Spiking fuel, summer travel & a blunt reality check on AI

Note: Transcripts are automatically generated from episode audio, and are not fully corrected for spelling, grammar, and formatting.

ED BASTIAN: AI is not trusted, and for good reason, probably. 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 in the technology sphere just don’t get it. They’re out there selling, selling, selling. This world is moving faster, and staying resilient also means staying humble.

SAFIAN: 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 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.

[THEME MUSIC]

I’m Bob Safian, and I’m here with Ed Bastian, the CEO of Delta. Ed, great to see you.

BASTIAN: Bob, good to see you again.

SAFIAN: This is your fourth time on this show, on Rapid Response.

BASTIAN: Wow.

Copy LinkHow Delta prepares for constant disruption

SAFIAN: We talked in the depths of the pandemic, in the heights of the recovery, and now 2026 has brought a different kind of environment: military activity in Iran and spiking energy costs. Do you get frustrated by it all, or is it just, OK, another day, another crisis?

BASTIAN: In this industry, we’re very exposed to what happens in the world. There are things that influence travel across the board. So my constant refrain to my team is, in times that are good, just get ready, because the next thing that’s going to happen probably isn’t good. And when times are bad, don’t get into despair, because we know we’ve got the resilience gene, and the capability and the experience set to power through. And that’s indeed what we’ve done this year.

SAFIAN: So much isn’t in your control. We thought the Strait of Hormuz was opening, and now maybe not. How do you plan in that situation? Are there things you can do to influence these geopolitical choices? Do you talk to the White House? Does it matter?

BASTIAN: I don’t think you have a lot of influence in those types of affairs, but we control a lot more than we don’t. We control our response. We control trying to run the very best operation we can. And if fuel prices are up, we do our best to see the degree to which we can include that in pricing for our customers. This past quarter, we were reasonably successful at that. We didn’t cover all of the costs, but probably about 60% of the cost, which, given the significance of the fuel spike, is a pretty strong statement of the value that customers see in the Delta product. And you can’t worry about things you don’t control. You’ll just drive yourself crazy.

SAFIAN: You did have to raise prices a bit due to the fuel costs, and you said recently that consumers can afford it. There was a little blowback on that, but there are no easy choices in this.

BASTIAN: Our consumers have a tremendous amount of discretionary income and wealth that they’ve accumulated over the last number of years. Employment’s at pretty close to all-time highs, labor engagement is strong, and we sit at the upper end of the K. So when you have a product that people are very interested in securing, such as travel, and you look at an incremental 12% to 15% increase in the cost of travel, is that making a difference for most people? Travel is not the biggest cost item in the budget many times. And I think most people say no, I’m not going to change from Delta. Delta is the airline that, when prices go up, I’m even more confident in flying because I know the value I’m going to get is reliable.

Copy LinkWhy premium travelers still absorb higher prices

SAFIAN: You just announced this new basic option for some of the higher-class travel: same seats and meals, but a few fewer perks. Does that reflect cost concerns at the top end of customers?

BASTIAN: Not at all, Bob. We have talked about this over the last several years, so this is not a new strategy. We’re just finally coming around this year to starting to roll it out. We’ve only introduced a handful of those product options. When you look back in airline history, we basically had two products that we’d sell. We’d sell a first-class product and a main-cabin product. We may have been good transportation providers, but we weren’t very good merchandisers or retailers. People want to have more options and choice from us, and to the extent you can take the shelf that you’ve created and put different brackets on the shelf, that helps. If you want the class-standard product that you’ve been buying all along, it’s there on the shelf. If you want a little more or a little less, you give customers options.

I think there’s a lot of interest in that, and we’ll see where it goes. This is a rollout, and to the extent that consumers have, and they will have, a lot of input for us, we’ll take that into account and continue to refine it and get better at it.

SAFIAN: And I guess you keep your eye on whether there’s confusion over the new options, or whether it’s something that drives more engagement.

BASTIAN: That’s the reason why it’s taken us some time to develop this. 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 saying, “I selected this box, but I didn’t realize.” We’ll make adjustments for people. We’ll be very understanding as we go. But I think this is the next level of commercial strategy for an airline that is a great consumer brand but doesn’t necessarily operate in the merchandising world the way we could.

Copy LinkWhat Delta’s booking data reveals about the economy

SAFIAN: You have access, obviously, to all the booking data that comes through your app and your website. Are there things that you see in that data that are different from the headlines? Does your data tend to lead the headlines or respond to them, or is it different at different times?

BASTIAN: Our data is usually ahead of the headlines. We just reported our second-quarter results. We gave guidance for our third quarter, which ends at the end of September, but we already have about 70% of the revenue on hand for that third quarter through advance bookings. Our bookings run anywhere from 60 to 120 days out. International runs longer, domestic runs a little shorter. So we have a pretty good sense for how people are already thinking about the fall and how people are thinking about the upcoming holiday season. Economists and members of the Fed and others are always quite curious about talking to us because we have a pretty good pulse on how the consumer, at least our consumer, is viewing the current environment, and then translating that into confidence to make a future purchase commitment.

SAFIAN: Your customer tends to be at the top end of the K in the K-shaped economy. You get, I don’t know, 20% more revenue per seat than competitors. Your premium-cabin revenue is almost on the verge of overtaking the main cabin. That decision, that lean into that customer, does anything about today’s environment make you rethink that strategy or double down on it? It sounds like that is still where, and the customer you feel, is healthiest for you to focus on.

BASTIAN: Oh, absolutely. And this is a decision we took not recently. We took it 15 years ago, shortly after we acquired Northwest Airlines. As a result, we were clearly the largest airline in the world. We still are, but it’s closer now. And we made a commitment to ourselves that we weren’t going to do the merger and introduce that level of scale unless we could actually differentiate in the marketplace and no longer be seen as a commodity. Because if you’re a commodity and you just get chosen by whoever has the lowest price, we lose. In fact, we lost 20 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 them, and as a result, the business model didn’t work, as it didn’t for a number of the big legacy carriers.

We spent many, many years figuring out what we called back then decommoditization. Today we call it premium. Tomorrow we’ll probably find a more elegant term for it. And it starts with reliability, building trust with your consumer, deploying technology to assist along the way, and developing more partnerships, whether it’s with American Express, Uber, or YouTube TV onboard airplanes, Paramount. We want to be there to make certain that we’re getting the first call for the best dollar.

SAFIAN: It seems like the more bargain-priced airlines are the ones that are struggling. I mean, Spirit is gone, right?

BASTIAN: Yeah, completely. And even as we talk about prices having gone up, on the lower end of the market, by our estimate, those carriers still have to increase their pricing at least another 5% just to break even. And if that happens, guess what? It’s going to help the top end, too.

Copy LinkDelta CEO: “AI is not trusted”

SAFIAN: There’s some concern that with the rise of AI, agent-based buying will make price-first shopping more prevalent. I’m curious how you think about that, that AI agents may not favor brands the way humans do.

BASTIAN: Unless the AI agents are going to be flying on the airplanes and actually providing surveys, I don’t think it changes our equation. At the end of the day, a relationship with an airline is fairly personal. It’s human. You’re not going to let an agent tell you how you should feel about a brand in the same way. And that’s the hallmark of a great brand: how it makes you feel.

SAFIAN: You deploy AI in your own operations. I know Delta tested AI for individualized ticket prices. Does using AI for this create a different kind of reputational risk because of the way people are emotionally reacting to what AI is driving?

BASTIAN: Yeah, AI is not trusted, and for good reason, probably, with all the hype that’s been attached to it. We talked a year ago about the fact that we started to use some AI in the pricing algorithms, and people extrapolated that into surveillance pricing and individualized pricing. We’re doing none of that, and we never intended to do any of that. The only thing we’re using AI for in the pricing tool is to help our revenue managers offer better pricing, and more pricing, in more markets around the world. At Delta, we have hundreds of thousands of price points out for sale at any given time on any day. We can only manage a select number of those with human eyes, and we auto-match the vast majority of those price points. Auto-match basically means making sure you don’t get too far above or below where the market is coming in at.

Through AI, we can bring more intelligence to setting those signals. And AI works around the clock. It’s 24/7. It’s always monitoring and seeing what’s happening in the marketplace, and whether our product should be higher or 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 massive number of routes where we don’t deploy it. So when you think about it, it’s really a knowledge tool, a learning tool, and an efficiency tool.

SAFIAN: You’ve been known for your people-first leadership, and I know a lot of people are worried about how AI is going to impact their jobs. How do you think about that? How do you talk to your team about that?

BASTIAN: Well, at Delta, I’ve been very clear that AI is just … First of all, I don’t call it artificial 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 are a highly analytical business. We have 5,000 flights a day, every day. As a result, there is a tremendous amount of data, a tremendous amount of intelligence in terms of monitoring and making decisions, whether it’s inflight patterns, pricing the product, mechanical reliability, predictive engineering. There are many disciplines that use that data.

AI helps you make those decisions quicker. It absorbs the amount of data that’s out there far faster than anything we can do. We wind up making a lot of decisions based on judgment, 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 fewer people. It frees people up to have more time to serve, and if we do a great job of that, that’s going to grow our business.

SAFIAN: Some CEOs got boos for mentioning AI at school commencements. You asked AI to write your commencement speech for Emory, then scrapped it, and warned graduates against pushing the easy button.

BASTIAN: And guess what? People stood and cheered when I said that.

SAFIAN: So what’s the easy button? And did going through that impact how you think about using AI yourself and for your team?

BASTIAN: I’ll admit I’m not a big user of AI. It’s pretty hard to teach old dogs new tricks at times. I’m curious about it. I was impressed with how quickly a speech is produced, within a matter of seconds, and it’s produced in words that I would be associated with. 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 spirit. I felt like I was cheating. To be given an opportunity to come to a commencement is an honor, and then am I going to potentially use technology just to try to get it done quickly and check that box? It wasn’t right. So there’s a conscience that needs to be deployed with AI. I think that’s where people in the technology sphere just don’t get it. They’re out there selling, selling, selling.

SAFIAN: Ed always calls it straight, which is one reason he’s built up so much trust for himself and for Delta. 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.

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Before the break, Delta’s Ed Bastian talked about why the airline’s customers have been willing to pay more as energy costs have skyrocketed. 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.

Copy LinkWhen CEOs should speak up on social issues

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 during the government shutdown. You suspended Delta perks for members of Congress, calling out lawmakers for a lack of leadership. Many CEOs have become more attentive in their comments with Trump in the White House. Has your calculation adjusted? How do you decide what to step out about?

BASTIAN: I try not to step out. I’m not always successful, but I really try not to because I don’t think there’s any gain necessarily in doing it. It’s just that 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. There are times that, candidly, you get exasperated and you wind up expressing or doing something. That one with the congressional perks hit the bull’s-eye. I don’t think I heard a single negative comment. I get thousands of comments from people on all sorts of things every day. That was like 99 percent, “Thank you for doing that.”

SAFIAN: So you have to trust that when your blood pressure is particularly high about something, maybe it’s worth listening to that?

BASTIAN: You have to listen to it. You have to be careful. You have to talk to folks about it. But there’s no point in grandstanding. These are politicians — that’s what they do for a living. CEOs get chewed up in that space very easily. And no matter what I would say, with that one exception, probably 50 percent would love whatever I say, 50 percent would hate whatever I say. And I do 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 Democrats do.

Copy LinkSeparating real AI returns from runaway hype

SAFIAN: You sounded pretty passionate before when you were talking about AI. Do you feel like the way technology companies, and the way we as a sort of society are approaching AI, is the kind of thing that could use a little bit more leadership in thinking about it?

BASTIAN: It absolutely can. And we’re in a race, certainly, to beat China. I understand that backdrop, but I also understand the hype is far greater than the actual value that’s ultimately going to be derived. 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 don’t really care about our people. They care about winning their race, and I’ve got to be concerned about winning my race. Everywhere I go, I ask the question: Who’s going to pay for the trillions and trillions and trillions of dollars of investment that are being committed in CapEx and other forms to this race? 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 pretty flat. So I think it’s good that we’re investing in the right stuff. We just have to be careful.

There are two forms of return: the value we get from it, and how much did we spend to get it? And if we’re going to spend more than we’re going to get from it, we’re not going to use it. I think that mindset has to be pushed back through the system. It’s not about individuals. It really is about corporations, because we make the big spending decisions as users of this stuff, as we figure out where we may be going too fast or where there are too many companies competing over the same opportunity.

SAFIAN: If those valuations and that spending make sense, the assumption is that a business like yours, like Delta, is going to save a tremendous amount of money with this technology, or open up tremendous new opportunities. Some of that might be that you need a lot fewer people, whatever the assumptions are, and if I’m hearing you right, right now, you don’t see those things lining up.

BASTIAN: I’d say it’s early. I see opportunities, absolutely, and we’re working on a lot of opportunities in this space, but these are opportunities largely about efficiency. They’re not necessarily about how you grow your top line. Because if it’s all about efficiency, I’m not sure I have that level of investment appetite just to be a little faster. If you show me how I’m going to triple my business, I’m more interested. And you’re even hearing the technology companies start talking about returns and realize that returns matter. There’ll be winners, and there’ll be losers. We just have to be clear: not everybody’s going to win.

SAFIAN: Right. Not all that investment is going to pay off the way …

BASTIAN: No.

SAFIAN: … people look at it. Yeah.

BASTIAN: Yeah. And you’re thinking about not just investment in the technology, but investment in new sources of energy and nuclear. So this is fairly dramatic in terms of the amount of long-term investment that’s happening in the marketplace. Are consumers going to pay for that? Are businesses? Who’s going to pay for it? You talk to the utility companies, the energy companies, and they say, “Well, the technology guys are going to pay for it.” Well, the technology guys aren’t the ones selling to customers — we are. So 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, but we’ll find out.

Copy LinkThe future of air travel

SAFIAN: This year marks your 10th year as CEO of Delta. When you look to the decade ahead, do you have any predictions that might surprise us? Is the next frontier going to be Delta space vehicles, or might the future of Delta be expanding the brand to nontravel areas, which you’ve alluded to also?

BASTIAN: Yeah, I don’t think we’ll be going into space. We have a partner that’s in space, Virgin Galactic, Richard Branson and his company, and Richard keeps trying to get me to go up there. I’m not planning on going with him. But we have a big opportunity, not in the next decade, I’d say in the next century, to make air travel much more available and accessible and affordable 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 explore new lands. And in exploring new lands, that brings understanding, that brings knowledge, that brings opportunity, that brings hope and inspiration, all of which is so positive.

SAFIAN: But travel is the parameter around which the Delta brand really lives.

BASTIAN: It’s always changing, but that’ll largely be at the core: commercial air travel for this planet. And I think the planes may change. You’ll see different types of planes. You’ll see more fuel-efficient planes. If the blended-wing design takes off, we could cut fuel emissions by 50 percent. There’s a lot of innovation growing. We’re investors in Joby, which is the air-taxi business, and I think you’re going to see that become a new form of transportation that will be here in the next couple, three years, starting to kick off in the big cities. We’ll be part of that. So there are more ways of doing that, but I do think the bigger idea is international.

SAFIAN: The listeners to this podcast are businesspeople, and I’m curious whether you have advice for them as a leader about how they should think about what their role and responsibility is in this moment between their own company, their shareholders, their employees, and the world at large.

BASTIAN: One of the lessons I’ve learned over the years is that there’s a lot that we may aspire to, but you’re not going to get anywhere unless you’ve got a team of people who are going to take you there. This world is moving faster. It’s going to continue to be challenging. You never fix the problems. The problems are always there, and they’re not really problems, they’re challenges and opportunities for us. Staying resilient also means staying humble, and being willing to listen and willing to be impacted by forces bigger than yourself, and not being afraid to let people know the vulnerabilities that are attached to leadership.

SAFIAN: You’re realistic, but you remain optimistic.

BASTIAN: Yeah.

SAFIAN: To what extent is the optimism almost like an article of faith — that you have to be optimistic? Because you have to get information every day about some trouble here or there, whatever, all over the organization.

BASTIAN: Well, I learned something. I knew General Colin Powell years ago and spent a little time with him. One of the things he talked about a lot back then, and that has stayed with me for many years, is that optimism is a force multiplier. If you want to go places and do things, it’s not false optimism, but optimism. You have to be open to what it’s going to take and be confident in where you’re headed. The reverse of that, by the way, is also true: Cynicism is also a force multiplier. People who are looking at the dark side, the downside, or the risk aren’t drawing a lot of others down those pathways. People have choices about who they’re going to follow, how they’re going to spend their time, and who they’re going to invest their energy in. No matter how hard the challenge is every day, I stay focused on that optimism.

SAFIAN: Ed, as always, thanks so much for doing this.

BASTIAN: Bob, great being with you. Thank you.

SAFIAN: 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: that 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. Thanks for listening.