Delta's Ed Bastian on spiking fuel, summer travel, and a blunt reality check on AI

0:01 The very best founders I know are brilliant at building systems. They connect teams, they remove bottlenecks, and they eliminate single points of failure. And yet When it comes to their own wealth. Most are running a disconnected stack. A tax accountant here and a state attorney there, a wealth manager who doesn't talk to either one of them.

0:22 Creative planning was built to fix exactly that. One integrated team of tax professionals, state planners, investment specialists, all coordinated by a dedicated wealth manager who sees your full financial picture and keeps every piece working together. Proactive tax efficiency, state strategy, investments all under one roof. Creative planning where wealth works together. Learn more at creative planning dot com slash masters of scale.

0:53 Hey folks, Jeff Berman here. I am thrilled to share some of the new names who will be joining us at this year's Masters of Scale summit. This may be our biggest stage yet. Reed Hastings, Meredith Whitaker, Van Jones, Amjad Masad, and more. Will be there with us October 20th through 22nd in San Francisco. If you're building something great, or you want to build something great, We want you there with us too.

1:20 Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. Twenty six. AI is is not trusted, uh and uh for good reason probably.

1:37 The hype. Is far greater. than the actual value. That's ultimately going to be derived. There's a conscience that needs to be deployed. And I think that's where people

1:49 Yeah, w in in the technology sphere, just don't get it. They're out there selling, selling, selling. This world is is moving faster and staying Uh resilient also means staying humble. That's Ed Bastian, CEO of Delta and one of the most trusted leaders in corporate America. Ed makes a return visit to Rapid Response today to talk about the key business challenges of 2026, from rising energy prices and the Strait of Hormuz to

2:23 Evolving consumer preferences and AI hype versus AI opportunity. He shares what Delta's booking data is telling him about the economy that the headlines aren't. What it takes to stay optimistic when the world keeps throwing curveballs and more. So let's get to it. I'm Bob Safian, and this is Rapid Response.

2:48 I'm Bob Safian. I'm here with Ed Bastian, the CEO of Delta. Ed, great to see you. Bob, good to see you again. This is your your fourth time on this show on Rapid Response. We we talked in the depths of the pandemic, uh, in the heights of the recovery. And now twenty twenty six is brought A different kind of environment. You know, military activity in Iran and spiking energy costs.

3:12 D do you get frustrated by it all, or is it just like, Okay, another day, another crisis. You know, in this industry We're very exposed. To what happens.

3:24 in the world. There's things that that influence travel across the board. So my constant uh refrain to my team is in times that are good. to just get ready,'cause the next thing that's gonna happen probably isn't good. Uh and when times are bad

3:42 You don't Um Get into despair because We know we've got the resilience gene and the capability and the experience set to power through. And and that's indeed what we've done this year. I mean so much

3:56 isn't in your control. Like we we thought the Strait of Hormuz was opening And now maybe not. And like like How do you plan in that situation? Geopolitical

4:10 Choices like he talked to the White House, does it matter? I d I don't think you have a lot of uh a lot of influence in in in those types of affairs. But we control a lot more than we don't. We control our response. We control by trying to run the very best operation we can.

4:27 And if fuel prices are up, we do our best to See the degree to which uh you know we can include that in pricing for for our customers. And you know, this past quarter we were, you know, reasonably successful at that. We didn't cover all of the uh cost, but probably about sixty percent of the cost, which is uh given the significance of the fuel spike is a pretty s a pretty strong statement of the value that customers see in the Delta product. And uh Yeah, you can't worry about things you don't control. I mean it just drive yourself crazy. You did have to raise Prices uh a bit to the field cost, which you said recently that consumers can afford it. There and there's a little blowback on that. But there there are no easy choices in this.

5:13 discretionary uh income that they've uh and wealth. that they've accumulated over the last number of years. Employments at you know pretty close to all time highs. uh l labor engagement is is strong. And we we sit at the upper end of the K. And so when you have a product that people are very interested in securing, such as travel, and you look at an incremental Yeah, probably the numbers in the twelve to fifteen percent range.

5:42 to which you know cost of travel has increased Uh, is that making a difference for most people that travel is not the biggest cost item on the budget when you when you travel many times? And I think most people say no, that's delta's I'm not gonna change from Delta. Delta is the uh the airline that When prices go up. I I'm even more confident in flying because I know the value I'm gonna get is is reliable. You just announced the this new basic option for for some of the higher class travel. Same seats and meals, but a few less perks.

6:17 Does that reflect sort of cost concerns at the top end of Customers. Not at all, Bob. Uh yeah, we we have talked about this over the last several years, so this is not a new We're just finally coming around this year starting to roll out. We've only introduced

6:34 you know, a handful of those product uh options. Uh when uh you look back in the airline uh history Yeah, we basically had two products that we'd sell. We'd sell a a first class product and a main cabin product. We may have been good transportation providers, but we weren't very good merchandisers or or retailers. People want to have more options of of choice from us.

6:59 And to the extent you can take the shelf that you've created and put different brackets on the show for you if you want the classic A standard product that you've been buying all along. It's it's there on the shelf. If you want a little more or you want a little less. You give you give uh customers options. I think there's a lot of interest in that. And we'll see where it goes. Yeah, this is a roll out. And to the extent that uh consumers have and they will have a lot of input to us, we'll take that into account and continue to refine and get better at it.

7:30 And I guess keep your eye on is there confusion over the new options or is it something that that drives You know, more engagement. That's the reason why it's taken us some time to develop this when Yeah, it'll it offers segmentation creates some misunderstanding at times and we'll do our best to try to learn from that and get better at it. I've already heard from customers that I selected this box, but I didn't realize and we'll we'll make we'll make adjustments for people. We'll be very understanding as we go. But um I think this is a night the next level.

8:04 of uh of of commercial strategy for an airline. That is a great consumer brand, but you know it doesn't necessarily operate. in the merchandising world the way we could. You have access, obviously, to all the the booking data that comes through

8:19 Your app and your website. Are there things that you see in that that are different than the headlines. Like does your data tend to lead the headlines or respond to it or Is it different at different times? Our our data is usually ahead of the headlines. So we just reported our second quarter results. We gave guidance for our third quarter, which ends at the end of September.

8:43 And but we already have about seventy percent of the revenue on hand for that third quarter through advanced booking. So our bookings run anywhere from sixty to a hundred and twenty days out. International runs longer, domestic runs a little shorter. And so we have a pretty good sense For how people are already thinking about The fall how people were thinking about

9:05 So economists and Members of the Fed and others are always quite curious talking to us'cause we have a pretty good pulse on how the consumer, at least our consumer Is is is viewing. the current environment, but then translating that in terms of confidence to a f future purchase uh commitment. Your customer tends to be at the top end of the K on a on the K shaped economy.

9:28 You can I don't know. twenty percent more revenue per seat than competitors you're Premium cabin revenue almost. On the verge of overtaking the main cabin. That decision that lean into that customer.

9:41 Does anything about today's environment make you rethink that strategy or double down on that strategy? I mean, it sounds like that it that is still where and the customer that you feel like is most healthy for you to focus on. Absolutely. This is a A decision that we took, not recently, we took this Fifteen years ago. Uh shortly after we acquired Northwest

10:04 Airlines and as a result, we were the largest airline in the world, clearly. We still are, but it's closer now. And we had a commitment to ourselves that we weren't going to do the merger and start to introduce that level of scale. Unless we could actually differentiate in the marketplace and not be seen any longer as a commodity. Uh, because if you're a commodity and you just get chosen whoever has the lowest price We lose. In fact we lost.

10:32 Uh back. twenty years ago when we had to file for bankruptcy for that very reason. Delta offered a lot of things but didn't get paid for it. And as a result, the business model didn't work as it did for issues that you know a number of the big legacy carriers had. We spent many, many years figuring out what we called back then decommoditization. Today we call premium. Tomorrow we'll probably c find a more elegant uh term for it. And uh it starts with liability, building your trust with your consumer, deploying technology to assist along the way. develop more partnerships, whether it's with American Express or Uber or YouTube, uh uh T V on board our planes, uh Paramount.

11:14 We want it to be there to make certain that we're getting the first call for the best dollar. Seems like the more sort of bargain. Priced airlines. Seem to be the ones that are struggling. I mean spirit is is gone, right? Completely. And even you know, we talk about prices that have gone up.

11:32 But on the the the lower end of the of the market. Yeah, w by our estimate that those carriers still have to increase their pricing at least another five percent just to break even. And if that happens, guess what? It's gonna help the top end too. There's some concern that sort of with the with the rise of AI that

11:51 Agent based buying will make price first. More prevalent. Right. I'm curious how you think about that, that AI agents may not favor brands The way humans do. Unless the AI agents are gonna be flying on the airplanes.

12:07 And actually and actually providing surveys and and uh I don't think it changes um our equation any. I you know, the at the end of the day A a relationship with an airline is is fairly personal. It's human. You're not gonna let an agent tell you how you should feel. about it the about it a brand in the same way. And that's and that's the the the hallmark of a great brand. It's how it makes you feel.

12:31 You deploy AI in in your own operations. I know Delta tested AI for individualized ticket prices. Using AI for this, does it create I don't know, a different kind of reputational risk because of the way people are Emotionally reacting to You know, to what AI is driving. Yeah, A AI is is not trusted, uh and uh for good reason probably.

12:54 with all the hype that's been that's been attached to it. We talked a year ago about the fact that We s we started to uh utilize some AI in in the pricing algorithms and people extrapolated about surveillance pricing and individual we're doing none of that. And we never intended to do any of that. The only thing we're using AI in the pricing tool is to help our revenue managers

13:19 be able to offer better pricing and more pricing to more markets around the world. At Delta We have hundreds of thousands of price points out for sale at any given time of any day. We can only manage a select number of those with human eyes and we set on auto Match.

13:40 Yeah, the the vast majority of those price points. And auto match basically is to make sure you don't get too far in or too far above or low lower than where the market is is coming in at. through AI, we can bring more intelligence in setting those signals. And AI works around the clock. It's twenty four seven. It's it's always monitoring and seeing what's happening in the marketplace and if our product is should be higher or should it be lower. Trying to give the customer the very best opportunity. We can only do that on our highest volume routes. But we still have a a massive amount of routes, but we don't deploy it. So you think about it as really it's a it's a knowledge tool.

14:19 It's a learning tool and it's efficiency tool. You've been known for your your people first leadership. And I know a lot of people are worried about how AI is gonna impact their their jobs. How do you think about that? How do you talk to your team about that? Well, Delta, I've been very clear um that AI is just first of all, I don't call it artificial. uh intelligence. I refer to it as augmented intelligence. It's going to enable our teams to do a better job. Of what they do. We we are a highly analytical business. We have five thousand flights day every day. And as a result of that.

14:56 There's a tremendous amount of data, a tremendous amount of intelligence in terms of monitoring and making decisions, whether it's in flight patterns, pricing the product, your mechanical reliability, your predictive engineering. There's just many, many disciplines that use that data. AI helps you make those decisions quicker, absorbs the amount of uh data that's out there far faster than anything we can do. We wound up making a lot of decisions. Based on Judgment?

15:26 Which sometimes is seat of the pants, sometimes it's instinct and These are going to be better data decisions. Now that doesn't mean that we're going to need less people. It frees people up. They have more time to serve. And if we do a great job of that, that's gonna grow our business.

15:43 Some CEOs got uh got booze for mentioning AI at school commencements. You asked AI to write your commencement speech for Emory and then scrapped it and and warned graduates against Pushing the easy button. And guess what? People stood and cheered when I said that. So what's the easy button and and did going through that impact how you think about using AI yourself and and for your team? I'll admit I'm not a big user of of AI. Um it's pretty hard to teach old dogs new tricks at times. I'm curious about it. I was impressed with how with how quickly the uh a speech within matter of

16:18 Seconds. It's produced. It's produced in words that I would be equated for. I talk in lots of public forums, so there's a lot of data out there as to how Ed Bastian would deliver a commencement address. But at the end of the day it didn't have any soul. It had no they had it had no spirit. It was Yeah, I felt felt like I was cheating. Uh they they the to be given an opportunity to come to a commencement is an honor. And then I'm going to potentially use technology just to try to get it done quickly and check that box. It it wasn't right.

16:49 It wasn't right. And so there's there's a conscience that needs to be deployed with AI. And I think that's where people Yeah, in in the technology sphere, just don't get it. Yeah, they're out there selling, selling, selling. Ed always calls it straight, which is one reason he's built up so much trust for himself and for Delta.

17:10 So what are the real world risks and opportunities in AI deployment at a massive business like Delta? And is there an even bigger opportunity he sees ahead? We'll talk about that and more after the break. Stay with us. Humans will never be more intelligent than AI. Those were great at AI and those that went out of business because they weren't. How do we build a future?

17:43 That is human centered. I'm Rana El Chayubi. And on my podcast Pioneers of AI, we answer that question and so many more. As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in.

18:14 Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show. Because every Friday we release a second rapid response exclusively in the Rapid Response feed the guests and topics are just as compelling and timely from Ford CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there. Before the break, Delta's Ed Bastion talked about why the airline's customers have been willing to pay more as energy costs have skyrocketed.

19:01 Now he talks about publicly calling out members of Congress, the real world risks and opportunities of AI for a massive business like Delta. And whether the future of the airline will be in space travel. Let's jump back in. You and I have talked before about the role of CEOs in social and political issues. You're one of the first CEOs to speak out against Tariffs uh during the government shutdown do you suspend it?

19:31 Delta perks for members of Congress calling out lawmakers for lack of leadership. Many CEOs have become more attentive. in their comments with Trump in the White House. Has your calculation adjusted? Like how how do you decide what to step out about? I try not to step back I'm not I'm not successful always, but I really try not to because I don't think there's

19:54 Any gain uh Necessarily in doing it. There comes a time. When it's relevant to my business and it's relevant to my constituents. that we have to do or say something.

20:08 There's times that Yeah, candidly. Um You get exasperated and y you just wind up Yeah, expressing Or doing it.

20:17 Something that that hit the um Then that that one with the with the Congressional perks hit the uh hit the bullseye on it. I've I I I don't think I heard a single negative comment. I get thousands of comments from people of all sorts of things every day. Um that was like ninety-nine percent, you know. Thank you for doing that. So you have to trust that when your blood pressure is particularly high about something, maybe it's worth listening to that? You you have to listen to it. You have to be careful.

20:44 You have to talk to folks about it. Um But you know, there's there's no point in in grandstanding. Uh these are politicians. That's what they do for a living. COs get shoot up in that in that space very easily. And no matter what I would say, with that one exception,

21:00 Probably fifty percent would love whatever I say, fifty percent would hate whatever I say. And I do uh subscribe to the old Michael Jordan theory that Republicans buy sneakers just as much as Democrats do, and Republicans fly in our airplanes just as much as uh Democrats do. You sounded pretty passionate. Uh before when you were talking about AI, do you do you feel like the way Technology. Companies and the way as a as a sort of society we're approaching AI is the kind of thing that

21:30 That could use a little bit more leadership and sort of Thinking about it? It absolutely can. And yeah, we're in a race. Certainly there to beat China. You know, I understand that that that backdrop.

21:43 But I also understand the hype. Is far greater. than the actual value. That's ultimately going to be derived because these technology companies are not about people. These technology companies are trying to beat the other guy. Or to beat China or to beat somebody else and they they don't really care about our people.

22:02 Yeah, they care about winning their race. And I've got to be concerned about winning up my race. Everywhere I go, I ask the question Who's gonna pay for The trillions and trillions and trillions of dollars of investment. that are being committed in CapEx and other other forms to this race. And you know, I think it's pretty clear that our economy is being sustained by AI. If you strip out AI's contribution to GDP, you realize GDP is

22:28 Pretty flat. So I think that's good that you know we're investing in in the right stuff. We just have to be careful. Yeah, you know, the There's there's two forms to to a return. There's the value we get from it and how much did we spend to get it. Then if we're gonna spend more.

22:43 than we're gonna get from it, we're not gonna use it. And I think that mindset has to be kind of then push back through the system. And it's not about individuals, it really is about corporations, because we make the big spending decisions as users for the stuff is to dec to figure out where we may be going too fast or where, you know, there's there's too many companies competing over the same opportunity. If those valuations and that spending make sense, the assumption is that

23:10 A business Like yours, like Delta, that this technology is gonna save you. a tremendous amount of money or open up a tremendous New new opportunities, right? S some of that might be you need a lot fewer people, whatever the assumptions are. And if I'm hearing you right, like right now.

23:28 You don't sort of see those things lining up. I say it's early. But I you know, I see opportunities, absolutely, and we're working on a lot of opportunities in the space. But these are opportunities about efficiency. They're not necessarily about how do you grow. Your top line.

23:48 'Cause if it's all about efficiency, well, I'm not sure I I have that level of investment appetite just to be a little faster. If you show me how I'm gonna triple my business. I'm more interested. And you're even hearing the technology companies about returns and realize That you know, returns matter. There will be winners and there will be losers.

24:08 We just have to be clear, not everybody's gonna win. Right. Not all that investment is gonna pay off the way the way people look at it. And you're thinking about it's not just investment in the Taiwan in new foot storms forces sources of energy and nuclear and I mean so these this is fairly dramatic. In terms of the amount of long term investment.

24:30 that's happening in the marketplace. Are consumers gonna pay for that? Or Businesses who's gonna pay for it? And they the utility companies, the energy companies, they say, Well the technology guys are gonna pay for it. Well, the technology guys aren't the ones selling to customers. Yeah, we are. So

24:46 It's it's it's very interesting. I think at the end of the day there will clearly be some type of settling out. And I hope it ends up on the good side of that rather than the dark side of that, but we'll find out. This year marks your your tenth year as as CEO of Delta. When you look to the decade ahead. Do you have any

25:06 predictions uh that that might surprise us. I mean is the is the next frontier gonna be Delta space vehicles? Like or might the the future of Delta be expanding the brand to to non travel areas, which you've alluded to also. Yeah, I d I don't I don't think we'll be going into space. We have a partner that's in space, Virgin Galactic. Uh Richard Branson and his his company and Yeah, Worcer keeps trying to get me to go up there. I'm not I'm not planning on it. Uh With them.

25:33 But we have a big opportunity, uh, not the next decade, I'd say the next century. Of making air travel much more available and accessible and Uh affordable. uh for the masses. When you realize only one in five people in the world have ever stepped foot on an airplane, this is a massive growth opportunity. We don't need to go to space. We just need to go, you know, explore new lands. And in exploring new lands, that brings understanding, that brings knowledge, that brings opportunity, that brings hope.

26:04 And inspiration, all of which is so positive. But travel is the parameter around which The Delta brand really lives. I mean it's always changing, but it'll largely be at the core. um you know commercial air travel, you know, for this planet. And uh I think the planes may change. You'll see different types of planes. You'll see more fuel efficient planes. the blended wing design takes off and we cut fuel emissions by fifty percent. And yeah, there's there's a lot of innovation growing for investors in Joby, which is

26:39 the the air taxi business. And I think that you're gonna see that's gonna be I think a a a new form of transportation that that will be here in the next couple, three years, starting starting to kick off in the big cities, where it will be part of that. Um so there's there's more ways of doing that. But I d I do think the the bigger idea is is international. The listeners to this podcast are are business people and and I'm curious Uh like If you have advice for them as a leader about how they think about what

27:14 Their role and their responsibility is in this moment Between You know, their own company. their shareholders and their employees and and and the world at large. One of the lessons I've learned over

27:28 over the years is um Yeah, there's a lot that we may aspire to, but You're not gonna get you're not gonna get anywhere unless you're Unless you got a team of people that are gonna take you there. This world is is moving faster. It's it's it's gonna continue to be challenging. There's no you never f you never fix the problems. The problems are always there and the they're they're not problems really. They're they're challenges and they're opportunities. uh for us and you know staying

27:55 Uh resilient also means staying humble. And being you know willing to listen and willing to to to be be impacted by by forces bigger than yourself and being you know not afraid to to let people know the the vulnerabilities that are attached to leadership. You're realistic. But

28:14 You remain optimistic. Like it's it To to what extent is the optimism like It's just like an almost like an article of faith. Like you have to be Optimistic because you you have to get information every day of some trouble here or there or whatever all over the organization. Well I uh

28:33 I learned uh Something I I was uh I knew uh General Colin Powell uh years ago and spent a little time with him. And one of the things that he he he he would talk a lot about back then and stayed with me for many years is optimism as a force multiplier. And if you want to go places and do things

28:54 And it's not false optimism, but it's optimism. Yeah, open to what it's gonna take and be willing to to to be confident. in in where you're headed. And the reverse of that, by the way, is also true. Uh cynicism.

29:08 is also a force multiplier. And people that are kind of looking at the dark side or the downside or the risk. There's not a lot of people that wanna wanna go down those those pathways. And you know, people have choices who they're gonna follow and Where how they're gonna spend their time and who they're gonna invest their energy with. No matter how hard the challenge is every day. I stay focused on that optimism.

29:30 Well, Ed, as always, thanks so much for doing this. Bob, it's great being with you. Thank you. Talking with Ed always leaves me reassured even when the topics aren't all sunny. His concerns about AI hype are bracing, yet his optimism about Delta itself remains unwavering. What struck me most was how his emphasis on data and technology was matched by enthusiasm around sentiment.

29:59 But so much of impactful leadership is guided by feeling and human emotion. And that he embraces that element. Of course the airline industry at its core is about the human joy of real world experiences, but for all of us. Ed's perspective is a reminder that even as technology burrows deeper into our businesses, the guiding clarity of human priorities remains an essential competitive advantage. I'm Bob Safian.

30:28 Thanks for listening. Rapid response is a wait what original. I'm Bob Safian, our executive producer is Eve Tro. Our senior producer is Alex Morris. And our associate producer is Masha Makutonina.

30:52 Mixing and Mastering by Aaron Bastanelli and Brian Pugh. Our theme music is by Ryan Holiday. Our head of podcasts is Letal Malad. For more, visit rapidresponse show.com.

What you see above is a preview of the first minutes. One unlock costs 10 credits and covers this episode forever: full segment and word-level timestamps on this page, plus .txt, .srt, .vtt and word-level JSON downloads, as many times as you like.