The TravelMole Interview: Carolyn Ezzell, Delta Air Lines

The recent axing of commission by carriers in the US was not unexpected, according to Carolyn Ezzell (left), vice president Atlantic region at Delta Air Lines.

Delta was the first airline to announce it was axing agents’ commission in the US and Canada, a move quickly followed by the other major carriers – but Ms Ezzell said that it had been anticipated for some time. She told TravelMole: “It was not as big as surprise as some of the decisions that have been made in the past. Online and the internet is huge in the US and distribution costs are significant costs for the airlines.”

The airline expects the restructuring to reduce passenger commission expenses by approximately $100 – $150 million in 2002. However Ms Ezzell pointed out that it does not mean agents are receiving nothing at all. The airline continues to reward its key travel agencies with individually negotiated incentive commissions.

Carriers in the US recently reported their Q1 results – with total losses of over $2billion during the three month period. Delta itself posted a loss of $354million excluding unusual items. Commenting on the figure, Ms Ezzell said: “Our results were in line with the guidance we had given which said we expected losses to be the region of $350million to $380million overall.”

And she claimed that despite the size of the losses, Delta was still in a relatively secure position: “Clearly you can’t tolerate those sort of losses for a long period of time without it hurting your ability to invest. But we made good profits for the three or four years before 2000, we made an operating profit this March and we are taking out $1.8billion in costs this year.” She also pointed out that Delta’s policy of hedging fuel meant it was to some extent shielded from increases in the price of oil – the airline has hedged 57% of its expected fuel requirements in the June 2002 quarter at an average price of $0.58 per gallon.

While Delta is expected to return to profit in the second half of the year, yields are still under pressure. Recent moves by the airlines to hike domestic fares failed when Northwest Airlines refused to play ball and follow suit. US domestic air fares are believed to be around 13% down on the same period last year. According to Ms Ezzell: “Transatlantic prices are coming back but they are still down. One reason they are getting better is because we have cut down on capacity.”

Delta recently announced that it is to axe its service between Boston and Gatwick on June 1, instead adding a fourth daily flight from Atlanta on Thursdays, Fridays and Saturdays. Ms Ezzell explained that the route had not achieved the “level of premium traffic we had hoped for, that market seems far more tied to Heathrow.”

Ms Ezzell said that membership of the SkyTeam alliance was bringing a number of benefits to Delta, with the airline exchanging 2,500 passengers a week in Italy with fellow alliance member Alitalia. Delta will begin daily nonstop service to Rome on July 1, which will operate through the summer season. Delta’s SkyTeam partner Alitalia will code-share on the new flight. From Rome, Delta offers customers codeshare service on 82 Alitalia flights to 17 destinations in Italy and four destinations in Europe.

She said: “Alliances have a level a benefit both for customers and airlines without the complexities of a merger in terms of what we would have to lose. The fact that we have antitrust immunity in Europe lets us co-ordinate more closely on schedules so we can look more like one entity.”

See our previous stories:

22 Mar 2002: Zero commission hits agents in US
19 Mar 2002: Delta scraps agency commissions in US and Canada
12 Nov 2001: CRM Case study: Delta Air Lines

See previous TravelMole interviews:

23-Apr-2002: John Davis, Pegasus Solutions
15-Apr-2002: Gregory Hunt, ABTA Arbitration Scheme
09-Apr-2002: Stuart Winter, Atinera
03-Apr-2002: Roberto Da Re, Dolphin Dynamics
26-Mar-2002: Arnaud Debuchy, Amadeus
19-Mar-2002: Helen Baker, Lastminute.com
12-Mar-2002: Pat Minogue, Galileo
07-Mar-2002: Jon Hart, MyTravel
28-Feb-2002: Lawrence Hunt, Rapid Travel Solutions