Delta Air Lines forecasts an upturn in transatlantic traffic will continue. The airline’s head of operations in Europe, Matteo Curcio, spoke to Ian Taylor
The strong post-pandemic recovery in travel between the US and Europe is set to continue, fuelled by unspent billions in consumer expenditure.
That is according to Delta Air Lines’ new head in Europe, Matteo Curcio, who said: “The recovery is very strong, especially premium leisure, and we see a stable demand environment – one that should be healthy for some time.
“When you look at the correlation between aviation and US GDP, there is a gap of $300 billion which would have been spent on travel in the last three years and has not been.”
He argued the strength of demand “is reflected in our results”, noting: “We’re looking at our most-profitable ever second quarter [April to June] and upped our guidance on year-end results last month.”
Curcio took over as Delta senior vice-president for Europe, the Middle East, Africa and India (EMEAI) at the start of July, having previously headed the airline’s Asia Pacific operation.
He has worked at Delta since 2006 when he took charge of the carrier’s transatlantic and trans-Pacific network planning. Then, as director of alliance strategies, he developed Delta’s joint venture with Air France-KLM.
Curcio noted: “When I started at Delta in 2006, we didn’t have access to Heathrow and we had one daily flight to Gatwick.”
Now, he said, “we’re a solid number-two” in the UK transatlantic market with joint-venture partner Virgin Atlantic.
Delta began flying to Gatwick in 1978 but was excluded from Heathrow under a restrictive US-UK agreement which, until 2008, limited transatlantic access to Heathrow to just four airlines.
This summer, the carrier will operate 75 flights a week from Heathrow to the US and 222 together with Virgin Atlantic, with the pair jointly offering 20% more capacity than last summer. Delta’s UK seat capacity alone is 46% up year on year and 29% up on 2019.
Delta returned to Gatwick in April for the first time in 15 years, operating a daily service to New York-JFK. And it launched a daily summer service from Edinburgh to Atlanta in May, to add to daily flights to New York-JFK and Boston.
Largest-ever transatlantic schedule
Curcio described Delta’s transatlantic operation as “our most important” and said: “We’re flying the largest transatlantic schedule in our history, both as Delta and as a joint-venture with Virgin Atlantic and Air France-KLM.”
He noted: “Our schedule from the UK is almost back to the pre-pandemic level, at 99%.” However, Delta’s transatlantic premium traffic to and from the UK is up 16% on 2019.
The carrier operates to 15 US destinations from the UK and with partner Virgin Atlantic operates 278 flights a week to the US.
Curcio acknowledged the strength of the dollar in the US market “is one reason we see such strong transatlantic travel”. But with “the traditional corporate market still lagging at 70%-75% of 2019’s traffic”, it is premium leisure demand driving the growth above pre-pandemic levels.
He suggested “there is some structural element” to the lag in corporate traffic, arguing: “There is more flexibility in the way people work. We’re seeing new patterns of travel, but we expect an uptick. Corporates expect to travel more in the second half of the year.”
Operational reliability is “the priority” this summer following the flight delays and cancellations across Europe last year, although the US has suffered its own problems with more than 8,000 flights cancelled last week.
Yet Curcio insisted: “The problems experienced in Europe last year are well behind us.”
He characterised the resumption in air travel last year in Europe as “passing from nothing to 100 in no time” and argued: “We didn’t know how difficult it was to shut down an airline or how difficult it was to restart.”
But he noted: “The recovery in Asia Pacific was slower. It was more phased. The transition was easier.”
‘Agents play a critical role’
Travel agents and travel management companies (TMCs) play “a critical role” for Delta Air Lines, insists Curcio.
Delta takes about 60% of its bookings direct worldwide, with 40% made through intermediaries. But the proportion of agency and TMC bookings in the UK are much higher. The carrier reported two-thirds of its UK bookings came via intermediaries in the first five months of this year.
Curcio insisted, “agents remain important to us” and said: “Our UK corporate and agency travel partners will continue to play a critical role to Delta and to our joint-venture partners in the future.”
This does not mean Delta and partner Virgin Atlantic are ignoring developments in new distribution capability (NDC) aimed at enabling internet-style retailing through agents. But Delta does not propose to follow British Airways’ partner American Airlines in withholding fares from global distribution systems (GDSs) in order to drive bookings via NDC.
Curcio confirmed: “We are looking at NDC.” But he said: “Agents and TMCs are an important part of our footprint, and we want to help them display our product in the best way.
“We’re sensitive to agency partners’ needs and strive to be evolutionary rather than revolutionary in our approach to NDC, ensuring benefits for shareholders. We will not introduce new technology unless it adds value to all.”
Programme of transformation
Delta’s commitment to the trade continues alongside the carrier’s digital transformation.
Curcio explained: “Personalisation is the way we’re going, allowing employees to recognise customers and offering customers privileged access to dedicated, personalised content.”
The carrier has a substantial digital base to build on. Curcio noted: “Delta is the fifth-largest e-commerce retailer in the US, after Amazon, Walmart, eBay and Apple, and the equivalent of almost 1% of US GDP is transacted on the Delta-American Express credit card.”
He added: “The Delta app is recognised as one of the best in travel. More than 85% of transactions can be self-serviced via the app, triple the proportion in 2019, and it allows the customer to be in charge. You can rebook yourself or refund yourself.”
Curcio said: “We were the first airline to announce free Wi-fi for every passenger, and 100 of our aircraft now offer next-generation personalised content.”
But digital technology is not the only area of investment.
He explained: “We took advantage of the pandemic to accelerate our product development, fleet replacement and investment at airports. We spent more than $12 billion on airport facilities, with new terminals at Los Angeles, New York-JFK, Seattle and Salt Lake City airports.
“It would not have been possible to invest in [construction at] these airports when lots of passengers were flying.”
The carrier also “accelerated” its “programme of transformation” in other areas, retiring older aircraft and replacing them with new-generation, more fuel-efficient Airbus A330-900neos and A321neos.
And it looked to enhance its premium offering, comprising Delta One or Delta One Suites, Premium Select (premium economy) and Comfort Plus (extra leg-room economy seats).
Curcio noted: “We looked to our premium products to generate $10 billion in revenue in 2014. We’re looking at double that in 2023.”
‘We’re stepping up on sustainability’
Curcio is optimistic about Delta hitting its sustainability targets in the near and longer terms.
He said: “We’re deploying more and more new generation aircraft, which is important for our carbon footprint. Only 10% of our widebody [long-haul] fleet were new generation aircraft in 2019. By next year it will be 40%.”
Delta is already operating the new Airbus A330-900 to Heathrow which is 15%-25% more fuel efficient than the Boeing 767-300s it is replacing and offers 66 additional seats.
Curcio said: “You’ll see more A330-900s coming to Europe, and Virgin Atlantic is undertaking an important renovation of its fleet which will make it more fuel efficient and better equipped.”
He added: “We’re working on electric ground handling, and we have a target of 10% sustainable aviation fuel (SAF) use by 2030 and are working hard to increase the supply of SAF.”
There is currently not enough SAF produced in the world to run a fleet the size of Delta’s for one day. But the carrier has agreements to meet half its SAF requirements by 2030, meaning 200 million gallons a year.
The US federal government’s provision of $359 billion in investment and incentives to develop renewable energy including SAF in its Inflation Reduction Act (IRA) has attracted much attention in Europe. But Curcio argued: “Europe is ahead in the maturity of its discussion of aviation’s carbon footprint problem.”
Asked if he is confident aviation can hit Iata’s target of net-zero aviation by 2050, he said: “I’m confident we’ll do everything we can as an industry to get there. We’re all investing.
“At Delta, we have an entire organisation dedicated to this. We’re stepping up as an industry and Delta is in a leadership position on it.”