Delta has repeatedly made the decision over the last few years to take the path less traveled. In its latest move, Delta has decided to pull out of the US airline industry’s lobbying group, Airlines For America (A4A), because it doesn’t agree with the group priorities and decisions. It’s not entirely clear to me if this is a smart move or not, though it may end up working well for both sides.
JetBlue may have liked to call itself “contrarian,” but Delta has certainly gone against the grain more often when it comes to working with other airlines. Delta seems to have two options… my way or the highway. Here’s just a partial list of examples.
- Highway: Delta couldn’t get a joint venture with Korean, so it decided to punish the airline.
- Highway: Delta wanted more connectivity from Alaska in Seattle, but it couldn’t get it, so it built its own hub and is slowly ending the partnership.
- My Way: Delta bought a chunk of Virgin Atlantic and remade the airline’s network to fit Delta’s London needs.
- Highway: Delta couldn’t get American to pay a huge increase in costs to maintain its interline agreement, so the agreement ended.
- Highway: Delta exercised an option to extend a contract for 50-seater flying with Republic, despite expectations that it wouldn’t. Delta knew that it would be difficult for Republic to do the flying thanks to the pilot shortage, so it waited and then sued Republic for performance problems.
- My Way: Delta has spearheaded the fight against the Middle East carriers, and United and American followed along.
As you can see, this quite often ends with relationships frayed and partnerships damaged. The decision to leave A4A just furthers that.
The point of A4A is to be a lobbying arm for the US airline industry to push its agenda in the US government. Every industry has one of these kinds of groups. It’s really helpful for advocating for things that are generally supported by the industry at large. But lately, Delta has found itself with its own agenda. Because of that, it has been at-odds with A4A and with the group’s membership. Since Delta has been pushing so hard using its own people to get its agenda through, it decided it didn’t need to waste $5 million a year to participate in a group with which it didn’t often agree.
What were the sticking points? Well in Delta’s press release, it said A4A had “failed to support Delta on several key issues, including the growing harm of government-subsidized carriers in the Middle East and the damage the Export-Import Bank does to U.S. airlines. A4A also has advocated for the nation’s air traffic control to be separated from the FAA and put into a private organization – a move opposed by Delta.”
We all know the story on the Middle East carriers. The problem for A4A is that there isn’t a united front in the industry. While American, Delta, and United appear to be on the same page, Alaska, Hawaiian, JetBlue, FedEx, and UPS are all members of A4A as well. And they all benefit from the status quo.
Regarding the Export-Import Bank, well, that’s one that Delta has long hated for providing financing options to foreign airlines that buy Boeing-built aircraft. You can see why Delta might not like that, but it speaks out of both sides of its mouth. Delta didn’t have a problem when Gol in Brazil received Ex-Im assistance to fund maintenance services from Delta’s TechOps team. But Delta is thinking about this from its own perspective. Boeing, a very powerful company, would be in a world of hurt without Ex-Im bank assistance. The reason is that other aircraft manufacturers have their own banks to do this in their own countries. If all of them went away, fine, but otherwise, Boeing stands to feel the most pain by far. So there’s no clear industry stance here.
And then there’s privatizing air traffic control. Delta is strongly against it, but not everyone feels that way. Again, Delta found itself on the opposite side of the coin.
Now, the remaining A4A members decided to each pay more to make up for the loss of Delta’s $5 million in annual dues. So for A4A, this will continue to be business as usual, possibly with more effectiveness internally since there won’t be as many squabbles between carriers. But without one of the nation’s biggest airlines onboard, it might lose some clout.
On the other hand, Delta will now be doing it alone and pouring money into lobbying directly. I asked Delta if it was planning to form a separate group of its own, but I received no response. Either way, Delta is active approach is going to cloud the picture a little bit from a Washington perspective. A united front is much cleaner and easier to get behind.
In the end, you don’t want a group that has one outlier airline that hates what you do, so it’s better that they part. But maybe the more interesting question is… why does Delta have such a different view of the world in the first place?