Delta Air Lines CEO just revealed a harsh truth about why your flight was canceled
So far, travel this summer has been characterized by long lines at airports, a spate of flight delays and cancellations, and unprecedented amounts of lost luggage. All of which make for one of the most chaotic travel seasons in recent memory.
This Wednesday, Delta became the first airline to release quarterly earnings, shedding a light on the situation. It revealed some issues bubbling under the surface.
The company is experiencing a “training and experience bubble,” CEO Ed Bastian said in the company’s quarterly earnings call on Wednesday.
Nowhere is this clearer than the gap between staffing and air travel capacity: Bastian reported that Delta had recovered to 95% of the staffing level from 2019 pre-pandemic levels, but the airline was only operating at 82% of air travel capacity. In other words, a nearly fully staffed Delta is operating close to 20% below its peak level. To understand why, you have to go back to the brief pandemic recession of 2020, when Delta was one of several airlines to lay off staff—and accept government bailout money.
2022’s summer travel chaos has roots in 2020
The lower air-travel capacity is intentional on Delta’s part, Bastian explained.
“By ensuring capacity does not outstrip our resources and working through our training pipeline, we’ll continue to further improve our operational integrity,” Bastian said on the earnings call.
The airline said it had increased staff numbers at airports and in its reservations department, but still had to complete its hiring in pilots, flight attendants, and mechanics. This means that while the company may have been equipped to deal with the increased demand in air travel from a ticketing perspective, it is still ramping up with regards to its actual flights.
On the same earnings call, Bastian said the company has about 1,500 new pilots in training and more “waiting to be trained.” He specified that this number was “larger than we would normally carry.”
When asked about the financial and operational implications of the training backlog, Bastian said it was part of the company’s planned rollout to return to its 2019 flight schedule.
“The good news is that we’ve got all our folks,” Bastian said. “So, we’re at peak with respect to ‘training’ and I wouldn’t call it inefficiency but the cost of efficiency. Every month that goes by, it’s going to get better.”
In June 2020, a little over two years ago, 2,000 Delta pilots opted to take early retirement as the airline sought to reduce headcount in the earliest days of the pandemic when the number of global flights plummeted roughly 80%. In April 2020, Delta had received $5.4 billion, including a $1.6 billion loan, from a taxpayer-funded airline bailout.
As spending and travel resumed, at first slowly in 2021 and then dramatically in 2022, Delta has still dealt with the fallout of a pandemic-era labor shortage, so even as companies staff back up to 2019 levels, it’s just not so easy for its new staff to perform at that level.
Much of the training backlog is intentional, according to Bastian, because overall airline industry capacity still hasn’t returned to 2019 levels—his estimate is it’s currently between 90% to 95%—and he foresees continued pent-up demand for air travel as consumers become comfortable flying.
“It’s not just people that haven’t traveled,” Bastian said. “It’s volumes of trips that we anticipate people will take looking forward as they start to catch up on all the experience and all the opportunities that they lost.”
The discrepancy between flight numbers—82%—and newly filled positions—95%—is part of Bastian’s strategic plan to run what he referred to as a “quality operation” to meet the full demand which Delta estimates will return in the summer of 2023.
“We’re going to have the capacity to grow when we’re ready, but we want to make sure we’re focused on serving what we have,” Bastian said. “…You run a better airline, everything runs better, and the efficiencies start to materialize.”
In the meantime, the “training and experience bubble” will take some time to sort out.
Delta did not respond to Fortune’s request for comment.
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