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I am here in a Rio Degenario at iada's annual meeting with Peter Carter. He is the president of Delta Airlines. Thank you so much for being with us, Well.
Thank you for having me.
Good afternoon, Good afternoon. I want to start with the question that is on a lot of people's minds about consumer demand and how it's holding in given some of the increases and prices, given some of the questions around stress, howards all have consumer's been.
We are seeing very strong demand, Lisa, in every region, every region.
In the world, which has been very, very great to see. The consumer is strong. The economy is doing well.
It's one of the things that we pay very close attention to. And whether it's the US economy, certain economies in Europe are doing better.
We see that in our consumer.
Certain economies in Europe that actually flies against what some people seem to think where you've seen sort of some of the numbers fly down. Where are you seeing actually growth in Europe there?
Well, the UK is an example.
They're doing a little better than they have in the past, for sure. And I also think that that the EU and light of their investment in defense. We're also seeing some subsigns there.
So how have you be been able to pass along the increases in price from fuel to consumers? I mean, has it been pretty easy? Have you been surprised at how little pushback you've gotten?
Our consumer is resilient.
You know, we really focus on the premium customer, and you know, roughly forty to fifty percent of the increase in fuel costs we've been able to recapture through price, which really becomes about ten to fifteen percent on the price of a ticket, so.
Fine is still affordable.
And again we've we've seen strong demand despite the need to recover some of our costs.
We also have a refinery which.
Has been a terrificge for Delta through this because we pay less for jet fuel than any airlight in the world.
Has there been any pushback at all higher prices?
We really have it, I think in part because we haven't seen it. I think in part, Lisa, because when you look at inflation since COVID, it's roughly been about twenty five percent, But when you look at inflation around the price of an airfare.
It hasn't been anywhere near twenty five percent.
Even with this increase to recover fuel, so it's still very affordable and especially for the premium passengers, the premium leisure traveler, the corporate customer that we really focus on. So you know, this is going to be our busiest summer in the Transatlantic. We are doubling down on our global network and global expansion.
We already have the world's I.
Think, most connected network, but we're continuing to invest. We just launched our Hong Kong route yesterday with I guess today technically with our inaugural flight. So there's so many exciting things happening, and again we follow demand. You know, we launched seven new flights in Europe because our customers are saying they want to go to places like Porto and Malta and Sardinia, so we're taking.
Advantage of that.
How much are there certain places that you've identified that you want to create roots to that are harder to break into that might be really popular, but there are obstacles that have kind of emerged.
Well.
I think the best example of that right now is probably India because we cannot fly over Russian air space, but as we all know, India, it's the fastest growing economy, the biggest population, the largest democracy in the world, and someday we will serve India, but it's very difficult to serve India profitably without flying over Russian airspace.
I know that later this year you are planning to launch a flight to reacdjetd.
Is that still planned for later this year?
It is planned for October twenty third. We're very excited. We met with Riad earlier today. If they're a partner in that region. We think that is such a strong growth market. It's a country that's gone from the Middle Ages to the Modern.
Age in about a handful of years.
Forty million people live in Saudi Arabia. It's a large geographic area. They've got a lot of business travel. Obviously, oil and gas is huge there.
So we're going to start that flight.
We know, obviously with what's happening in the Middle East that folks in America may not see that that necessarily is the place.
They want to go right away.
But as these new routes develop, it takes time, and we want to be there for when the day comes when they're ready to travel to Saudi Araia.
You believe that there will be sort of a rejuvenation of some of the business demand and the business activity in the region that will be at the same level as before the war.
Not only will there be rejuvenation at the same.
Level, we think there'll be great growth.
Remember, one of the things that they do really well in Saudi Arabia is they build things, and because of the war and what's happened in that region, we think there'll be tons of business flowing in to help rebuild what has.
Been damaged during the conflict.
And then, of course when you look at what Saudi Arabia is doing.
When I was there last year.
Looked out of my hotel room, I think I saw fifty cranes. It's incredible what they're doing in that country, and we want.
To be a part of that.
When you look around the world and you're looking at expanding your roots, how much are you looking at partnerships? Do you ever consider consolidation as well just an outright merger and acquisition.
No, we're not in the consolidation business, but we have grown.
Through partnerships. One of our real core competency.
One of the things we do really well is we form jvs with airlines around the world. We have the best partners with the best brands and the best hubs, complementary networks that we can connect our customers to, which allows somebody to get on a flight anywhere in the US and fly almost anywhere.
In the world that they would want to go.
Korean is a great example.
Korean is about to close their merger with Asiana. I think December seventeenth they will have a single certificate. We already have such a great joint venture with them across the trans Pacific. We're going to continue to grow that because with that merger there's going to be that much more connectivity throughout Asia.
Very excited for that.
And in Sean I don't know if you've been there, but it is I think among, if not the most efficient connecting hub in the world.
Amazing experience.
How do you sort of plan forward when there are these geopolitical concerns that keep coming to the fore. For example, business travel from the US to China's fallen off a cliff, a lot of tourist travel also, how do you plan for growth given the uncertainties between these two countries.
I think we have belong view, Lisa.
I think we remain focused in discipline with respect to our strategy, and we know that there will always be geopolitical noise, and we are very I think disciplined about trying to keep the noise out and continue to build forward, continue to make sure that we know that demand will come back to China someday, that some of the restrictions that are in place will be lifted.
And we have the relationships there.
We have a great.
Partnership with China Eastern We saw them here as well, So we're ready when that economy.
Is more open to you business and US business is.
More open to that economy.
This geopolitical i'll call it tension, or you said noise, I think it will pass.
Well, it's noise, but not really noise.
I mean it's also a country.
It's real. I mean it's also sort of like the Middle East. It's noise, but it's not noise at all. It's conetically sure, And I just want to you know that everyone who I talk to you here is very worried about oil prices where they are. Do you have contingency plans should things go up significantly higher? I mean, what's your sort of scenario analysis?
So we are Delta is built for durable, sustainable growth and part of that is we have the ability to manage through oil costs.
We're very nimble, we have various tools available.
We're very much focused and discipline on using those tools. And in many respects, when you have a strong balance sheet as we do and we have a refinery, we can do things like trim capacity off peak flying.
We can focus on flying as.
Efficiently as possible, right, that saves fuel.
Of course, we do all of.
The things we can do, and we're still expecting.
To make around a billion dollars this quarter.
So I think this is actually an opportunity for us to show how durable our business model is, and it's.
A proof point.
I just want to finish up with premium. It's been leading the charge for quite a while. I know that Delta's really leaned into a Delta one, the Delta one lounges. How far can that go? The idea of the demand for premium products, So.
Lisa, we are finding that our consumer has an insatiable appetite for premium experiences and everything that we have introduced seems to just be truly inhaled by the consumer.
And so we haven't seen it.
And I'll give you a great example We opened a Delta Lounge in lax just a couple of years ago, and it's been wildly successful. And now we're building a second Delta one lounge in la because it is again one of these things where we underestimated how successful it would be. So I think consumers are really excited about spending money on premium experiences, and I feel very fortunate that Delta and our people could provide those experiences to them.
I'm waiting for the super duper loyalty Delta one Extreme Lounge.
Is that coming next? Who knows? Peter?
Wonderful to speak with you, Peter Carter, the president of Delta.
Thank you so much.
Thank you, Lisa really appreciate it.