I’ve wanted to write this post for a long time. In fact, I’ve had a blank post with this title sitting in my drafts folder since December. Now, the timing seems perfect considering the massive operational problems Delta faced last week when storms sat on top of Atlanta and the northeast (and incredibly, continues to face in some ways). There is less and less differentiating low cost carriers from legacy airlines every day, but the ability to reacommodate when things go wrong is still one of the more important differences. In 2015, Delta decided its operation was so good that it wasn’t as concerned about having agreements with other airlines. The end result was that American and Delta broke ties so they could no longer put stranded travelers on each other. This has gone on long enough. Figure it out, guys.
I wrote about this back when the airlines broke off their agreement, but it’s worth rehashing a bit of it here.
Since the dawn of time (or something like that), airlines have had interline agreements with each other. This allowed them to issue a single ticket covering flights from both airlines, check bags through to each other, and reaccommodate passengers on each other when things go wrong. The first two are important today for airlines like JetBlue or Alaska which rely on partnerships with global airlines to get their customers where they need to go. But between the big legacy carriers, it’s not as important as it used to be. The last piece, being able to reaccommodate people on each other when things go wrong, is valuable.
The way it works is fairly simple. If two airlines have an interline agreement, they can either accept the other passenger at face value of the ticket or they can do it at a set percentage of a high fare. These things all get settled behind the scenes through an industry clearinghouse, so for the traveler and customer service rep, it’s easy to handle.
Low cost carriers have never really gone down this route. Historically they focused on, well, keeping costs low, and that meant avoiding things like checking bags to different airlines and giving away revenue to another airline in times of trouble. Southwest today still can’t do it, so when things go wrong, it either has to buy a new, expensive last-minute ticket or it has to tell passengers they can either wait for the next Southwest flight or get a refund and find something on their own. It’s not great for anyone. Southwest will finally have the ability to enter into these agreements with its new reservation system, but when you think about ultra low cost carriers like Spirit, Allegiant, Ryanair, or easyJet, this just hasn’t been something they’re willing to do.
In this era of a la carte pricing and Basic Economy fares, the gap between legacy and even ultra low cost carriers has narrowed from a passenger perspective. But as mentioned, the ability and willingness to help passengers fly other airlines in times of trouble to me is one of the more valuable differentiators.
Back in 2015 when Delta was running that fantastic operation, it decided to get greedy. It noted that with United and American running far worse operations, it was taking many more passengers from them than they were taking from Delta. And so Delta thought it could make a money-grab and jack up the rates it charged United and American to take their stranded passengers. I had trouble following that logic, but apparently Delta thought it made perfect sense.
The reactions were very different. United caved and agreed to the higher rate. As its operation has improved, I’m sure the lopsided nature of the relationship has begun to settle out. But it’s very expensive when things do go wrong, so presumably it’s a last resort. In some cases, they may opt not to use each other at all.
American, on the other hand, told Delta to pound sand. It wasn’t going to agree to this and so the deal ended. Delta has generally continued to run a very good operation, but American and United are catching up. In the meantime, Delta has had some spectacular failures. There were the two computer outages in the last year which snarled operations for days. And then there was this storm last week that really messed things up.
Yes it’s true that Atlanta had bad storms last week, but Delta wasn’t able to prepare itself for a quick recovery. Days later, on Saturday, Delta had still canceled hundreds of flights. The airline kept delaying and delaying before canceling, making customers angrier and angrier every time. Phone lines were jammed; everything was gridlocked. Delta agents scrambled to find any remaining seat during the already busy Spring Break travel period, but many people were just out of luck. I bet Delta sure wished it could have routed some of those people on American to get them on their way.
Having the ability to put people on the other big US airlines is an important tool, not only for customers but for employees too. You think Delta’s front line people are having a good week telling their customers that if they want to get that seat on American they’re on their own? Nope.
There are some things that are negotiable, but this shouldn’t be one of them. Go back to the status quo, accept industry standard settlement, and stop screwing around with customers and employees. With lower rates, even the airlines that do have agreements with each other will be more inclined to send people to the other airlines when things go wrong. This should be one of the big differentiators for a legacy airline. Now go make it happen so we don’t run into this the next time there’s a meltdown.