Welcome to Travel Again presents the weekly travel Roundup, covering the headwinds and tailwinds impacting the business of travel. Please welcome our hosts, Mike McCormick and Ed Silver. Hello Mike, how you doing? Good, how are you doing today? I’m doing good. We are on episode six of season 2. It’s crazy, we’re just rolling through this season. We are indeed.
All right, so last couple episodes I’ve given an update on the Asheville area. If it’s all good with you, I’ll just give a quick update on the conditions on the ground here in Asheville, Mike. Yeah, that’s great. I think you should. Okay, so as we talked about last episode, potable water or drinkable water is still probably the largest issue in the area, but fresh drinking water is available everywhere you go. It just isn’t coming out of your faucets, obviously, meaning you can get it from FEMA stations. There are volunteer areas where all you do is drive up and they put tons of gallons of water into your trunk and you drive away. Those FEMA stations, by the way, also have meal ready plans, they have doctors on staff, they have fresh showers for those who are struggling to shower in the water. So, water is clearly still our biggest issue here in the area.
But Mike, the interesting thing is restaurants are starting to open their limited hours, limited capacity, and obviously some of them have different menus because they don’t have fresh water and some of them do have fresh water. It just depends. Then some big news in the area that Biltmore Estate, which is a major tourist attraction, did open this week. They’re a couple days into the opening. I haven’t heard any news about how that’s going, but they are on a well and so they have fresh drinking water on site. It’s really nice to have the Biltmore Estate opening back up.
Last but not least, there is some debate amongst tourism leaders here about whether it’s really too soon to ask people to come visit. In my opinion, I think it’s a little soon, but I know how desperate these businesses are to get visitors back in their stores and restaurants. So, if you do plan on visiting, just set your expectations properly, tread lightly, tip generously, and remember many of these people just went through some pretty harrowing experiences. Tread lightly and be kind to everyone around.
I guess the only other thing like I said last week, for those not in the area, not in Western North Carolina, that want to help, please do consider donating to the American Red Cross. It’s where we recommend that you funnel any help you want because that’ll also help people from the other hurricane. If you’re not familiar with that, it’s simply redcross.org and donate. And that’s the update from the ground, Mike.
Well, thanks for that and I think it’s good to keep everybody posted on the progress and interesting balance with tourism part. Certainly, the Biltmore Estate opening is a really good bellwether for the beginning of a recovery effort, but it’s going to take some time. That’s great advice: if you do come, understand and be respectful of the situation and manage your expectations, of course.
All right Mike, let’s get rolling with episode six onto the news. The first article I pulled—I think we both saw this around midnight last night—Boeing Union votes to end the strike. The machinists to return to work after ratifying a contract with a 38% pay raise. That’s I think only 2% less than what they were looking for and some other interesting tidbits there, Mike. But we’ve been covering Boeing for a long time, so any context here for our listeners?
Well, no, just other than the same thing we said before and been saying all along that the strike had to get settled. It’s critical for the industry, critical for aircraft, critical for the whole expansion, continued expansion, health, and growth of the industry, replacing old aircraft, etc. All the major airlines have their orders, they’re waiting, and we need to produce quality aircraft. Boeing is a key part and kind of a bellwether for the overall economy too for here in the states. What more can you say? It had to get done. The deal had to get done. Glad it did. Let’s move forward and get back to the real work at hand, which is producing high-quality reliable aircraft and making the necessary changes within Boeing to ensure that happens.
I agree with all that, Mike. Good to see that end, so that’s great. The next one I pulled is an article from The Wall Street Journal: “Tech Giants See AI Bets Starting to Pay Off.” We’ve talked a lot about this on the podcast and obviously this has been news we’ve been tracking. Some of the world’s biggest tech companies showed this week how the tens of billions of dollars they have bet on the AI boom are starting to pay off. They also warned bigger investments are coming. If you can imagine bigger investments in this industry than what are happening right now, hold onto your hat because they are on the way. For the travel industry and just the broader market, Mike, any context here for our listeners?
Well, I think we talked about this before. Microsoft, you’re talking orders of magnitude more on capital expenditure. Microsoft said that they were spending basically 4X what they were previously spending in capex to invest in primarily AI development. That’s a huge expenditure. There’s still questions about starting to pay off being one thing, but actually returning on that investment will be years off. But I think for travel specifically, we know things are coming. We’re starting to see just the beginnings of the impact it can have on the whole travel booking and arranging process. Really just a toe in the water right now for the industry in some of the ways we’re seeing that impact. Most of that is in some enhanced connection with the customer, a little bit of service delivery taking out a pain point, but not the real type of overhaul that we see coming on the horizon.
We’ve started advising customers and clients on their AI game plan. You really need to be thinking about this not just the immediate short-term incremental improvements, but really stepping back and taking a look at how to look at this longer term. How are you going to leverage investments made by some of the big companies and how that gets worked into your game plan as a company? Also the things you’re going to be doing spending money on. Clearly, very few companies have Microsoft, Google type budgets, or Apple budgets. Of course, we’re going to follow their lead, but how you leverage that technology, those capabilities, being smart, being first—those are really important things to be thinking about and putting into a game plan. So, we’re going to continue to keep this high on our list of things that we’ll be watching for the industry. It’s going to get really interesting in the coming years and should have a pretty dramatic impact on travel distribution in general over time.
Agree on all that. I do hope to see more than just the big companies in the Magnificent 7 start to see ROI come together. I think that’s key to the next phase. I don’t think it’s a surprise the large giants with cloud computing capability are starting to see those bets pay off as people pay for more AI capabilities, but midsize and smaller firms, we need to see some ROI there as well, Mike. I think that’s what’s next.
Next article I pulled, partly because we were in Vegas together last week. Yes, we were. I also thought it was an interesting one: “MGM Resorts Sees Healthy Vegas Demand Despite Heatwave Hit, F1 Race Slowdown.” MGM Resorts sees strong demand at its Vegas resorts continuing through year-end despite some performance hiccups in July and a more muted interest in the Las Vegas Formula 1 race in November. Quote: “July was pretty bad for the entire community including us,” said CEO Bill Hornbuckle on Wednesday during an earnings call. “We had eight days in a row of 120-degree heat compounded with a major highway being relatively closed for three days due to a truck rollover. The quarter got better as it went along.” We were in Vegas, we did see some of the F1 Formula structures there, Mike. Any thoughts on Vegas demand even despite some of those setbacks?
Well, this is one of those articles that on the surface when you read the headline you’re like, okay, just another report on earnings and results, no big deal. But for us, it’s the intersection of a lot of things that we can tackle here. One is just overall health of the industry. Vegas is a bellwether for leisure, and that all looks very healthy. That’s good. But we were out for the Money 20/20 conference on a whole different set of issues around payment and around how potentially some legislative efforts could really derail our industry. We were there working on a lot of those issues.
While we were there, to your point about sometimes, Vegas made a big investment in having Formula 1 come to the city and do the race on a three-plus mile track literally through the city. They’ve got a 10-year deal, I guess with a three-year commitment and then a review and an out after that. We learned that from our cab driver, by the way, which we verified, which I thought was very funny. But also the fact that they have to build all this infrastructure to be able to support it. It disrupts—the locals are pissed off because of all the disruption while they build the whole track and all the grandstands and all the stuff.
That causes those issues, but then the other problem is that I think the expectation was, “hey, look, we’re going to have this Formula 1 race crowd, we’re going to draw in a whole new set of Vegas vacationers and visitors from overseas where Formula 1 is even more popular than here in the states and create a whole new category. This would be great.” The problem and the unintended consequence is that it’s had an impact and it’s softened some of the regular Vegas visitors because people are like, “it’s too… I’m not going to go during that. It’ll be disruptive. Just the thought of trying to maneuver while you’ve got all this disruption to traffic and everything in town.” People were deferring going that might have gone otherwise, and were they basically just replacing new visitors with old visitors, etc.?
I think some of it is a little bit up in the air. We met with some Vegas officials while we’re there and got some interesting take on it. I think the overall is positive still, but I think there are some unintended consequences there that people are still dealing with. But the other thing—the little part about the cab driver and all that—what I’m always amazed by is really something how much even people outside of our industry really follow tourism, particularly in Vegas because it’s all about that. In most areas, you’re talking about tourism in Asheville and all the impact. We know it because we work in the industry, but how much this drives the overall economy, how much it drives commerce in general, and how important it is. We need to be really mindful of and protect and make sure that we’re looking out for our industry in that respect. Can’t take it for granted. We saw what happened during the pandemic. We’re finally back to a place where we’re healthy as an industry and an economy again. These… we’re always on the lookout for things that are going to have a negative impact. I just thought there was a lot to unpack here. It was a really interesting story. If we need more advice on that, we’ll of course contact our cab driver and see what he has to say. He knew what was going on.
He did, he knew the scene. All right, Mike, thanks for that and we will be right back with our guest. Mike, thanks to our sponsor safe travel RX, an app that takes the worry off your itinerary, providing travel peace of mind with emergency response components, travel security, and risk management especially for those traveling internationally. It includes 24/7 global concierge assistance. Landed in the hospital in China? Forgot your prescription? Wallet stolen? Safe travel RX is your prescription for better, safer travel. Download it today to discover the power of safe travel RX and reach out to them if you have interest in offering this tool to your travelers to provide them the duty of care you are required to provide. Safe travel RX: your prescription for better travel.
All right Mike, and now on to our guest. Please join me in welcoming Steve Sear. Steve is Executive Vice President, Global Sales and Distribution for Delta Airlines. Steve, as EVP of Global Sales Distribution, leads the teams that oversee worldwide customer relationships and programs with corporations, travel management companies, distribution partners, and cargo logistic providers. Prior to his current role, Steve served as Delta’s President International where he was responsible for the airline’s Asia-Pacific, Atlantic, and Latin regions, as well as Delta’s global alliance strategy including SkyTeam leadership and joint venture partner development. Steve currently sits on the Board of Governors for Junior Achievement Worldwide, having previously served on the board of directors for Virgin Atlantic Airways, the board of directors for United Way of Greater Atlanta, as well as the board of visitors for DePaul University. He is a graduate of Leadership Atlanta and is active at the GBTA where we got to know Steve. Please welcome to the stage Steve Sear.
Gentlemen, hey Steve, thanks for hosting me. You picked the slowest media day of the year: election day. We aim for it. Perfect timing as far as I’m concerned. Absolutely, actually literally there’s nothing happening on the news whatsoever that’s of any interest at all to anyone until around 7 o’clock tonight and then you tune in.
I loved your three stories. One, congrats to Boeing. We desperately want and need them to be the best in the world at what they do, and just it’s great not only for our industry but for our country as we’re thinking about elections. So, it’s great to see that. On a personal note, the new CEO Kelly Ortberg is from Dubuque, where my dad is from, so there’s not a lot of people that can claim those Dubuque roots. AI obviously will be the talk for forever and we’ll probably touch on that a little bit later. And then Vegas, Mike, you said is sort of a bellwether for leisure; it’s also a bellwether for business when we think about business on the hybrid—the corporate travelers that are not flying on their corporate designators when they’re in leisure. That’s close to 200% recovered and they’re going to places like Vegas and leisure destinations, bringing their spouses and partners and families. That’s a really good segment for us. It’s sort of a change. And Ed, to tell you how different things are, our CEO will be presenting—he’s the kickoff keynote speaker at the Sphere for this CES show in January. There might be some funny-looking Delta things on the Sphere. That would be awesome. We got a taste of the Sphere while we were there. We got one afternoon free. It was very cool.
One thing before we get started too, Steve. I see you’re on the Board of Junior Achievement. I won “Best Salesman of the Year” of Junior Achievement when I was in high school, in 10th grade. I will tell that story. I’m heading to London tomorrow night for the board meeting over there. It’s a great organization. It fits right into what I like personally, which is a focus on education and kids, and it fits right into Delta’s core pillars as well. It’s a great fit on a global scale. We’ve got 31 different chapters that Delta supports around the world. It’s a great organization. I really enjoyed it. It was great for teamwork and being able to meet a whole range of kids outside of your school and outside your normal. It was really terrific. Congrats. You’ve gotta put that trophy up on your… I still have it. I’ll dig it out.
Actually, Ed mentioned about knowing you from our GBTA days, but you and I actually know each other from way back. Over the years, your start with Delta actually was through Northwest because you were part of the Northwest family and then a key part of the whole integration team. I remember when you were going through those couple years of integration, it was no easy feat, man. But to your credit and I think to both organizations’ credit, you really set the bar for how that kind of mega integration needed to get done because you came away and, boy, when you look today you end up taking the best of both. That was no… again, because we’ve seen a lot of mergers, not just in the airline industry but just generally. Mergers are hard and integrations are hard. As you kind of reflect back on all of it, was this the vision? Ultimately is it realized? Because certainly Delta is the market leader now. Any thoughts or reflections?
Thanks. It’s some sort of combination of elation and PTSD reflecting back. I joined this industry after grad school because it’s global, competitive, and complex. It has exceeded every expectation from that dynamic. Whether it’s bankruptcies—I did bankruptcy consulting prior to grad school so I thought that would be my scope in life—little did I know I’d be on the commercial side for most of it. Love every single second of it.
But the merger, we set out to want to be like the US leading airline, leveraging our people. I think that’s one of the key things that Delta brought. When we executed it, it came down to the people. When you have a service DNA combined with one of the most important things we did—put the profit-sharing program in place—industry first, industry leading, still probably the world’s best profit-sharing program from any industry. It became really powerful and the people actually made it happen. We all were heads down because it was at the time I think the biggest merger certainly in the US airline industry and one of the biggest in the world. It was like, “hey guys, don’t get distracted, stay focused and execute.”
To everybody’s credit, that happened. When you take care of your people, they take care of your customers, that in essence takes care of your stakeholders and we were able to get through it. We never take it for granted. It was super hard. It was a big journey. Veterans, we know what our history was. I likened it to three pillars.
First on operational reliability, Delta and Northwest were like at or near the bottom. I can’t even say how low we were, but we did not run a very good operation. We needed to fix that. I remember the meetings where that was going to be mission first—of course, safety—but we have to run a good airline because that builds trust and consistency. By the way, when you do that, everything else starts to work commercially. From a trust perspective, you have to run a great operation. To that extent, we continue to put our investments there. Whether it’s even on the sales side where all of our corporate agreements have an operational performance guarantee that we’re going to outperform our two biggest competitors here in the US, we never have to even worry about it. The distance is so great. In fact, we even gave corporate partners tools that let them track: if they had chosen another carrier, how many tens of thousands of additional delays, cancellations, extra costs, let alone traveler friction that occurs in that environment. It’s something that we’re still super proud of and you can always count on us to be at the top.
On the second pillar, it is about our network. When we put our two hub networks together, Northwest and Delta, we were a little thin in some of the big coastal business markets and we didn’t really have a presence in London, only Gatwick. When we started to put together a plan to build out New York, build out Boston, LA, Seattle, then all of a sudden we had big business centers that were gateways to international travel that complemented some really strong hubs like Atlanta, Salt Lake City, Minneapolis, Detroit. We ended up with a really robust domestic network complemented then over time with making purchases in Virgin to get access to London Heathrow slots, efforts with Aeromexico putting us squarely in Mexico City as a hub, even more recently LATAM, the biggest carrier in South America, filling that void. Incheon with Korean, I would argue the best connecting complex in all of Asia. All of a sudden we had a domestic network that we had to redesign versus just put it together and really build out our partner networks to provide that global reach.
I think taking the ownership stake in your partners, even minority stakes, was really smart. Having a stake in the game with them that’s deeper than alliances… if you’re really relying on that consistency through the entire network, ownership helps a lot because you’re at the board level.
Yeah, because you’re at the board level. Some of the first projects were blocking and tackling, we call it “seams reduction.” We laid out a big grid of 50 must-haves if we’re going to have a partnership—everything from booking and seat access on your displays and just making sure everybody aligned. Then on a bigger note, it’s about getting the same or similar products on aircraft, like a business class and then a Delta Premium Select and then Comfort Plus, let alone main cabin. Then all the carriers as we align around that, that’s making the experience for our travelers, which are our heavy business travelers, see a more consistent product when they’re traveling around the globe. Those are long-term projects and decisions when you’re talking aircraft and configuration, so getting that early and consistent has helped us.
Under your umbrella now, including all this, is the pricing strategy. We talk a lot about NDC and the future of dynamic offers and pricing and how that’ll get done. Delta, I would say, was more patient. In the earlier part there might have been some frustration like Delta’s late to the game. As it kind of turned out, given Americans retrenching, that “slow and steady wins the race” approach was a very wise approach. Where do you see that all going? From an observer, we’ve worked with a number of clients in the space around these issues and it is a tough one because on one hand you see the promise of it, but what it takes to get there and then ultimately for it to finally benefit a customer… how do you see that playing out?
Look, it’s not like it’s a project. Edifact wasn’t created in a day. I liken it back to our approach that we’ve taken actually since the merger. We had this model called Listen, Act, Listen. When we merged our companies, for example in the sales area and distribution area, we took the best of both. It was very hard, but we ended up, I would argue, with an A-team. But then we focused on the customer. We don’t get to tell them what to do. We’ve got to find what do they need and want that they value. They value service; that’s why we have the best global sales support in the world. They value having a sales rep with them and able to hear and understand the sorts of contractual needs that they have.
Then that starts to put us in a position where, when we see what I’d argue is the biggest system change in the industry, we just have to take the same approach. We listen, act, listen. We get all the stakeholders involved—the TMCs and the ITs and IATA—and then we work with the corporate agencies and the GDSs and say, “how are we going to ultimately build something that’s going to be valued and consumed by our customers and they’re going to appreciate it?” Rather than we’re going to just build something and hopefully it works.
The key there is that we’re going to make sure it can be serviced. I think that’s the key piece. We sell pretty well in Edifact, but servicing is going to be a benefit across all channels. Our distribution strategy is simple: meet the customer in their channel of choice. We’re not going to tell them where to go, but then we’re going to have the best sort of channel for them to choose from. As you know, our very best customers use all the channels in many cases. Then we just keep that in mind. We want to make sure what you experience on delta.com, what you experience in the GDS or OBT or a TMC display, it’s going to look and feel similar. Can’t be perfect, but I think we’re far enough along with technology and approach that we can make that happen. Arguably I know some people said we’re slow, we’re just going to make sure it works.
Working would be a good bar to reach. It is amazing because some of the other initiatives just didn’t include service as part of that standard bar. But it is interesting because NDC should be able to go way beyond that level. I know you’re talking about meeting people where they are with the functionality that’s at least at a base level. What about that next level, Steve? When will consumers, when will travelers start to see that? Personalized offers, dynamic offers, bundles… we’re nowhere near that from a customer perspective.
People are testing it in very minor ways around the world, but those percentages are in the low single digits. That’s okay because I think what’s happening is people, as they’re testing, are realizing some of the things just don’t work. We will at Investor Day in a few weeks here sort of lay out a little more clearly what we envision our next generation of pricing can look like, but I don’t see us in that space materially until probably toward the end of ’25 and we can begin to get a little bit more testing in place and making sure again it can be served and not just for third-party NDC, also for delta.com, the app. We want it to be consistent so we’re not scrambling to service something that we put out there. It’s going to be a journey, but we like what we’re hearing from our partners. We’re going to keep building it to their specs.
We met with and had Steve Singh on talking about his vision with “Perfect Trip” and all that. I welcome that. With Investor Day coming, we’ll be watching with interest because I think Delta’s in a really great position to offer some leadership and some guidance that the industry can effectively follow. The industry needs that too. Everybody needs to kind of have a common language.
Think about data. I remember that was one of the first things. People were like, “okay, we need reps, we need service, but the data is a disaster. Everybody’s talking past each other.” We focused a lot not only on trying to standardize it but also making it accessible. We were the first to put customer reporting—we call it Sky Partner Reporting. It was like people think the internet just got invented because people can see on-time demand and get the reports. That’s what the customer wanted, and I think that’s what we have to keep thinking about. Again, we don’t view this as a sprint or a race. Edifact lasted 30, 40 years. It is still chugging. We’ll make sure it’s done right.
You talk to customers in all different forms. What do you hear about what the industry could be doing better? What do people want from Delta and don’t get?
We hear pretty consistently—and if this is news to you guys then you’re not paying attention—one, get me through the airport fast. Speed. We view the airport as “how fast can we get people through,” and that’s not an easy aspiration. We’ve been first to be investing in Clear, first with Digital ID, trying to make sure that piece of the equation can go as fast and as smooth as possible. I think we see green shoots. I think that ultimately will be a good answer for us, but then we have to make sure that the airport themselves… we have to work with the TSA and the government in many cases and they’re actually pretty good partners. We don’t just say, “hey, we blame it on you.” We work with them and say, “okay, Digital ID is working, now let’s make sure the back systems are fast and let’s get people out of that tension area,” which is one of the most tense areas through the whole travel ribbon.
I think making sure we continue to use digital applications to make that experience easy. We need everybody on the app because the app will pretty much tell you everything you need to know. Then you have less people asking, “where’s my gate? what’s where’s my connecting gate?” It’s all right there. We have the data, we just need to make it easy for our customers to access. That was one thing.
I think the other thing is people want a modern and more premium airport experience. We made some pretty big bets when COVID hit. We put over $12 billion of investment in our real estate team for the airports. In retrospect, great decision. We didn’t know if we’d have an industry, but in a time of uncertainty, empty airports, no labor supply issues, no inflation, we were able to get these projects done fast, on time, on budget, or often ahead of budget or ahead of time. Now I’d argue we have some of the best facilities in the country. If you’ve been to LA or LaGuardia or Salt Lake City, these are completely brand new airports with the reconfigurations and people like that.
When you put in clubs—by the way, we learned that from Virgin Atlantic—when you put good clubs in, people value it versus it just being a resting area. So, we invest in those, we keep expanding them, we have the most number of clubs. Hopefully, you guys have seen the new Delta One lounge in JFK, we just opened one in LA. This is world-class. I’ll be up in Boston—that’s my hardest part of my job is opening up a new Sky Club in Boston—to open up the Delta One lounge there in a few weeks. Then Seattle will be in the first quarter of ’25 and then we’ll just keep investing more into the center core hubs as well.
That airport experience people want and they value having that choice to buy up. Think about our seats in the air. People want fast, free Wi-Fi; by the way, it saves corporations a lot of money too because it isn’t expensive and it feels like you’re at home and you can just access it. Having the comforts not even just from your inflight entertainment system, but you can choose whether you want to be in Delta One or Delta Premium Select or Comfort Plus. Leisure travelers are buying them as well. It’s pretty exciting to see both leisure and business demand valuing really options and choices. Customers like it; they’re happier. We see speed and sort of more premium experiences. This was happening before COVID because there was a shift in consumer spending from goods to services. In COVID it was all goods, but now that trend is already coming back. Within services, it’s travel. Within travel, it’s international travel. So, there’s still a lot of healthy demand for Delta’s customers.
Investing during COVID for the companies that were able to do that… I worked with an airline that did two capital projects that survived during the pandemic. One was putting in a whole new reservation system because it was the perfect time with few customers to test and learn if we make any mistakes with a low volume. The other was the whole project around their loyalty program. It’s very interesting because for the companies that have come out of this—maybe had the means but also the foresight to say “hey, look, what can I do during this time?”—I’m going to be hopeful and say we’re going to figure out a way to get through this as a society. But for now, how can I keep a core group of people? Delta was in a position too to actually keep everybody employed, which was not everybody’s position of course. That was huge in terms of the morale while you’re working on all this.
Even blocking the middle seats for that year… commercially it’s not a great decision, but from an employee and customer safety perspective, that’s the kind of thing because we didn’t really know exactly what was going on. We bought 1,400 electrostatic sprayers—if you want one let me know—because it turned out disease wasn’t transferable on surfaces. You never just didn’t know exactly, but it did kind of galvanize the teams. As you know, there’s a lot of new people in the industry because of whether it was layoffs or in our case early-out programs. We spent a lot of time making sure that the culture is there because when you lose a large portion of your workforce, we’ve got to get back and make sure that Delta culture, which we really believe is a competitive asset, gets engaged with all of our new employees.
We talk about disruption aside from the pandemic, but you had CrowdStrike which was one of those that just came out of nowhere, obviously the ongoing weather disruptions, etc. Anything that you’ve learned as a company just about handling those kinds of disruptions?
Obviously, that’s been in the news quite a bit. We were a little over-indexed on particular technologies. By the way, we have a motto here at Delta and Delta Sales: stay humble and hungry. That was a good humble time. I spent two days handing out candy at the Fort Myers airport because I couldn’t even get onto a system even if I could help. Obviously, there are a lot of learnings that we’ll take from an IT perspective in terms of… we think we do a good job, but we’ve got to make sure when we have partners that we also have that same level of intensity. That one we’ll put in the humble category.
I think it’s cultural. People are pretty much accepting that there are unforeseen things, but it’s how you handle it. Transparency. We had very tough three days but we came back to number one completion factor and on-time. By the fourth day, it was already back. But we got so many complimentary letters during that period because the employees oddly shined during that period. We just appreciated the customers who I think appreciated that our employees took care of them during the very worst of times. It made us all feel… it took the edge off of the harshness of really feeling during those three days. At least our people were able to shine and that gives you a little sense of pride.
Steve, thanks for taking some time with us today. Really great discussion. We have a season two wrap-up question we’ve asked everybody: you’re on the road a lot, what is your guilty pleasure when you’re out traveling?
When I travel, I don’t know if it’s a guilty pleasure, maybe it’s guilty because I want to make sure I stay in shape, but I love running wherever I go. Whether it’s Central Park in New York or the monuments in DC or the riverfront in Seattle. I’ll be in London tomorrow night and there’s nothing better than running in Hyde Park and Buckingham Palace. You don’t see that here. It’s a guilty pleasure but it also helps you stay in shape and keeps that global view front and center.
Steve, thanks. Appreciate your time and insight. Keep it up. Steve Sear is the Executive Vice President, Global Sales and Distribution for Delta Air Lines. Thanks again, Steve. Take care.
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Now we will wrap with headwinds and tailwinds where we identify what we think is adding value to the travel industry or taking it away. Mike, I’m up first with a tailwind and I’m going to stay on the Delta trend line here. I didn’t want to do this one with Steve on, but they reported financial results for the September quarter and provided its outlook for the December quarter. Highlights of the September quarter, including both GAAP and adjusted metrics, were really amazing. Thanks to the exceptional work of the entire Delta team, they continue to lead the industry operationally and financially with double-digit operating margin and nearly $3 billion of free cash flow generation year-to-date. That’s right from their quarterly statement; they had an amazing quarter. It’s a great sign for the broader industry and a great sign for Delta continuing to take the lead in the airline space.
The outlook’s really good. The major airlines are a bellwether for the industry overall, and Delta’s certainly a bellwether for the airline industry. We follow them closely. Steve mentioned they put back a billion dollars into their employee profit sharing, which is a really great example of how companies can motivate and how that virtuous circle could really work for you and help you navigate through difficult times.
That’s a good lead into our headwind. The things I chose were more about the state of affairs with low-cost carriers. As much as we need a very healthy U.S. airline industry, we need a very healthy aviation industry globally. It helps fuel basically all business everywhere and gets us to all the places we need to go. Having competition is healthy and important too. The low-cost carriers have all been really falling on harder times. Some of that I think is reflected in some of the choices that customers make now in this environment about the product they’re choosing and the airlines they’re choosing. Are they choosing reliability and a certain amount of comfort or benefit that they can’t necessarily get with a low-cost carrier?
We’ve seen the struggles Southwest has been having, JetBlue has been having, Spirit, Frontier, etc. I think they’re all trying to find their way, but we need them, or at least a segment of them, because it helps keep a healthy check and balance in the industry. For me, it’s more of a headwind of saying having a carrier shutting down or experiencing real trouble doesn’t help the industry either. We need healthy competition in all the segments of the industry. We’ll stay tuned. As long as the overall demand stays healthy, there’s a pretty good chance some of those or most or all of them will find their way.
That is our show. Thanks again to our sponsor Safe Travel RX and we will see you back here next week. Have a good night, Mike. See you, Ed.