Senior Vice-President, Europe, Middle East and Africa, Delta Air Lines, Perry Cantarutti, tells Chinedu Eze that the airlines’ venture in Africa has so much promise as the continent is the new frontier for economic development. Excerpts:
How do you battle the challenge of competition in your African destinations?
Yes, African market is very competitive; customers in Africa now have more choice ever than they have had ever before, especially from Lagos to United States. We have to compete and earn customers business and Delta has a lot of perks. First of all, we’ve got aircraft that have a lot of varieties in the interior. So, from Lagos, we have 10 or 11-hour journey: in the economy class cabin, we have a lot of movies and television shows or options, USB, power on every seat because today, everybody gets on the airline with phones or a device you need to plug your devices. We have also spent a lot of effort in the six years we have come to Africa, especially in Nigeria, we concentrate on satisfaction on board for customers.
In our business class cabin we have about four seats, it’s great for rest, passengers in the business class are able to move around, they arrive refreshed at their destinations. The other advantage is that every seat has direct isle access; you don’t have somebody between you and the isle, you can move in and out as you wish. There is privacy. Here on the ground in Lagos, we offer protocol services, which help premium passengers get through the airport to the lounge, it offers passengers the opportunity to refresh, especially when they arrive the airport in time.
In Atlanta, we have opened our new terminal for passengers; there is a quick immigration process, easy connections to anywhere in the US cities, when you add all these together, I think it is a very competitive and appealing offer.
Your started operation, eyeing Ghana as a major destination in West Africa, how do you compare Accra and Lagos in terms of the market
Nigerian market is huge for a couple of reasons: In the business environment, there is growing ties between Nigeria and US, that is a natural need. Nigeria is a big country, it is not just Lagos, there are other cities in demand for travel to US.
Accra is a growing market, the business environment there is different from Nigeria, we have a lot of ties between US and Ghana and one of the reasons we use Accra a little more often is because it is a little shorter in distance, Lagos is a little further. But in general, the opportunity in Africa is huge, as an American business person, you find the business environment wake up to the opportunity, the oil business has been here for a long time, the opportunities is becoming more well known in America than ever before.
What are the benefits of partnership with Virgin Atlantic
Back in July, we completed investment in Virgin Atlantic with 49 per cent and Richard Branson owns the other 51per cent, it is a huge step at building our presence on the Atlantic with particular presence in London. Initially, our focus with Virgin Atlantic was in developing traffic in Canada and UK, it could extend beyond that, but now we have Virgin in our frequent flyer programmes, members can earn miles on Virgin flight; we are having a growing affiliation with Virgin, with new benefits for customers in Lagos and other parts of the world, it is a great brand.
How will US American Airways merger affect your operation?
For sure, the new merger will bring new competition, but that notwithstanding, we welcome completion but that does not affect us, it makes us stronger but we feel we will have an advantage because we went through a merger with Northwest, completed in 2010 and so we have got four years ahead of them in bringing our companies together. We have gone through the challenges of the fusion so for the next few years they will be distracted with the internal challenges of merger and our present opportunities for us to widen the horizon and forge ahead.
The best way to deal with the competition too is to continue to do what we have been doing, making sure that our products and customers services improve constantly. This year, Delta Air Lines won the 13th Business Travel and News award for the third year, that shows the kind of gap we are building in terms of customer and who they chose to travel with, the quality our scheduling, our networks and products, we have been focusing on the customer. We do recognise that there are things we cannot look away from.
When you talk of customer satisfaction, we collected data from IATA, Delta has clearly moved ahead of the US industry, we are within the number three index in terms of customer satisfaction. The other measure is in the ability of Delta to fill up their planes with business premium customers and that in turn allows us to generate a better margin than our competitors.
In the US, Delta represents 40 per cent in terms of profitability in the US airlines industry, our profitability in the third quarter is huge and that is because customers are prepared to pay us more for the services and products we offer in the business premium area, which is what we have been focusing on. And that is what we are doing in Nigeria to build stronger market. We listen to our customers and we try to find out how we can serve them better. This is what really differentiates us from the other airlines because we understand that the loyalty is going to be based on something really tangible. So they fly with Delta for better service and they are willing to pay a little bit more.
Talking about competition, before American airlines started coming to Africa, European carriers have been taking Nigerians to various US destinations, but you guys came and took this juicy market from them. What is your projection on the growth of the US, African market in the next 10 to 15 years?
We are here and determined to be here. We believe connecting Africa to the US is a key business …for both countries and our early entry into this market has been really helpful in facilitating economic ties between the two continents and as that begin to develop.
Africa has been growing considerably across economies . We felt it was necessary way back to be here and we are constantly refining our products, making sure that its right and as the economies grow, we have come to look at the right market such as Lagos, Ghana, South Africa.
We have airlifted about 675,000 people from Lagos between the US and Nigeria. I think we are here for the long haul.
We have gone through the introductory phase and we have got over six years of experience, which indicated that this is not a short-term strategy for Delta. We have a lot of opportunity to grow. In Lagos we add bigger airplanes and we can add more frequencies per week when we think the time is right and the opportunity is good and we got the ability to grow.
We are also working at other cities in Africa that we think, like Lagos could support our answer of our service back to the United States. So we have a list of cities that in the coming years we will add to the Delta network and expand our presence.
We have been talking to a lot of our customers in the last 48 hours. They were telling us that it was an amazing thing that Delta opened the route because for all of them; they used to go via Europe and constantly they face the transit situation and have complicated trip. But here it is so much easier. Sometimes we may not understand the commercial and economic implication but we are learning that what we have done is to provide for many Africans what they want to do: they want to go from Africa to the United States and come back straight, non-stop with good service onboard and with our catering for African taste. And these are the things we have been learning since the past six to seven years.
When I look back I recall the way we started with our service. Today we have Africanised the service as much as we can to make it relevant to the people that are flying the aircraft. We cater to the specific needs of the market. We need to understand what the African market wants. People are saying they don’t want to go back to the old times and we don’t want them to go back.
Delta Air Lines is engaged in building airport facility in Monrovia and Accra, what is your corporate social responsibility (CSO) in Nigeria?
In the case of Accra and Monrovia we work with the airport authority to invest in the holding area for passengers before they board. Here in Lagos, we are not having a problem in the gate place which is adequate for our customers. In the case of Lagos, it is about having enough space because as the customers grow you will need to have enough for passenger facilitation.
But in general, we are pleased with the operation we have in Lagos. We are pleased with the project going on now to replace the baggage belt, which is good improvement for your airport and for us. The airport has been helpful for us to meet our operational needs for our airlines to fly safely and have god on time departures and arrivals.
On corporate social responsibility, for three years we have had an internship programme here in Lagos as well as the other places we fly in Africa. We take young business students and we bring them into our business and we teach them how to make them members of the team for certain period and we teach them how to work in an international company, managing commercial matters and we teach them in the course of one year.
We give them the opportunity to travel to Atlanta, our headquarters to learn more on what happens in our business. One of them in Nigeria is working on Ministry of Foreign Affairs and we make them good Delta ambassador as well.
We are also looking at the project we will introduce in 2014 but it is still in the formation stage. So I am not in a position to discuss it in detail but it is an opportunity for Delta to contribute to the communities that we serve because. We feel that it is an important thing to do. We have taken up several projects in Africa since the six years we have been in operation here but we are looking forward to refresh the commitment.
When are you going to change the aircraft type you bring to Nigeria?
When we see the need to change it we do so. We operate Boeing B767-300 and we sell almost 3000 seats a week in our flight between Nigeria and the United States. It is a great airplane. We spent a lot of money to bring the interior up to state of the art; inflight entertainment system. But if we decide we need a bigger airplane on that route we can put another airplane on the route; that is not a problem.
You declared good profit in your third quarter result. What are the factors that made this possible?
Here, we had great third quarter results and now that the fourth quarter is nearly done, I can say we going to have great year because the profit in the fourth is also going to be very strong and some factors contributed to that success. One will be meeting customer demand. There is a very high customer satisfaction, so customers are attracted to Delta and we are the first choice for customers and that is a good position. We have very good capacity management so capacity been relatively flat with good balance of supply of seats and demand.
We are running a great operation. In 2013 we had almost 70 days in a year where we have 100 per cent completion factor. Network of our size should be about 4,000 flights a day and we have 70 days where there was no single network consideration. So we are running operation much more reliable than our US competitors.