The airline industry is an incredibly difficult space to operate in, with intense competition and razor-thin margins. Despite the many challenges airlines face, Delta has emerged as an industry leader over the last several years with superior financial and operating performance. Over the past five years, Fortune has named Delta the world’s most admired airline four times, and the company’s stock price has nearly quadrupled.
Delta’s recent success has been driven in part by a focus on data that permeates the firm. From customer loyalty to airport operations, new applications of data analytics have played a central role in enabling the firm to differentiate itself with more effective marketing and better service.
For instance, Delta has invested over $100 million in airport baggage systems to track and improve its baggage handing. With more advanced tools for baggage data collection and analysis, Delta’s operations teams at airports and headquarters have been able to better identify key causes and trends in mishandled bags and implement effective solutions. By integrating real-time flight data into its baggage systems, Delta now automatically alerts baggage handlers when connecting bags need to be transferred directly to another plane instead of sent through the airport’s luggage sorting system. Delta has also begun sharing baggage tracking data with travelers, who can now follow the progress of their bags minute by minute on the Delta app and website. By bringing data to what was previously a highly manual operation, Delta has reduced its mishandled baggage rate by 71% since 2007 (more than any other airline) and improved its customer experience.
In addition, Delta has made use of more advanced data in its efforts to better engage customers and generate loyalty. The airline combines customer data from flight purchases, routes flown, and credit card spending to piece together customers’ demographic profile, travel habits, spending ability, and even what company they work for. The company uses that data to carefully tailor promotions and target customers with whom the airline senses there is more opportunity. If you have recently joined a travel-heavy professional services firm, Delta may identify your company through the corporate travel agency that books your business travel and send you a company-specific promotion designed to capture your loyalty before a competitor does. If you have recently stopped flying on Delta and have purchased significant airfare on other airlines using your Delta American Express card, Delta may take note and send you a promotion to win you back.
Data is not new to the airline world, of course. At most airlines, deep data analysis, whether automated or manual, underlies every function from ticket pricing to route planning. But in recent years Delta has expanded the purview of data analytics to encompass aspects of its business that have traditionally been performed by hand or managed by intuition. The result has been an improved operation and experience for customers, who have taken note. Customer satisfaction scores as measured by JD Power have steadily marched upward since 2011, and corporate traveler managers have rated Delta the top US airline for four years in a row.
While taking a personalized approach to customer engagement may help Delta win more business, it comes with some risks. If customers perceive that they are being tracked too closely, they may feel that their privacy is being infringed on. In 2013, Delta was heavily criticized when its website unintentionally allowed SkyMiles members to view the airline’s estimates for their annual income, their discretionary spending, the value of their home, and their sociodemographic profile. Moving forward, the airline must find a balance in providing personalized customer service without making customers feel spied on.