Delta’s Promise to Pay Businesses if American and United Run a Better Operation Isn’t Much More Than a Great Marketing Message

It’s no secret that Delta is running a fantastic operation these days. On-time performance is impressive, and only a tiny number of flights end up canceled. Now, Delta is taking this operational performance and turning it into a guarantee for its corporate clients. If Delta doesn’t beat United and American in operational performance, then it’s going to pay those corporate clients with future credit on Delta. Great, right? It is, though it’s highly unlikely Delta will ever pay a dime on this. It’s really just a great marketing message.

Delta Leads the Pack in On Time Performance

The program is called the Operational Performance Commitment (OPC). And while I wasn’t able to get details on exactly what kind of payouts we’re talking about, this is certainly an enhancement for corporate clients. It’s also a good incentive to get them to perform. Those clients who don’t live up to at least 90 percent of their market share goals aren’t eligible for payout. And those who reach 110 percent of their market share goals will get a 50 percent increase in the payout. So, be loyal to Delta and you have the chance to get paid more.

But let’s be honest, neither American nor United are in any place to challenge Delta’s operational heft right now so Delta isn’t going to pay out anytime soon. Throw Alaska into the mix for those Seattle-based clients and it would be interesting (and costly). This has to be more of a marketing exercise than anything. It’s just another way to reinforce with corporate clients just how good of an operation Delta is running.

The reality is that this program has been structured with so many carve-outs that even if American and United did step up their game, it’s still unlikely Delta would have to pay. Here’s how the structure gives Delta the advantage.

The Payout Requires Underperformance for a Full Calendar Year
Even though the Department of Transportation (DOT) puts out a monthly scorecard on performance, this program runs for a full calendar year. So Delta could, in theory, have a bad month but it could make up for it later. That doesn’t lessen the impact poor performance would have had on its corporate clients during that one month, but Delta has a buffer to avoid paying if that happens.

The Metric Only Counts Domestic Flights
Delta is using the DOT stats available for domestic flights only. So if there was a widebody meltdown (ahem, United) that hurt the international operation, that wouldn’t make a difference.

This Only Includes Controllable Delays
The DOT statistics break delays down into 5 categories. The extreme weather, national aviation system, and security delays won’t count toward the payout, because they aren’t within Delta’s control. It’s only the air carrier and late arriving aircraft delays that will count. (At least, I assume the late arriving aircraft delay counts.) This means that if there is a bunch of weather that messes with a Delta hub, it won’t impact the payout status even though corporate clients will have been inconvenienced.

This Doesn’t Include Connection/Express Flights
Without question, this is the biggest carve-out of them all. This payout only looks at Delta-operated flights. That means the giant Delta Connection network can fall apart completely and it won’t count toward this calculation.

Now let’s be fair here. Today, Delta generally outperforms everyone even if all these exclusions aren’t… excluded. I pulled up delays for June. The delays and controllable delays in the chart below came from the DOT. The Express delays came from masFlight.com. I should note that the Express delays aren’t just domestic, so those regional flights into Canada and Mexico/Caribbean snuck in there.

June Airline Delays

Yes, Delta outperforms across the board, but it may not always be that way. Delta has built this with enough safety valves, so that it probably won’t ever have to pay. Instead, this is just a great marketing message that reminds corporate partners just how good of an operation the airline is running today.

[Original race photo via Denis Kuvaev / Shutterstock.com]

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