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.
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?
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