Delta Air Lines' CEO Richard Anderson has hailed the airline’s recent record earnings, but warned about the dangers of unfair competition from Middle East carriers.
Speaking at the GBTA Convention in Los Angeles, Anderson cited the announcement of $1.4 billion pre-tax income for Q2 2014 and said the third quarter wlll be “a lot better” than Q2. “We expect to top $4 billion in pre-tax profits this year,” he said.
CBS News travel editor Peter Greenberg asked Anderson about competing with the Middle Eastern airlines.
“We are broadly in favour of Open Skies – but we’re in favour of Fair skies,” said Anderson. “A number of those carriers are not airlines, they are governments. They have huge subsidies and structural advantages.”
He added that competition should be on a “fair and level basis.”
Anderson said balance was needed in terms of Fifth Freedoms and bilateral agreements, taking into account disparities in income taxes, labour laws and subsidies.
The fifth freedom allows an airline to carry revenue traffic between foreign countries as a part of services connecting the airline's own country.
Greenberg asked Anderson about Emirates operating on Alitalia’s old Milan-New York route.
Anderson called it an “anomaly”, adding that Fifth Freedom agreements were originally intended for fuel stops. But new aircraft technology meant these were now not needed, he said: “There’s no necessity for abuse of Fifth Freedoms.”
Anderson said Delta’s investment in its own oil refinery was "paying off". He said average jet fuel prices for Q2 this year were $3.08 per gallon, compared with $2.93 for Delta’s.
“A saving of just one penny a gallon would equate to $10 million a quarter,” he said. “The advantage we’ve been able to build is large and sustainable.”
Asked about the recent Malaysia Airlines rocket attack, Anderson said Delta already had its own no-fly zones policy in force, prohibiting flights across Afghanistan, Iraq, Iran, Syria, and North Korea.
He also talked about a new revenue stream for the airline: new digital entertainment technology on domestic flights that will see economy passengers paying to view ‘premium’ films. But Anderson said passengers would still be able access free content, including his favourite movie, The Big Lebowski.
Delta.com