Not too long ago, it seemed to many travelers that airlines were constantly removing amenities and never adding new ones. However, in the past year or so, the legacy carriers have led a push to restore a few perks like free snacks in order to differentiate themselves from budget airlines.
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Later this week, Delta Air Lines (NYSE: DAL) will move even further in this direction by reintroducing complimentary meals in coach for some domestic flights. Delta expects this change to improve customer satisfaction. As such, it could become a key tool for fending off the threat from transcontinental expansion by JetBlue Airways (NASDAQ: JBLU) and Alaska Air (NYSE: ALK).
Free meals make a comeback
In late 2001, in the aftermath of the 9/11 attacks, nearly all of the legacy carriers (including Delta Air Lines) stopped serving free meals in coach on most domestic flights. By 2010, the only airline still serving meals in coach on any domestic flights was Hawaiian Holdings -- and that carrier doesn't operate any flights within the continental U.S.
These days, fliers have become completely accustomed to the idea of paying for meals onboard. Nevertheless, Delta plans to reinstitute free meals on a dozen key routes over the next two months.
Delta plans to serve free meals in coach on several routes. Image source: Delta Air Lines.
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On March 1, Delta will start offering free meals in coach on its New York-San Francisco and New York-Los Angeles routes. On April 24, this will be extended to 10 more routes: Boston-Seattle, Boston-San Francisco, Boston-Los Angeles, New York-Seattle, New York-Portland, New York-San Diego, Washington, D.C.-Los Angeles, Seattle-Fort Lauderdale, Seattle-Orlando, and Seattle-Raleigh/Durham.
Meal options will include a honey maple breakfast sandwich in the morning, mesquite-smoked turkey for the afternoon or evening, and a breakfast bar at the end of overnight flights. Customers seated in Delta's Comfort+ extra-legroom seats will get additional snacks and complimentary alcoholic beverages.
Competing with two up-and-coming airlines
Delta's decision to bring back free meals in coach appears to be first and foremost a response to JetBlue's highly successful "Mint" premium service.
JetBlue currently offers Mint service on its routes from New York and Boston to Los Angeles and San Francisco. Together, those make up four of the 12 routes where Delta is reintroducing free meals in coach. On the New York-Los Angeles and New York-San Francisco routes, JetBlue is earning dramatically higher margins with twice as many flights as it had a few years ago. Continued Mint growth is clearly a threat to rivals like Delta.
JetBlue's Mint premium service has become very popular. Image source: JetBlue Airways.
JetBlue is also about to begin another wave of Mint expansion, with the explicit goal of gaining share in transcontinental markets. By early 2018, it will offer Mint flights on three more of the routes for which Delta plans to offer free meals: New York-Seattle, Boston-Seattle, and New York-San Diego.
Alaska Air is an only slightly smaller threat to Delta Air Lines. The two carriers have been locked in a market share battle in Seattle for the past several years. Alaska's recent acquisition of Virgin America has put it in competition with Delta in numerous additional markets. Alaska plans to use its expanded West Coast footprint to gain share in the massive California market.
Indeed, Alaska (including Virgin America) competes directly with Delta on 10 of the 12 routes where Delta is reintroducing complimentary main cabin meals and indirectly on the other two. (Delta flies nonstop from Portland and San Diego to New York's JFK Airport, whereas Alaska offers nonstops from those cities to Newark Airport, another major New York-area airport.)
Delta is right to be vigilant
JetBlue Airways has had the highest rating of any airline in the annual J.D. Power North American Airline Satisfaction Study for 12 consecutive years. Meanwhile, Alaska Airlines has been the top-ranked "traditional carrier" for nine years running.
These carriers' efforts to improve their service and add more flights on key transcontinental routes thus represent a big long-term threat for legacy carriers like Delta Air Lines. Delta is in the favorable position of having better customer service than its rivals American Airlines and United Continental. Nevertheless, Delta will have to up its game to hold its own with JetBlue and Alaska on routes where they compete directly.
Offering free meals in coach is an easy and relatively cheap way for Delta to boost customer satisfaction. This should help it hold on to customers who might otherwise have defected to the likes of JetBlue and Alaska Airlines.
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Adam Levine-Weinberg owns shares of Alaska Air Group, Delta Air Lines, and JetBlue Airways and is short October 2017 $50 puts on Hawaiian Holdings and long January 2019 $10 calls on JetBlue Airways. The Motley Fool recommends JetBlue Airways. The Motley Fool has a disclosure policy.