Delta spent years building a premium reputation. Then it had a meltdown

As businesses around the world rushed to restart their operations after a global technology outage before dawn on July 19, aviation experts were shocked to see one carrier struggling more than any other: Atlanta-based Delta Air Lines.

A faulty security update that upended many industries practically knocked Delta out of the skies, leaving travelers sleeping in airports for days all over the world. Endless lines of stranded Delta passengers snaked through terminals from Atlanta to Seoul. Baggage piled up everywhere. Hundreds of thousands of passengers collectively descended into a sort of “Planes, Trains and Automobiles”-like hell.

It was so staggering to watch because Delta has over the last decade built up a sterling reputation as a premium carrier with top-tier on-time performance — reliable, high-end service preferred by leisure and corporate travelers alike.

Yet it failed to recover as well as budget carriers and other competitors that are less-hailed in airline quality awards.

And then the situation got even worse. Even after Delta racked up more than 1,200 flight cancellations on the first day of the outage, leaving untold numbers of people stranded, its performance failed to improve Saturday. Then, as the weekend wore on, its operation somehow worsened as the airline’s crew management system remained overloaded and dysfunctional. By Monday, Delta had an eye-popping 5,000 flight cancellations — one of its worst meltdowns in history.

Now, Delta is under federal investigation by the U.S. Department of Transportation for the mass cancellations and its treatment of customers, and facing criticism from lawmakers on Capitol Hill. Ed Bastian, Delta’s CEO, has also taken heat for going to Paris for the Olympics — Delta is a Team USA sponsor — Tuesday night as Delta front-line workers were still contending with the mess.

“I was absolutely, totally shocked — dumbfounded, even — that Delta’s operation fell apart so badly and for so long,” said Henry Harteveldt, a longtime airline industry analyst and president of Atmosphere Research Group. “It has done terrible damage to Delta’s brand, especially its reputation for being reliable and punctual.”

The blow to Delta’s reputation — and balance sheet — could be immense. Southwest Airlines’ holiday season debacle in 2022 ultimately cost the company more than $1 billion in lost business, compensation to customers and fines.

It’s quite the bruising for Delta, which has been named the best airline in the United States and in North America numerous times, and this year came in as the top airline in Fortune’s World’s Most Admired Companies and No. 11 among all companies. For the past three years, Delta has been the most on-time airline in North America in rankings by aviation analytics firm Cirium.

Amid the outrage from its inability to quickly recover from the CrowdStrike outage, Delta has vowed to do better.

“We’re committed to getting back to the reliability as quickly as we can, the reliability that we’re known for,” said Delta President Glen Hauenstein during remarks at a Global Business Travel Association convention in Atlanta on Tuesday.

Delta has said little publicly about what it will do to prevent similar meltdowns in the future, though the carrier will perform a postmortem of the crisis. Delta Chief Information Officer Rahul Samant told employees “we’ve stood up a team dedicated to a full after-action review of this unexpected and unprecedented event so we can minimize the risk of this happening again.”

Loss of trust

Andrew Wells and his wife had to spend the night at Hartsfield-Jackson International Airport after their Tuesday flight to Greensboro, North Carolina, was canceled.

He said they stood in line for about two hours and then were told they couldn’t get a hotel room from Delta because it was too late to check in. Then, at about 3:30 a.m. Wednesday, they decamped to an upper level of the domestic terminal atrium to lay down and try to get some rest.

“I don’t want to fly Delta in the future. I’ve lost trust in them,” he said.

With an urgent need to get back in time for work, Wells and his wife decided to rent a car and drive to North Carolina, carpooling with another stranded passenger. Delta “just didn’t have the resources” to reaccommodate those who were stranded, Wells said.

Corey Willard, their carpool companion, got stranded while returning from a business trip to Tallahassee. His wife was back home in Lexington, North Carolina, juggling work and caring for their 2- and 6-year-old children on her own.

Willard has been a frequent flyer on Delta, but “I’m going to start looking at other airlines. I ain’t dealing with this crap.”

Harris Foster, another traveler who got stranded in Atlanta, said he had previously been “singing the praises” of Delta and its partner Air France for offering “one of the more comfortable flights across the Atlantic,” less-cramped than budget carriers with better amenities. Now, he’s not sure.

“Maybe it could be forgiven once, but I’m pretty angry about it,” Foster said.

The fallout has made clear that a single event could damage the record Delta spent years establishing.

“I think that there was a feeling over the past couple of years that Delta would be immune because the airline is so well run,” said Jay Sorensen, a consultant whose firm, IdeaWorks, specializes in frequent flyer programs. “Obviously, this event took the facade off of that belief.”

Because there have been so many airline meltdowns stemming from storms and information technology outages affecting virtually every carrier over the years, “It does seem like it’s a roulette wheel, and it was Delta’s turn,” Sorensen said.

“Delta has built up a tremendous amount of goodwill with business travelers. … So they have a premium, but it’s a lot smaller than it was,” Sorensen said.

It’s yet to be seen how lasting the hit could be on Delta and its image.

Harteveldt said it took Southwest about a year to win back business from customers after its holiday season meltdown in 2022, and passengers still cite the debacle as a reason they don’t book the airline.

Some travelers, aware that the cancellations initially stemmed from the global CrowdStrike IT outage that hit many users of Microsoft systems, said they didn’t blame Delta alone.

And many longtime road warriors and corporate travel managers have experienced meltdowns on different airlines over the years.

“There’s a reason they’re called road warriors, not road relaxers,” said Rich Liu, CEO of Navan Travel, an online travel management system. Dealing with delays and cancellations for travel managers and corporate travelers is “honestly … part of the job.”

Within Delta, executives are aware of the steep fall from the perch where the airline previously sat.

Hauenstein on Tuesday nodded toward the obvious discrepancy between Delta’s performance and others’ by saying that his airline’s recovery has been “a little more sluggish than some of our competitors who also had CrowdStrike. And unfortunately we’re painfully aware of that.”

It’s yet to be seen what the fallout might be within the company.

“We were so proud up until June that we had been No. 1” in avoiding cancellations, Hauenstein said. “We had been No. 1 on-time every month and we really felt we were on a roll.”

In just the first five days after the outage, Delta fell from the top of the ranking to the No. 3 spot.

Hauenstein and other Delta executives speaking at the conference had to face many attendees who went through frustrating delays in their travels to Atlanta for the gathering. Some also had to respond to emergencies involving employees at their companies who also needed help.

CEO leaves for Paris

While many people at airports were upset and angry by the flight disruptions, Delta CEO Ed Bastian attracted more flak when he took off for Paris late Tuesday night for the Olympics.

“By golly, having Ed Bastian go off to the Olympics was perhaps the most Marie Antoinette thing any business could do,” Harteveldt said. At the time, Delta was still in crisis mode with employees “working 18 or more hours a day to try to help passengers” and mountains of baggage still piled up at hubs including Atlanta, he said.

“I think Ed would have been a lot more useful to Delta, you know, helping to sort those bags, to get them delivered, and maybe even hand delivering some of those delayed bags to people who live in the Atlanta area,” Harteveldt said.

Sorensen said he also thinks Bastian should have been “making the rounds at Hartsfield” instead of leaving the country.

“’He left for Paris last night.’ Nothing good will come from that sentence,” Sorensen said.

Still, Sorensen predicted that even in Paris — where Delta has a heavy presence because its joint venture partner Air France has a hub there — Bastian would be bombarded with comments about the meltdown.

In a statement, Delta said Bastian is “fully engaged” with the airline’s senior operations leaders and that he delayed the trip “until he was confident the airline was firmly on the path to recovery.”

Response in the aftermath

A key risk is the potential for Delta to lose loyalty from its well-heeled customers and corporate travelers who have elite status.

Industry observers said Delta will have to work overtime to regain the trust of its high-dollar passengers. The company will also need to scrutinize its own policies and technology.

Transportation Secretary Pete Buttigieg and other officials, hearing reports of customers waiting in lines for customer service help and other frustrations, told Delta that the law requires airlines to treat passengers fairly, take care of customers and notify them they are entitled to refunds for canceled flights if they don’t want to be rebooked.

“I would not be surprised if there’s a congressional hearing about this,” Harteveldt said.

Some questioned why Delta didn’t take action to better respond to outages after past airline meltdowns across the industry, such as the Southwest debacle, which exposed that carrier’s outdated crew management system.

“What this showed, and which is so surprising, is Delta didn’t seem to have a workable business continuity plan,” Harteveldt said. “One of the tasks that Delta’s CIO and his colleagues within the IT organization need to do is examine Delta’s technology redundancies.”

Hauenstein pledged to the corporate travel managers and others in the audience at the GBTA convention: “We will learn from this.”

“We will undoubtedly learn a lot from when we do the postmortem,” he said.

Many think the Delta catastrophe will serve as another wake-up call, not only for airlines across the industry, but for other businesses.

“This is the moment where you realize that a single vulnerability is pretty critical,” said Suzanne Neufang, GBTA executive director, who was delayed by about eight hours getting to Atlanta to prepare for her organization’s convention.

Harteveldt said Delta likes investing in amenities like new high-end airport lounges, chef-curated meals and designer uniforms — “all the things that help present and burnish the airline’s public image.”

Investing in behind-the-scenes software that helps with a piece of airline operations that’s invisible to passengers is “just not the type of investment that makes an Instagram-worthy post,” he said.

But Harteveldt said Delta might have to shift money from “some of the sexy things” and invest in its people and technology “to make sure that Delta is never, ever in a situation like this again.”