Delta spent the pandemic earning goodwill. It might be about to vanish.
April 3, 2021
By Thomas Pallini, Business Insider
It started with a presidential election.
Georgia quickly found itself in the crosshairs of then-President Donald Trump in the aftermath of the 2020 election. Joe Biden narrowly won the state and its 16 electoral votes, helping bolster his progressive mandate, but Trump did not let the state go to Biden without a fight.
The Peach State quickly became an epicenter for baseless claims of election fraud in the hopes of overturning the outcome. In response, Georgia began overhauling its election system and its legislature crafted SB202, a controversial election reform bill.
Delta Air Lines, as Atlanta's hometown airline and one of the largest companies in the state, took an interest in the bill and said it worked with the government to bar its "most egregious measures." After its passage, Delta CEO Ed Bastian commented favorably on aspects of the legislation and lauded the efforts of Atlanta's business community in shaping its outcome.
"The legislation signed this week improved considerably during the legislative process, and expands weekend voting, codifies Sunday voting and protects a voter's ability to cast an absentee ballot without providing a reason," Bastian said in a March 26 memo.
Gov. Brian Kemp signed the bill into law on March 25 and immediately drew the ire of progressive activists. President Biden derided the bill as "Jim Crow in the 21st century" and multiple civil rights organizations have already filed federal lawsuits in opposition.
Delta's response immediately sparked controversy as the airline was seen as supportive of the bill that included what opponents call voter suppression methods. Among others, the law requires a voter to present identification to vote absentee and the window for requesting an absentee ballot is shortened, as Insider's Grace Panetta reported.
Bastian's statement stunned industry observers that had been closely following Delta's great strides in the area of diversity, equity, and inclusion over the years.
"Even before the George Floyd incident, Delta had been talking about the need to hire, mentor, provide professional development opportunities, and promote women and people of color and other groups who were underrepresented in Delta's leadership," Henry Harteveldt, travel industry analyst and co-founder of Atmosphere Research Group, told Insider.
Bastian, in response to the backlash, took a stronger position against the bill in a Wednesday memo.
"However, I need to make it crystal clear that the final bill is unacceptable and does not match Delta's values," Bastian clarified.
"The entire rationale for this bill was based on a lie: that there was widespread voter fraud in Georgia in the 2020 elections," Bastian said. "This is simply not true."
But by the time the Delta chief changed course, the hashtag #BoycottDelta had already gone viral on Twitter with more than 38,000 tweets mentioning the call to action, according to the Atlanta Journal-Constitution.
Kemp also pushed back on Delta's statement, saying: "Today's statement by Delta CEO Ed Bastian stands in stark contrast to our conversations with the company, ignores the content of the new law, and unfortunately continues to spread the same false attacks being repeated by partisan activists."
Inside Delta's turbulent public relations week
Richard Levick, chairman and CEO of crisis management firm Levick, told Insider that the roots of Delta's poor handling of the issue can trace back to the US Capitol Building riots and the George Floyd protests last year.
"[Delta] clearly missed, surprisingly, the import of what happened January 6 and thereafter in terms of companies pausing their [political action committees]," Levick said. "And they didn't see the permanency of some of that."
Levick likened the airline's first statement to "sharpening the blade on the guillotine and saying, 'look how much better we've made it.'"
Veteran communicators told Insider that Wednesday's follow-up statement that unequivocally denounced the bill was the right move but Levick said the company should have been on the offensive early on, either by condemning the bill in its first statement or taken itself out of the bill's formation.
Shying away from the spotlight also wasn't really an option as Levick said that companies have to realize that we're in a new era where they're expected to take action in defense of important American institutions.
"They're not going to have to take a position on everything political, they are going to have to realize that issues regarding race, access, democracy are things where there's an expectation of their involvement or at least not their involvement on the wrong side," Levick said.
"There is no longer brand neutrality on voter suppression," according to Levick.
Delta is also too influential of an employer in Georgia not to get involved in landmark legislation in the state, even if the subject is outside of its primary purview of connecting the world through travel.
"The challenge with being a leader in any industry is that you're a leader and so, you're expected to be involved in things that a lot of other companies aren't involved in," John McDonald, a former American Airlines vice president for corporate communications and public affairs, told Insider. "You're expected to make influential decision-making on subjects that aren't necessarily core to your business."
Bastian's second statement was also buried during a Wednesday news dump as Delta decided to also unveil its latest policy changes. Most notable was the news that middle seats on Delta aircraft would no longer be blocked as of May 1.
Levick says Delta should have let Bastian's condemnation of the bill shine instead of bogging down the media with additional stories unless the airline had a genuine business reason for announcing its new policies when it did. March 31 was the end of 2021's first fiscal quarter and it might just have been bad timing, McDonald said.
Delta now risks losing the goodwill that it has built up over the years stemming from its innovations in the industry and keen focus on social issues.
Staring down a potential boycott from its most influential customers
Individuals promising to boycott Delta won't impact the airline's operations too greatly. Consumers have reliably shown that they will book the cheapest and most convenient travel option, and Delta will often meet those criteria for many Georgians.
But if the business community turns it back on Delta, that could deal a serious blow to the airline's bottom line. "Only when you get corporate accounts or large volume accounts that represent millions of dollars or more in business to an airline would any kind of a boycott really be meaningful," Harteveldt said.
Dozens of Black executives have already spoken out against Georgia-based companies like Delta for not doing more to oppose the law, and a full boycott of the airline's services could damage the airline. Corporate accounts are incredibly lucrative as firms spend top dollar when booking flights on everything from costly last-minute tickets to premium cabin seats for executives.
Bastian's initial comments also impacted Delta employees.
"I think that Delta's employees of color feel very let down by this," Harteveldt said. "Over the weekend, I heard a lot from a lot of Delta employees, frontline workers, management, many workers who felt that the airline betrayed the values that it holds so dear."
And it's exactly those workers that Delta should have considered when issuing the first statement.
"I have to think that Delta looked at this largely through a public affairs lens and not through that broader, diverse, fully integrated lens that brought in other internal audience members and [asked], 'how do you see this?'" Levick said.
McDonald noted, however, that these types of statements are often the result of discussions with politicians. All sides likely wanted to come out of this looking good and likely coordinated on what to say and how to say it.
But the public break between Delta and the state government has already yielded repercussions. Georgia's House of Representatives on Wednesday night voted to repeal a tax break on jet fuel that greatly benefits Delta, which has its largest hub at Hartsfield-Jackson Atlanta International Airport.
If passed by the Georgia Senate and signed into law by Kemp, Delta will be forced to pay more in fuel costs in the state, a costly expense that would come as the airline attempts a financial recovery from the coronavirus pandemic.
A cautionary tale for airlines
As more states take on the issue of voter rights in their legislatures, major companies will have to take note and Delta won't be the last airline forced to take a side on this issue. American Airlines took a stand on similar legislation passed in Texas on Thursday, boldly proclaiming: "To make American's stance clear: We are strongly opposed to this bill and others like it."
As for Delta's next move, Levick suggested the airline should do nothing more and hold firm in its condemnation.
"Don't just do something, stand there," Levick said.