For the past five years or so, boosting operational performance has been a key goal at Delta Air Lines (NYSE: DAL). Between 2010 and 2016, the company reduced cancellations by two-thirds and improved its on-time arrival rate by more than 16 percentage points. A focus on excellence in its maintenance organization and technological improvements were both major drivers of these achievements.
Other airlines, including United Continental (NYSE: UAL), have also significantly improved their operational reliability in recent years. However, Delta Air Lines has stayed at the head of the pack. In November, it achieved its most impressive accomplishment yet: Delta managed to avoid canceling a single mainline flight for the entire month.
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New milestones in November
Not too long ago, if an airline completed 99% of its scheduled flights in a given month, it was considered a solid performance. That isn't good enough for Delta's management, though. Year after year, the carrier has inched closer to its goal of perfection.
On Nov. 20, Delta Air Lines announced that it had set a new company record for the longest streak without a mainline cancellation: 35 days. Delta built on that momentum during the following week. Between Wednesday and Sunday of Thanksgiving weekend, Delta did not cancel a single mainline or regional flight out of nearly 23,000. By the end of the weekend, it had gone 11 days without a single cancellation (including regional flights).
Delta Air Lines' record-setting performance continued in the last few days of November. For the first time ever, it completed an entire month without a single mainline cancellation. It also set new records for on-time performance last month.
Running ahead of the competition
To some extent, Delta Air Lines may have benefited from benign weather during November. That said, none of its competitors are putting up the same kind of operational performance statistics.
For example, United Continental achieved several company performance records for the eight-day period from Nov. 19 to Nov. 26. On three of those days, it didn't cancel a single mainline or regional flight. Nevertheless, United's consolidated completion factor for the full period was 99.6%, compared to Delta's 100%.
By historical standards, a 99.6% completion factor is a very strong result. But it still means that United Continental canceled well over 100 flights during the course of the week.
Strong operational performance is important for financial success
It's not a coincidence that Delta Air Lines is both the most reliable of the three legacy carriers and the most profitable. Travelers -- and especially high-paying business travelers -- rely on airlines to get them where they need to be going in a timely fashion. Flight cancellations are a sure way to ruin a customer's experience.
The extent of Delta's advantage can be seen in its domination of the annual Business Travel News airline survey. The carrier has been ranked No. 1 for seven consecutive years -- and in 2017, the voters ranked it ahead of its competitors in each of the poll's 10 categories.
United Continental and American Airlines both realize that they need to become much more reliable to compete with Delta for the most lucrative travelers. However, the truth is that taking huge strides forward may not be enough. Unless Delta Air Lines stumbles, United and American will be doomed to compete for a distant second-place finish in terms of profitability.
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