Airlines With The Most Customer Friendly Covid-19 Strategies Earn Loyalty While Remaining Financially Competitive

To instill confidence in air travel during the pandemic, airlines with the most customer-friendly Covid-19 responses have made huge commitments to cleanliness and health at the airport and in flight. These steps include electrostatic cabin cleaning before every flight, testing employees for Covid-19, and creating some measure of onboard social distancing by ensuring every passenger sits next to at least one empty seat.

By blocking seats airlines like Delta, Southwest, Jet Blue, and Alaska seem to be putting the health and safety of passengers ahead of short-term financial performance.

In that regard, Delta seems to be leading the pack. On August 20, it committed to blocking the selection of middle seats in economy through January 6, 2021.

• For customers in parties of 1-2: Middle seats will be blocked to improve social distancing.
• For customers in parties of 3 or more: Middle seats are available for booking, to allow families and travel companions to select seats together.

Delta is also ensuring flights are not filled to capacity. For travel through at least Oct. 31, Delta will:

• Limit the number of customers on board all aircraft – with or without middle seats.
• Limit the First Class cabin to half capacity to further ensure more space between customers.
• Block one seat per row on aircraft without middle seats.
• When planes begin to reach capacity, it will consider using larger aircraft or adding more flights.

Flights with a Delta One cabin on widebody aircraft (business-class seats with a door) will be offered at full capacity effective October 1.

Blocking Seats Increases Customer Satisfaction And May Create Long-Term Loyalty

Sitting next to an empty seat doesn’t create sufficient social distancing from a health perspective, but it is surely better than being wedged in shoulder to shoulder. Moreover, the one thing that most improves onboard personal comfort is having the seat next to you vacant. In coach where seats are narrow and rows are squeezed ever more closely together, being guaranteed an empty seat beside you is a luxury.

It is not surprising that airlines that bestow on passengers the dual benefits of greater safety and more comfort are earning customer praise as measured by big increases in their net promoter scores (NPS). NPS is a tool designed to measure the loyalty that exists between a business and its customers. A score of +50 is great and +70 is exceptional. For the second quarter of 2020, Southwest recorded and NPS of 79. It last reported NPS from 2017 was 62. Delta reported an increase of 20 points over its NPS score from June 2019. I suspect other airlines with similar policies are also registering higher NPS scores.

Delta is the airline blocking seats that I have the most experience flying. I have a love/hate relationship with Delta. I hate the way it makes continual “enhancements” to its frequent flyer program that are actually devaluations of the benefits it claims to provide. For example, Delta has devalued its frequent flyer program by becoming revenue based and eliminating fixed prices for award tickets. It now often requires spending two or three times as many miles for an award ticket as when prices were fixed.

On the other hand, I love Delta’s onboard service and the way it often goes above and beyond for its most loyal frequent flyers. An example of the latter was a flight in business class from Tokyo to Bangkok last year on China Eastern Airlines that China Eastern cancelled because of Typhoon Lekima. I had booked that flight with Delta SkyMiles. When China Eastern stranded us at Narita Airport without attempting to book another flight, Delta came to the rescue. It booked us on the next flight in business class on Thai Airways. That probably cost Delta a pretty penny as Thai and Delta have no reciprocal rebooking agreements.

A few years ago, frustrations Delta’s frequent flyer program made me switch to American Airlines. It is disappointing that American is not blocking seats. That decision is symptomatic of other problems with what I view as short-sighted decisions by American’s executive management team. If I fly before the pandemic is over, it will be on Delta or another airline that blocks seats. After the pandemic I may stick with Delta and abandon American, which has other problems with its operations beyond its Covid-19 response.

Blocking Seats Would Seem To Be A Sure Fire Way To Exacerbate Pandemic Financial Losses

Airlines are burning through cash reserves and losing money hand over fist because of severely depressed demand for air travel.  You might assume that limiting capacity by blocking seats would make matters worse financially even if it increases customer loyalty.

But that may not be the case according to an August 5, 2020 article in the Business Insider.  The article states in part:

New data shows that regardless of what the airlines think, passengers want to see those seats fly empty — and are increasingly willing to pay for it. Passengers are willing to plunk down 16-17% more on average to fly on an airline that blocks the middle seat, according to a survey by Atmosphere Research, a travel industry analytics and consulting firm….

But two key accounting metrics indicate that Delta’s passengers, like those surveyed by Atmosphere, are putting their money where their (masked) mouths are.

The first is available seat miles (ASMs), which represents how many available seats an airline flew on its planes over how many miles. If one airline operates a route with a 200-seat plane, and another airline operates the same route with a 300-seater, the latter will have 50% more ASMs.

The second is Passenger Revenue per Available Seat Mile. PRASM measures how much revenue an airline makes from passengers — including fares, add-ons like baggage fees, and in-flight purchases — averaged out over all the ASMs the airline operated during that time period. It’s essentially a measure of an airline’s financial efficiency.

In essence, Delta is not earning revenue for 40% of their ASMs, since the airline is capping its flights at 60% load factors. So, setting aside variables like operating expenses and fares, Delta’s PRASM should be 40% below that of an airline like United, which is performing similarly.

However, Delta’s second quarter PRASM was 6.40 cents, just 15% below United’s 7.60 cents. The slimness of that gap suggests that Delta is earning a revenue premium, charging higher fares on average than United, according to Henry Harteveldt, a principal and co-founder at Atmosphere Research, a travel industry research firm.

“If you adjusted Delta’s PRASM for the 40% hit it took by blocking seats, Delta is earning a substantial premium over United,” Harteveldt said. “Overall it looks like Delta may be on to something.”

Delta CEO Ed Bastian stated that its surveys show that blocked seats are the top reason customers are choosing Delta.  Delta doubled down on its  strategy by extending blocked seats until no earlier than just after the busy holiday season as stated above.  

Final Thoughts

If I fly before the pandemic is over, it will be only on Delta or another airline that blocks seats. After the pandemic I may stick with Delta and abandon American, which has other problems with its operations beyond its Covid-19 response. Long term, it will be interesting to see if increased customer satisfaction from blocking middle seats translates into sustained customer satisfaction and improved financial performance.

If you fly in the next few months, what are the most important factors in deciding which airline to fly?