Becker Private Equity & Business Podcast: Delta and the Airlines Take Off (07-10-25)
Host: Scott Becker
Release Date: July 10, 2025

Introduction

In the July 10, 2025 episode of the Becker Private Equity & Business Podcast, host Scott Becker delves into the recent surge in airline stocks, focusing on Delta Air Lines and its strategic approach to profitability. Titled "Delta and the Airlines Take Off," the episode explores the dynamics driving the success of major airlines and the broader implications for businesses aiming to enhance their profitability.

Market Performance of Major Airlines

Scott begins by highlighting the impressive performance of the three major U.S. airlines:

• Delta Air Lines
• American Airlines
• United Airlines

“All three are up 12% plus today, with one soaring 15%,” Scott notes at the start of the episode (00:00).

This remarkable uptick reflects investor confidence in the airlines' strategies and market positioning amid evolving economic conditions.

Delta CEO’s Strategy: Emphasizing Premium Offerings

A significant portion of the discussion centers on insights from the Delta CEO, who attributes the airline's profitability to its focus on premium services. Scott emphasizes the CEO's statement:

“Everything about our profitability comes from being able to charge premium amounts for premium things,” Scott quotes the Delta CEO (02:30).

Key aspects of this strategy include:

• Premium Add-ons: Charges for additional services such as priority boarding and enhanced in-flight experiences.
• First-Class Offerings: Investing in superior first-class amenities to attract high-paying customers.
• Optimal Flight Scheduling: Ensuring flights are available at times that cater to business and affluent leisure travelers willing to pay a premium.

Implications for Business Strategy

Scott extrapolates the Delta CEO's approach to broader business contexts, underscoring a critical business lesson:

“It's about not just do you have customers, but you have customers that could afford to pay what you want to charge to make it work,” he explains (05:15).

This principle underscores the importance of targeting high-net-worth individuals or entities that can sustain premium pricing, thereby moving away from a commodity-based business model. He draws parallels to other industries:

• Consulting Firms: Cater primarily to Fortune 500 companies that can afford high consulting fees.
• Law Firms: Serve major corporations needing specialized legal services.
• Professional Services: Focus on delivering high-value services to clients willing to pay top dollar.

The Commodity Trap vs. Premium Positioning

Scott contrasts the premium strategy with the pitfalls of becoming a commodity business:

“You could be in other businesses where you're a commodity business. You're selling a burger cheaper than the next place, you're selling Taco Bell cheaper than the other Taco place, whatever it might be,” he illustrates (08:45).

The commoditization approach often leads to price wars and thin profit margins, whereas premium positioning allows businesses to maintain healthier profit margins by catering to customers who value quality over cost.

Sustainability of Airline Stock Performance

Addressing the recent stock performance surge, Scott muses on its sustainability:

“We'll see how that lasts. But it's been a while since we've seen that and, and God bless them,” he remarks (12:00).

While optimistic about the current trend, he remains cautiously hopeful regarding the longevity of the airlines' upward trajectory.

Broader Economic Reflections

Scott reflects on a broader economic trend where a significant portion of profitability across various industries stems from serving the wealthiest segments:

“So much of the money is made from serving those that can afford to pay. Those are in the top 10, 20% of net worth, those on the 10, 20% of net income that so much of the profitability comes from that group,” he observes (09:30).

This observation highlights the critical role of affluent consumers in driving business success and economic growth.

Conclusion

In wrapping up, Scott reinforces the central theme of the episode:

“The statement, the discussions from the Delta CEO around this issue about the name of the game for them is selling premium things, they get premium pricing and take themselves out of the commodity business is really a lesson for all of us and all of our businesses,” he concludes (14:20).

He encourages business leaders to evaluate their strategies, emphasizing the importance of targeting and retaining customers who can support premium pricing to ensure sustained profitability.

Thank you for tuning into the Becker Private Equity & Business Podcast. Stay tuned for more insightful discussions tomorrow!