Delta Airlines just announced that they’ll continue to block middle seats on flights until at least April 30, 2021. There are some exceptions for First Class seats and they’ll let a party of 3 sit together instead of forcing them to split up.
Delta is the last U.S. airline continuing to leave the middle seat empty due to the coronavirus. It doesn’t matter if the reason is for guests’ safety or to make them more comfortable about flying, at this point. Delta has staked out this position and they apparently think that it’s working for them.
The obvious question is how Delta can do this without taking a hit to its bottom line. Flying planes under capacity means they’re leaving money on the table for every flight. While it makes customers happy, stockholders may feel differently if the airline is losing money in the process.
I did a little research and it looks like this isn’t hurting Delta as much as you’d think. Or there may be another reason that Delta can pull this off when other airlines have started booking flights to capacity.
Here are the 2020 4th quarter earnings for the major U.S. airlines:
- American – 2.2 billion loss (-3.81 per share)
- Alaska – 430 million loss (-3.47 per share)
- JetBlue – 381 million loss (-1.34 per share)
- Southwest – 908 million loss (-1.54 per share)
- United – 1.9 billion loss (-6.39 per share)
Delta lost 755 million in the fourth quarter or -1.19 per share. Even with blocking middle seats for the whole quarter, Delta lost less money per share than any other major U.S. airline. Compared to the other legacy carriers, there’s no contest for which airline is doing better during COVID-19.
This brings us to the chicken and egg problem. Since Delta is doing better financially than the other airlines, they can keep blocking middle seats to keep a competitive advantage. Passengers might pay more for that if they feel safer on Delta than another airline. Being able to charge more for seats means Delta can keep blocking those seats.
Or maybe the opposite is true. Because of their less favorable financial situation, United and American were forced to sell flights to 100% capacity in 2020. Passengers may only be willing to book those flights if they’re cheaper than what Delta charges. This forces them to keep charging less, meaning they have to fill flights to stay afloat and the circle continues.
I’d guess that it’s probably a combination of both of these situations that allow Delta to continue blocking seats while forcing the other airlines to sell those seats.
If the goodwill Delta is gaining with passengers will persist after COVID-19 vaccines are widely available and people start to travel closer to 2019 levels remains to be seen. However, it’s clear that Delta is making their bet and no one else at the table has a large enough stack of chips to see if they’re bluffing or not.
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This post first appeared on Your Mileage May Vary