Delta CEO Ed Bastian is being criticized over some comments he made about the trajectory of ticket prices. This is one of those topics on which I have to defend airlines, as I think some people are just unrealistic about how the industry works.
In this post:
Ed Bastian hopes Delta can maintain pricing strength
During the Q1 2026 Delta earnings call, CEO Ed Bastian was asked a question about what would happen if oil prices suddenly dropped considerably, with fare increases not fully rolled back. Would Delta be able to maintain its previous guidance and potentially have a lot of upside there for the remainder of the year, or what? Here’s what Bastian said:
We’re not in a position given how dramatic the fuel swings have been to really answer that. We do expect, hopefully, that fuel settles down. Now, it’ll settle down, I think, at a higher level than where we have in the plan. Fuel recapture is going to be important no matter what we do, and the degree to which we can retain any of the pricing strength that we talked about from industry rationalization, that will certainly help us boost our margins this year and clearly into next year as well.
As you can see, Bastian references a desire to “retain any of the pricing strength” that has been gained as a result of this crisis. That’s also partly a reference to industry mergers, as Bastian is predicting we’ll see quite a bit of consolidation, and that this would ultimately be to Delta’s benefit.
In defense of airlines and their pricing…
Ragging on airlines is a popular pastime, and people love to accuse airlines of trying to price gouge, without actually considering the incredibly challenging economics that airlines face. Nowadays it’s not uncommon for an Uber to the airport to cost as much as a flight across the country, and airfare remains incredibly affordable, all things considered.
The most basic thing to understand is that airline pricing isn’t based on the cost of transporting passengers, but instead, it’s based on what airlines can get away with charging. That’s the “beauty” of an industry that’s all about incremental revenue, where it’s about filling every last seat before the door closes, with fares that are as high as possible.
The good news for passengers is that in most situations, you’re actually being transported at a loss. Now, that’s a slight oversimplification, but the reality is that in the United States, a large percentage of airline profits come from loyalty programs, and that’s something that only larger airlines can properly monetize. Even for airlines that do turn operating profits, a majority of tickets are still sold at a loss, and airlines make money off of those booking the most expensive fares.
My point is simply to say that carriers like JetBlue haven’t been losing money since pre-pandemic just because they feel like it, but instead, because this is such a challenging industry. Fares need to be higher (or something else has to give) for the entire bottom half of the industry to remain in business.
Also keep in mind that what typically has the most impact on airline pricing is capacity. All too often, even during good times, the industry simply has overcapacity. So the way airlines deal with that is by reducing their scheduling, and utilizing their planes less. It’s another reflection of how challenging the industry is, when the only way you can fly a plane semi-profitably is by parking it over an extended period of time.
Bottom line
Delta CEO Ed Bastian indicated that even if oil prices drop, the airline hopes to maintain some of the “pricing strength” it has gained in recent weeks, as we’ve started to see fares increase. The reality is that fares aren’t increasing because airlines are waving some magic wand, but instead, because they’re cutting capacity, as that’s the only way to drive up prices.
Overall, the airline industry in the US has a serious profitability issue, and even the most profitable airlines are earning a majority of their profits from loyalty programs. So an airline executive indicating that they hope to charge as much as possible is just honesty, and nothing scandalous.
What do you make of Bastian’s comments about ticket pricing?
None of us are greedy; it's only the other guy who is.
Agreed, they have to run a business. That said, fares on Delta have gotten kind of absurd the past few years. Let’s pull an example for LAX-NYC (a route I fly often), for a roundtrip weekend in early November (12th-15th):
JetBlue Mint: $1,697
American Flagship: $2,571
United Business: $2,951
Delta One: $7,697
Perhaps even more staggering is the price comparison for premium economy:
United Premium Plus: $1,321
Delta Premium Select:...
Agreed, they have to run a business. That said, fares on Delta have gotten kind of absurd the past few years. Let’s pull an example for LAX-NYC (a route I fly often), for a roundtrip weekend in early November (12th-15th):
JetBlue Mint: $1,697
American Flagship: $2,571
United Business: $2,951
Delta One: $7,697
Perhaps even more staggering is the price comparison for premium economy:
United Premium Plus: $1,321
Delta Premium Select: $4,397
Like… as someone who appreciates a premium experience, it’s unreal. And these aren’t isolated dates. Check pretty much any dates further out in the schedule with the entire cabin open.
The problem is, once you start charging fares that are 2-4x the competition, you have to be at least twice as good, and while Delta is better in many ways, they’re not *that* much better. I start to be much more critical of the product.
I remember even just a couple of years ago, Premium Select was half the price it is now. It’s gotten out of hand and I think they’re living in an alternate reality that over $4k roundtrip makes any sense for premium economy, let alone over $7k for old 767 Delta One seats.
Wow, that's wild. Delta is definitely not better than Jetblue on a transcon flight imo.
you clearly don't realize that DL carries the most corporate traffic in the US industry - and perhaps the world.
The fares you see that far out are used as the basis for corporate negotiated fares. DL doesn't want to sell premium cabin seats at a discount that far out.
If you look at fares a couple weeks out, AA, B6 and DL are much more closely matched.
DL does get an average...
you clearly don't realize that DL carries the most corporate traffic in the US industry - and perhaps the world.
The fares you see that far out are used as the basis for corporate negotiated fares. DL doesn't want to sell premium cabin seats at a discount that far out.
If you look at fares a couple weeks out, AA, B6 and DL are much more closely matched.
DL does get an average fare premium but not as large your anecdotes suggest.
Anecdotes are great but they really don't represent much in an industry that as large as airlines.
I was a traveling Project Manager making 6 figures in the Sports and Entertainment technology field for the past 10 years. I walked away from it simply because I could not longer deal with the airlines, and air travel in general. When you are getting on planes 3 or 4 times a weeks, and spending multiple hours in airports every week, it just becomes so clear that behind all the attendants fake smiles, and customer...
I was a traveling Project Manager making 6 figures in the Sports and Entertainment technology field for the past 10 years. I walked away from it simply because I could not longer deal with the airlines, and air travel in general. When you are getting on planes 3 or 4 times a weeks, and spending multiple hours in airports every week, it just becomes so clear that behind all the attendants fake smiles, and customer service b s, none of these airlines care about your experience AT ALL. It's all theater, and fake to try and make you feel like you actually have some kind of status with them so you always choose them. In reality, they inconvenience you and screw you every chance they get, and they are literally just trying to farm your wallet so they can have their million dollar bonuses, mansions and lavish lifestyles. I just decided that airlines are so ridiculously greedy, and I was so sick and f - ing tired of constant delays and nonsense, and peeing away days of my life every month sleeping in airports because of their nonsense, that I realized 2 things. 1, the job wasn't worth it, and 2, I am never giving even a single dollar to any airlines ever again. I would rather take extra days just driving myself. They don't deserve my business, and I'm happy to spend the extra time that way instead.
Interesting, but it does increase your mortality rate.
I have no problem with Deltas approach. The benefit to flyers is , less poor people and drugged out rif raf all tatoooed up wearing pajama bottoms. I wish someday we return to the glory days of air travel.
dave over here getting giddy just reminiscing of colored water fountains
That's the standard operating procedure for most organizations, including airlines. Use every advantage you can to justify permanently increasing prices while simultaneously reducing the amount of products and services provided. Whatever factors drive up costs for these greedy orgs, they will always pass it off to the customer. If they actually had to contribute to rising costs, they couldn't have their million dollar bonuses anymore!
When DL says they are the most premium airline, that inlcudes prices as well.
Individual and corporate greed, incarnate.
Ed only cares about his $100 million incentive package.
Ragging on airlines is a popular pastime, and people love to accuse airlines of trying to not pay higher union wages, without actually considering the incredibly challenging economics that airlines face.
Unions have nothing to do with this.
Of course they won't go down . Money money .
There is no dollar sense to continue asserting that banks subsidize loyalty programs and airlines fly passengers at a loss. All businesses, especially the big 500 Fortune companies, will not exist without profits because they are not charity organizations. You can mention, first and foremost, about obscene executive compensation package plus benefits and paid expenses as well as those of board members. Once prices escalate, they will not come down despite factors that contribute to...
There is no dollar sense to continue asserting that banks subsidize loyalty programs and airlines fly passengers at a loss. All businesses, especially the big 500 Fortune companies, will not exist without profits because they are not charity organizations. You can mention, first and foremost, about obscene executive compensation package plus benefits and paid expenses as well as those of board members. Once prices escalate, they will not come down despite factors that contribute to rising prices dissipate. Loyalty programs will not alone finance all big orders of new planes that US airlines have committed to buying. But foreign airlines excel in services and other soft products. Labor expenses alone are not a competitive advantage.
Ed is correct in his comments. I recall Richard Anderson telling an analyst "We're running an airline, not a hobby." And like any good business you charge what the market will bear.
We will never have high speed rail in this country because of opposition to eminent domain. That may be a good thing when you look at how it was used in the past.
I have no idea of how someone thinks airlines make money on domestic fares as a whole. Sure, there are some money making routes, generally shorter ones with little competition, but I doubt there's an airline out there that makes any,...
We will never have high speed rail in this country because of opposition to eminent domain. That may be a good thing when you look at how it was used in the past.
I have no idea of how someone thinks airlines make money on domestic fares as a whole. Sure, there are some money making routes, generally shorter ones with little competition, but I doubt there's an airline out there that makes any, or at best very little money, flying tourists to Orlando. And there's far more flights to Orlando than Cedar Rapids, Iowa.
How uncompetitive must US airlines be that without the huge credit card revenues they would essentially all be bankrupt. Airlines in non US markets do not have the same advantage and yet some actually make a profit.
It's just a different business model - credit card income cross-subsidises cheap fares. I think those airlines are caught in the middle between a hugely influential banking lobby and a political class which enjoys its support. It's not necessarily a good place to be for the airlines, but they've got to adapt to their environment.
The US political system is so tightly interlaced with banking interests that they're trying to go after the Brazilian government...
It's just a different business model - credit card income cross-subsidises cheap fares. I think those airlines are caught in the middle between a hugely influential banking lobby and a political class which enjoys its support. It's not necessarily a good place to be for the airlines, but they've got to adapt to their environment.
The US political system is so tightly interlaced with banking interests that they're trying to go after the Brazilian government for having had the temerity to introduce Pix (payment platform supported by the central bank) because it's been eating into the market share of Visa and MasterCard!
Yet again, one is minded to post that well known phrase or saying …. “Who cares”?
Seems you do... again...
Troll elsewhere
This is way too generalized. A 1.5 hour flight from where I live to where my family lives that’s serviced 4x daily regularly costs over $800 one way. Absurd highway robbery.
@ Dt -- For sure it's generalized, and I think I acknowledged that. Yes, a short flight that costs $800 is an example of where an airline makes money, and that's obviously a market where an airline has pricing power, due to its schedule. Keep in mind on that same flight you'll have a lot of passengers who are connecting, who are probably paying 10-20% that much for the segment.
And they definitely will not drop the bag fee ever again regardless of situation in Iran.
How does your defence of airlines needing to ensure they charge sustainable fares align with your insistence that UA's introduction of premium class fare families is bad for consumers because it'll allegedly lead to higher fares? Surely the existence of financially viable airlines must be in the consumers' interest?
@ Throwawayname -- That's a great question with a complicated answer. Keep in mind that on the premium cabin front, demand is as high as it has ever been, but yields from leisure travelers just aren't as high as they were from business travelers. A premium leisure traveler might be willing to pay $3-5K for business class to Europe, but probably not $10K+.
So airlines have to find way to extract more revenue from those...
@ Throwawayname -- That's a great question with a complicated answer. Keep in mind that on the premium cabin front, demand is as high as it has ever been, but yields from leisure travelers just aren't as high as they were from business travelers. A premium leisure traveler might be willing to pay $3-5K for business class to Europe, but probably not $10K+.
So airlines have to find way to extract more revenue from those premium leisure travelers. Of course fare increases aren't good for consumers, but to me that doesn't mean that airlines are somehow being exploitative, or anything.
Also keep in mind that airline operating costs have gone up massively since the start of the pandemic, and those have to be covered somehow. So this isn't even about corporate greed, it's about being able to pay the high salaries that need to be paid to keep the industry moving.
My issue with this line of thinking is that you seem to subconsciously overlook the fact that fare increases can actually be good for consumers.
The history of aviation is littered with airline collapses and nobody wants to wake up one morning and find out that their local airport has lost half a dozen leisure destinations and/or a lifeline route to a major hub.
The airlines (contrary to popular belief) do make most of their money by selling seats unless the airline is ULCC.
@ Cr- -- They generate a majority of their revenue from fares, but it's hard to argue that they generate most of their profits from that. Admittedly it's hard to break down how things contribute to the bottom line (since the loyalty program can't exist without the airline), but when RASM is lower than CASM at most US airlines, it's hard to argue they're taking us for a ride.
It would be nice to see a post that details how US airlines make their money vs South America, western Europe and Australia for example. If loyalty programs and cargo are keeping US airlines afloat, what are the other regions above doing?
their labor cost is around half or less. there i explained it for you
Seems to me like in a country with a functional transportation network, there'd be another mode of transportation in-between airplane (best for long distance/over-water trips) and car (best for shorter trips), that people could use as a cheaper alternative that both doesn't require driving themselves and is still at minimum competitive to driving in terms of speed. I think in other countries, it's called a train.
@ Dusty -- You're right for sure, public transportation in the United States sucks. In fairness, I'm not sure the economics of widespread train travel really make sense either, given the size of the country, plus how spread out large population centers are. It would be nice, but...
Ben, that's a pretty lazy take commonly used by conservatives to shut down any discussion of investment into high speed rail in this country. HSR is ideal for travel within 300-500 miles, so it doesn't really matter "the size of the country" but rather the corridors where it might make sense to serve between two large population centers. There's plenty of potential opportunities if the system wasn't so rigged towards building highways (and if the...
Ben, that's a pretty lazy take commonly used by conservatives to shut down any discussion of investment into high speed rail in this country. HSR is ideal for travel within 300-500 miles, so it doesn't really matter "the size of the country" but rather the corridors where it might make sense to serve between two large population centers. There's plenty of potential opportunities if the system wasn't so rigged towards building highways (and if the freight railroads weren't near impossible to work with).
@Ben
I don't think the economics of it is any worse than, say, the Interstate system. One of the hallmarks of a functional government is providing infrastructure and services that benefit the nation as a whole when private companies can't do it. A similar example is USPS. Sure UPS and Fedex exist, but they deliver to a fraction of the places USPS does and often use USPS for last-mile delivery. They do not have...
@Ben
I don't think the economics of it is any worse than, say, the Interstate system. One of the hallmarks of a functional government is providing infrastructure and services that benefit the nation as a whole when private companies can't do it. A similar example is USPS. Sure UPS and Fedex exist, but they deliver to a fraction of the places USPS does and often use USPS for last-mile delivery. They do not have the ability to scale to the level that USPS operates on daily without bankrupting themselves, because nobody could pay the prices they'd need. That's why we pay taxes: everyone contributes to a common good, even if we don't directly use it, because the direct benefits it provides others also provide indirect benefits to us. Whether that's the ability to affordably mail letters and parcels or get from city to city.
As far as the size of the country goes, that's misleading. Most major population centers aren't that far from each other. A national rail network shouldn't be thought of as trying to capture transcon traffic, and as someone knowledgeable about aviation I'm sure you'd agree that transcon traffic is a small portion of US air travel. Additionally, not all intercity rail necessarily needs to be true HSR. Countries with decent rail networks have regional, non-HSR capable of 100-120mph speeds which would be plenty for connecting major cities to smaller cities and towns around them.
A realistic network, at least initially, would be less a national network and more several regional networks that could later be connected:
1. Extending the Northeast Corridor down to Atlanta/Florida, which connects major southern population and business centers to the already existing HSR network we have. This gives us a Japan-like trunk through the Atlantic coast states, which accounts for just over 1/3 of the entire country's population. Additionally, many sections of the existing NEC desperately need to be reworked to allow the existing Acela services to actually maintain the high speeds it's capable of, since much of the ROW still has 19th century curves and tunnels limiting speeds. DC to Boston is a slightly shorter distance than Tokyo to Aomori, but Tokyo to Aomori only takes 3 hours by train while DC to Boston takes 7.
2. Texas Triangle plus San Antonio, the biggest no-brainer of any completely new-build intercity rail
3. Expand rail corridors in the Midwest around Chicago to connect Detroit, Cleveland, Columbus, Cincinnati, Indianapolis, Milwaukee, Minneapolis, and maybe St Louis. This is the more difficult one due to the radial nature of it and lower population than the eastern seaboard, but the southern and eastern spokes would eventually connect to Atlanta through Nashville and Philly/NYC through Cleveland or Columbus.
4. A Front Range line (this is also easier thanks to just being one single line) going from Boulder through Denver to Colorado Springs, with an eye towards eventually connecting to Santa Fe and Albuquerque.
Respectfully, Ben, this is an area where you are totally out of your depth (train travel).
Rail works for anything up to about 500 miles, and there are a ton of corridors for which it could work and for which we could eliminate short flights, especially by building air-high speed rail connections at airports, including:
The entire Northeast Corridor between Boston and Washington, D.C.; the entire proposed California High-Speed Rail system; the so-called Texas...
Respectfully, Ben, this is an area where you are totally out of your depth (train travel).
Rail works for anything up to about 500 miles, and there are a ton of corridors for which it could work and for which we could eliminate short flights, especially by building air-high speed rail connections at airports, including:
The entire Northeast Corridor between Boston and Washington, D.C.; the entire proposed California High-Speed Rail system; the so-called Texas Triangle consisting of Houston, Dallas and San Antonio/Austin; a constellation of cities outside Chicago, including Milwaukee, Detroit, Madison, Minneapolis-St. Paul, Indianapolis, Cleveland, St. Louis and Kansas City.
Of the ten busiest air routes in the US, three are easily replaceable with HSR: LA to SF, Atlanta to Orlando and LA to Vegas
Nothing to see here.
Name of the game is charge what the market will bear, without regard to the cost of inputs. Always has been, always will be. He's just being honest.
Does anyone expect an airline CEO (or any other fuel-dependent industry CEO) to enthusiastically state their hope to lower their prices when their own costs take a dip?
Different topic but related: It'd be interesting to see how much the fuel price...
Nothing to see here.
Name of the game is charge what the market will bear, without regard to the cost of inputs. Always has been, always will be. He's just being honest.
Does anyone expect an airline CEO (or any other fuel-dependent industry CEO) to enthusiastically state their hope to lower their prices when their own costs take a dip?
Different topic but related: It'd be interesting to see how much the fuel price jump from the war impacts each airline. I am aware a good many lock in fuel prices using the futures and options markets. Those stuck at the spot price during the war have it roughest...
His comment was in response to an analyst question and regarding DL's unwillingness to provide full year guidance.
He also said that DL is recovering only about 40-50% of the increased cost of fuel which means that, at current fuel costs, billions of more will be added to the industry's fuel bill and for the big 4 airlines with DL having the lowest increase because of the refinery. Fare and fee increases are nowhere...
His comment was in response to an analyst question and regarding DL's unwillingness to provide full year guidance.
He also said that DL is recovering only about 40-50% of the increased cost of fuel which means that, at current fuel costs, billions of more will be added to the industry's fuel bill and for the big 4 airlines with DL having the lowest increase because of the refinery. Fare and fee increases are nowhere near enough to cover higher fuel costs.
He said that the amount of volatility in fuel markets is why they cannot provide guidance.
Yes, they want consolidation and reduced capacity and for poor-performing players to leave the market or have their capacity managed by better-run airlines but even on a fuel cost basis, fuel prices will not come down even if miltary action stops because there are so many imbalances in the global fuel supply.
DL also said it was removing growth capacity for the 2nd quarter which other carriers that have less ability to lower fuel costs will undoubtedly have to follow. AA was adding the most capacity followed by UA; WN had very little capacity growth in its plan even before the war started.
what is notable is that there will be a two-week lulll before the next airline - UA - reports where UA normally follows DL by less than a week. Lots of airlines will be digesting what DL, the DOT Sec'y and war news but much of the upbeat commentary at the JPM conference just a few weeks ago will turn more negative.
Yeah, it’s fine for YOU who no doubt gets free points and whatnot for writing reviews but not for the rest of us.
@ Jacob -- I use points I earn to travel on airlines and write reviews, and not the other way around. I'm curious which point of mine you disagree with, though?