Becker Private Equity & Business Podcast: "Delta Wins the Survey" Summary

Episode Title: Delta Wins the Survey
Host/Author: Scott Becker
Release Date: May 16, 2025

Introduction

In the May 16, 2025 episode of the Becker Private Equity & Business Podcast, host Scott Becker delves into the dynamics of customer service within the airline industry, specifically focusing on the "big three" U.S. carriers: Delta Air Lines, United Airlines, and American Airlines. Titled "Delta Wins the Survey," the episode explores recent survey findings that highlight Delta's superior customer service compared to its competitors and examines the potential correlation between customer satisfaction and stock performance.

Overview of the Survey

Scott Becker opens the discussion by addressing the common experiences of frequent flyers. He observes that passengers consistently notice shifts in service quality and customer interactions across the major airlines. These changes are not limited to logistical aspects like flight punctuality but extend deeply into the customer service realm. To quantify these perceptions, Becker conducted a survey targeting regular travelers to determine their preferred airline among Delta, United, and American.

Scott Becker (00:30): "If you fly regularly and you're on one of the big three airlines, meaning Delta, United, and American, you are consistently seeing changes in service...how you are treated by the different airlines."

Survey Results: Delta Takes the Lead

The survey results were revealing, with Delta Air Lines emerging as the clear favorite among the respondents. Delta not only outperformed United and American by a wide margin but was also recognized as the "nicest" airline in terms of customer service.

Scott Becker (01:15): "Delta outperformed the other two... Delta, by a wide margin, was viewed as the nicest airline travel line compared to American, United."

Despite Delta's strong performance, Becker notes that a significant number of participants expressed dissatisfaction with all three airlines, citing reasons such as fear of flying and general displeasure with air travel experiences.

Scott Becker (01:45): "Of course, there were plenty of people that said they hate all the airlines or are scared to travel, et cetera."

Correlation Between Customer Service and Stock Performance

Beyond customer satisfaction, Becker explored whether there is a relationship between an airline's service quality and its stock market performance. Analyzing year-to-date (YTD) stock data, he compared the financial trajectories of Delta, United, and American Airlines.

The findings indicated no significant correlation between customer service ratings and stock performance. Both Delta and United experienced a similar decline in their stock prices, each down approximately 15% YTD. In contrast, American Airlines faced a steeper decline of 31% YTD.

Scott Becker (02:30): "Delta and United are both down about the same amount year to date. American, which has been taking on the chin in the press and the customer service is down about 31% year to date."

This data suggests that while Delta's superior customer service boosts its reputation among travelers, it does not necessarily translate to a stark difference in stock market performance relative to United. American Airlines, despite poorer customer service standings, has seen a more significant drop in stock value.

Analysis and Insights

Becker finds the lack of a strong correlation between customer service and stock performance fascinating. The expectation might be that higher customer satisfaction would lead to better financial performance, manifested in higher stock prices. However, the data presents a more nuanced picture.

Several factors could explain this disconnect:

1. Market Dynamics: Stock prices are influenced by a multitude of factors beyond customer service, including operational costs, market competition, broader economic conditions, and investor sentiment.

2. Long-Term vs. Short-Term Performance: Customer service improvements may have long-term benefits that aren't immediately reflected in stock prices. Investor responses can be driven by short-term performance metrics.

3. Brand Loyalty and Perception: While Delta may be favored by customers, this doesn't always directly influence stock valuations unless it translates into measurable financial gains.

4. Public Relations and Media Coverage: The negative press surrounding American Airlines could have a more immediate impact on investor confidence, contributing to its steeper stock decline despite customer service perceptions.

Scott Becker (03:30): "So again, Delta, United down about 15% year to date. In contrast, you've got American down about 31% year to date. So that's what we're watching."

Conclusion

In this episode, Scott Becker provides a compelling analysis of customer service perceptions among the major U.S. airlines and their respective stock performances. Delta Air Lines stands out as the leader in customer satisfaction, yet this distinction does not straightforwardly translate to superior stock performance compared to United Airlines. American Airlines, grappling with both customer service challenges and significant stock declines, exemplifies the complex interplay between service quality and financial markets.

Becker’s exploration underscores the importance of looking beyond surface-level metrics when evaluating business performance. While customer satisfaction is a crucial component of an airline's reputation and potential long-term success, various other factors contribute to its financial standing and investor appeal.

Scott Becker (04:15): "I just find it fascinating."

Listeners gain valuable insights into how customer service excellence can coexist with market challenges, emphasizing the multifaceted nature of business performance in the airline industry.

Thank you for tuning into the Becker Private Equity & Business Podcast. Stay informed and ahead in the world of private equity and business with Scott Becker.