Delta Air Lines has been staying clear of the distribution disputes that engulfed fellow carriers American Airlines and US Airways, GDS operators Sabre Holdings and Travelport and online agencies Expedia and Orbitz. Though Delta publicly has expressed a desire to deliver services "in a far more personalized and targeted fashion," has cited Farelogix as a possible tech provider to accommodate that desire and has begun selling its new Economy Comfort international premium-economy only through direct channels, it hasn't moved to limit GDS distribution--at least not in any obvious way. Maybe it doesn't need to say or do all that much right now, given that the airlines' deals with Sabre and Travelport run for another two years. In an interview in New York last week with The Beat's Jay Boehmer, Delta CEO Richard Anderson kept any new distribution strategies close to the vest. If any movement by the carrier is afoot to meaningfully alter GDS relationships or significantly cut distribution costs, he didn't let on.
Boehmer: Some analysts suggest that ancillary revenue opportunities are lessening. To what percentage of revenue do you see ancillaries growing?
Anderson: I don't know that I can break it down as a percentage of revenue. I can tell you that 
merchandizing is a big part of our revenue strategy going forward. If you look at the other sectors of the travel business -- the hotels, cruise lines, car rental companies -- all of those firms have merchandized different packages to different consumers based upon what their particular demands are. The airline industry is really no different in that regard.
You saw us take a big step just [last] month with Economy Comfort in the international cabin. That's been a really big success. That's an example of us being able to create a differentiated product on the airplane and then be able to offer that as a value-add to our customers.
Our real goal is to create meaningful, valuable products in the form of different types of merchandizing for our passengers. We'll continue to do that going forward.
Boehmer: With Economy Comfort, have you seen any trends on where customers like to purchase that? Are they picking it up at the point of sale or waiting until they get to the airport?
Anderson: It is not available through the GDSs. It's available through delta.com or the kiosk or ticket counter, and we're expanding it to the gate. So, it's really an additional add-up. We want everything to be fully transparent to the consumer at all times, but we think a number of these merchandizing opportunities are unique to our distribution through delta.com, through the voice of Delta on the phone, our kiosk and our very capable agents at the airports.
Boehmer: Do you envision GDS distribution of Economy Comfort?
Anderson: No. We do not envision at this point GDS distribution -- not that it couldn't occur in the future.
At this point in time, we're in the early stages of the product. It's very successful. Remember, the other piece of that product that was important for us is for our premium elite frequent flyers. If they did not buy a business class ticket, for certain elites it's an automatic upgrade to Economy Comfort. So it was another way to provide a differentiated product to our most loyal customers.
Boehmer: Why doesn't GDS distribution make sense for Economy Comfort?
Anderson: We think that's an opportunity for us to differentiate our brand. Much of what we're doing at Delta is making sure that we control our brand and that we control our distribution. Much the same as other consumer product companies, you want to control your brand, your distribution and your content.
Remember, all of that's in the context of having complete and transparent disclosure to all consumers. That's not in our interest at all to not have our consumers very well informed about our offerings.
Boehmer: It's an interesting point, because Delta doesn't necessarily look like its competitors, but on a GDS green screen, you look a lot like your competitors.
Anderson: Correct. It's a very good point. We want to control the packaging of our brand and the distribution of our brand. We're making very big investments in that.
We're re-platforming delta.com. It's about a $100 million investment and a whole new technology platform through delta.com to make sure we're leading edge in terms of interactivity with all of our customers. The world's really moving to a totally mobile society, and we have to have a service-oriented architecture in our web space.
We probably have one of the biggest websites in the United States, if not the world, in terms of traffic and sales. You don't often think of airlines as Internet companies, but we are a very big Internet company, and, as a result, that's a point of very big investment for us.
You think about the future of how we interact with our customers, it's going to be much more real-time, it's going to be smartphones, Twitter, Facebook. We've really been on the cutting edge of using those channels to communicate with our passengers.
Boehmer: There's discussion in the airline industry around the "who's asking?" question--the idea being that airlines should tailor the product to the individual. Is that part of your strategy as well?
Anderson: Yes, tailoring is part of it. One piece of that is in our frequent flyer database, where we have a lot of information about our really good customers, so putting the typical CRM tools that are used in many other industries to work in our industry or at Delta is a very important part of that strategy.
The second thing is with a flexible, fast, nimble technology platform, you can unbundle your offerings and let people make the choice about what they want, what they want to buy and what they want to pay for. There's a lot of opportunity there for us going forward. And from a customer standpoint, customers can make these decisions.
Boehmer: Corporations depend on TMCs and GDSs. What does that mean for third-party distribution?
Anderson: We believe strongly that the travel management companies are important partners in the corporate travel management process. When you think about all the important capabilities that American Express, BCD, CWT and the big nationals -- they're filling an important role in letting the big corporations manage their travel all the way around the world. We view them as very important partners, and that channel for the large corporate customer is going to remain a very important and viable channel.
Boehmer: Is there an opportunity to make that relationship more direct? Does the GDS serve as the ultimate intermediary between Delta and TMCs, and therefore the corporate client?
Anderson: Ultimately, you have to have the content residing somewhere in a database. That's going to be an important part. That function is an important function -- housing all the data somewhere so that it can be accessed by customers will be an important part of the equation.
At this point, I think we have a system that works, though you're seeing a pretty significant evolution underway when you look at what's going on in the court systems and what's going on in the marketplace. I think we're in a period of flux, a period of change and it will be interesting to see how that all works out over time.
Boehmer: You said evolution, so does that mean no revolution on this front from Delta?
Anderson: We're really focused on delivering a first-rate product to our corporate customers. That's where our opportunity lies. We've made a lot of big investments in our business and we're in the process right now of placing an order for narrow-body aircraft. We're putting a couple billion dollars of investment in our fleets. We're in the process of putting very significant investment in our technologies all across the business. We're building two new international terminals -- one in Atlanta and one in New York JFK, which together comprise about $2.5 billion worth of terminal investments.
Our real strategic focus is becoming the airline of choice for large corporate customers, with a brand that our customers can depend upon.
The Beat is a sister publication to Travel Weekly. For more, visit www.thebeat.travel.