What you need to know:

• Customers hate inflight Wifi because its so bad and costs too much, says Delta CEO Ed Bastian. He saw his chance.
• Delta spent a billion dollars solving the quality problem – no mean feat – then gave the service away for free.
• Bastian says his board told him he was nuts. And then the magic happened.
• Delta's Skymiles membership soared.
• And now it's leveraging its loyalty power to strike business model-busting deals.
• Instead of paying Paramount+ for its content, Paramount+ now pays Delta to reach the airline's audience.
• A partnership with Starbucks was so popular it hit its annual target in just two weeks (and crashed the servers).

Ed Bastian, CEO of Delta, knows how to work a crowd. To build an emotional connection — and draw a guaranteed and sustained burst of applause — he looks down the barrel and tells them, "Inflight Wifi sucks."

But he did more than just talk. Bastian took that terrible inflight service that was nonetheless generating a lot of money, and spent a billion dollars making it better. Then he gave it away for free.

He cheerfully acknowledges that his board thought he was crazy. But that was until they started to see the power of what he was creating.

Delta was recently voted the most admired airline in the world, and was also recognised by Fortune as the 12th most admired company in the world.

It has achieved this status despite the historical difficulties competitors in the sector face to differentiate themselves. After all, it’s an industry where almost every company uses the same planes – Airbus, Boeing, and Embraer account for 97 per cent of global market share. They all use the same fuel, and all fly in and out of same airports. 

To stand out from the pack you either invest in experiences or sell on price – and it’s hard to build margin if your point of differentiation is how low you can go.

Speaking at the QualtricsX4 event in Salt Lake City last week, Bastian revealed the huge bet he took to disrupt his own business, and just how quickly it is paying off.

The Delta chief has been talking about making Wifi free for five years. Now, he’s finally doing it and the impact on customer acquisition to the company's Skymiles loyalty program has been nothing short of remarkable, with 250,000 new members added in about three months.

Bastian says he’s known for a while that he was backing a winner – all he had to do was listen to the customers. “Despite all the amazing innovation and travel that we've seen over time, there's one universal question. Why does inflight Wifi suck so bad? Doesn't matter whether you're in your fancy corporate jet, it's not good. Whether it's on your private jet, it's not good. Whether it's on your commercial aircraft, it's not good.”

People, he says, want to be connected. “And that's what we do. We connect. Our experience is connecting people to people, and people to places, things, and the purpose that matters for them in their life.”

Planes are one of the few remaining places were you are disconnected (and yes he acknowledges some people like it that way, and they still have that choice.) “Where are you disconnected? You're disconnected when you're on your flight.”

It has cost a lot of money for Delta to solve a very difficult technical problem, and much of it spent during the pandemic when there was not a lot of money coming in.

“I always say 'guys, we're closer to the dark satellites in the sky, then on the ground, why isn’t it even faster in the sky, right? It shouldn't be that hard'. And they said 'yeah, but we're traveling at 500 miles an hour as compared to sitting in your living room doing yoga'.”

Historically airlines charged for Wifi to govern and moderate usage. “None of the satellite companies have allocated enough bandwidth because it's very expensive," per Bastian.

As a result, his competitors simply haven’t invested in the equipment or capabilities to bring the latest technology into their planes. He contrasts their stance with Delta which is rolling out its own solution onto 1,500 planes. The program is US domestic flights only for now, but international is coming over the next two years.

“It's not a small endeavour."

Delighting the customer.

“Customers want to connect to the brand, we don't want to charge them for that, because charging is a losing proposition,” said Bastian.

He goes further, saying it’s a matter of brand trust –  because customers don't trust and won't trust anyone that charges for Wifi.

Light blub moment

Bastian says his ‘aha” moment was when is understood the power of linking free Wifi to Skymiles membership.

“We have 200 million people a year that we serve. 50 million new customers within that 200 million gross number. 50 million unique customers.”

But only 25 million of its customers are in the Skymiles program.

“We have added 250,000 since November.”

Delta is also using the leverage that its Wifi-fuelled loyalty program growth gives it to create new value for the business, again through business model-busting initiatives.

A new program starting in April will allow partners companies to engage with Delta’s growing audience.

Paramount+ is one example. “Historically in the airline industry, airlines have to pay for all the content that you watch on the screens. Today, with Paramount+, not only are we not paying, [but] they're paying us to be there to have the access to provide content free to our customers," said Bastian. "They're also giving us the full library of content as well that our customers can preview.”

Delta has also inked a deal with Starbucks where members of both loyalty programs can choose to be linked so they can earn points when they fly or when they drink coffee. “We thought a million people would link their accounts over the course of the first year — we had a million people in the first two weeks. It crashed the system.“

And while he didn't address it during his time on stage, there is another big downstream opportunity – advertising. In Australia Qantas and Virgin have both built lucrative revenue streams leveraging data and tapping partners across inflight entertainment, boarding passes, luggage, carousel, posters, itineraries, apps, loyalty programs, emails and websites. Those dedicated internal and external sales teams are notching up media margins of circa 90 per cent versus three per cent on flights.

Not so crazy, after all.