamless experience when communicating with the airline via Twitter. Nearly six years ago, Delta became the first U.S. airline to offer real-time customer support through Twitter via the @DeltaAssist handle, including rebooking, flight information, airport details and additional services. Since then the team has grown from six employees to more than 40 specialists with Reservations backgrounds, providing assistance in English, Spanish, Portuguese and Japanese.
Delta kicks off 2016 with record quarter
On 17th April, Delta reported a $1.56 billion (around €1.36 billion) adjusted pre-tax profit for the March quarter of 2016. That’s up $966 million (around €843.59 million) over the same timeframe last year, and marks the 12th consecutive quarterly record. On a GAAP basis, pre-tax profit for the March quarter 2016, was $1.43 billion (around €1.25 billion).
The March adjusted pre-tax profit was an $11 million (around €9.6 million) improvement over the December quarter despite being Delta’s seasonally weakest period.
Delta’s operational performance during the first quarter was record setting for the timeframe with an on-time arrival rate of 86.5% and 99.4% completion factor. The airline also posted 49 days of perfect mainline completion factor with zero cancellations.
Unit revenues declined 4.6% on ‘foreign currency headwinds’ and lower ticket pricing, due to fuel. While the tragic events in Brussels created a $5 million (around €4.37 million) headwind in the quarter, commercial initiatives including Branded Fares and the American Express partnership, allowed the airline to maintain its top line financial performance for the quarter.
While the airline is currently enjoying reduced fuel expenses, which are contributing to record profits, Delta continues work to improve unit revenue given a volatile fuel environment and global economic uncertainty.
Glen Hauenstein, Delta’s incoming President said Delta is “… focused on getting unit revenues back to a positive trajectory and we will make adjustments to our fall capacity levels if we are not making sufficient progress over the coming months.”
Where the airline’s costs are concerned, total operating expenses were down more than $1 billion (around € 873.29 million), as the decline in fuel costs offset wage increases, as well as higher profit sharing expense, which increased 100% compared to last year.
Paul Jacobson, Delta’s chief financial officer said, “Our cost discipline, combined with continued low fuel prices and solid outperformance on revenue, is helping to contribute to over $8 billion (around €6.99 billion) in operating cash flow this year, which we are using to invest in the business, strengthen the balance sheet and continue to return cash to our owners.”
By the end of the first quarter, Delta had used its operating and free cash flow to reinvest more than $870 million (around €759.76 million) back into the business, including $764 million (around €667.19 million) in fleet investments. It also completed $1.3 billion (around €1.14 billion) in pension funding for the year, including $135 million (around €117.89 million) in April, returned millions to shareholders, stayed on track to reduce adjusted net debt to below $6 billion (around €5.24 billion) by the end of 2016, and accrued $272 million (around €237.53 million) in profit sharing.