Delta Air Lines, like nearly every other major airline in the United States, is exposed to ultra-low-cost carriers (ULCCs) in the marketplace. Each airline has taken a different approach to how they interact with ULCCs in their markets. Delta, which has spent the last several years engaging in a premium-oriented strategy, believes that this strategy is the one that will keep it successful, even as ULCCs continue to expand.
Delta stays confident as ULCCs grow
On Delta’s fourth-quarter earnings call, the carrier’s executives were asked about how the airline was thinking about its strategy, network, and offerings in relation to expansions from major ULCCs. President Glen Hauenstein stated the following:
“We’ve competed with ULCCs for many, many years, and I think that’s really where we came to a couple of different strategies, including our premium strategy. And I’d like to say that some of our highest return markets, historically, have been straight up against LCCs and ULCCs. So I think we’re really not afraid to compete in those markets.”
There are a host of different ULCCs that are on major growth trajectories. Allegiant is an example of one, and Frontier has even set up a base in Atlanta (ATL), which is Delta’s largest hub and home.
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The premium strategy remains key
As ULCCs grow, including in some of the carrier’s hubs, Delta Air Lines believes its premium strategy is the key to remaining successful. As Mr. Hauenstein stated, the airline has made a divergence compared to what ULCCs are doing, which thus impacts the bases of traffic the airlines are going after. As he further stated:
“[W]e think our products stand on their own and it is a very different product and a very different customer than they are going after.”
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