Delta takes $150m computer glitch loss, consumers lost more

Delta Air Lines just announced that last month’s computer glitch loss cost the company $150 million dollars. The losses came from flight cancellations and delays that cost the company $100 million dollars in “negative revenue” and $50 million in net costs.

The airline didn’t figure in any of the costs to airline passengers who were stuck halfway through their trip; others who had to forego vacations, weddings, and family get-togethers; and more who had prepaid for hotels, tours and cruises due to Delta’s own admitted mistake.

Delta has carefully calculated the “significant operations disruptions” costs to the airline, but has managed to ignore its customers who paid perhaps more in costs than the airline.

Plus, Delta passengers who had to make changes to their vacations and future flights are still being punished by Delta for its own failures by being forced to pay more for many of its rescheduled tickets.

1. If we take the number of passengers carried by Delta last year, about 139 million, and divide them by 365, we get to about 380,000 passengers a day traveling on Delta.
2. The disruption from the computer glitch loss lasted about three days. This means approximately 1.15 million passengers were affected by Delta’s computer failure.
3. If we assume — using US government per diem rates — that passengers having to stay overnight lost approximately $138 a night (based on Atlanta, Georgia, rates), the consumer losses for overnights comes to $158 million dollars.
4. If we figure an average normal government per diem rate for “meals and incidental expenses” of $60 a day, the consumer losses are increased by another $69 million.
5. Now, let’s factor in losses to the economy of lost tourism spending, restaurant business, souvenirs, clothes shopping, taxies, Uber, Lyft, and hotel nights, and the computer glitch loss spirals way beyond double Delta’s paltry losses.

Now, Delta is getting away without making its passengers and countless businesses whole. This airline is treating its technology failure as though the shutdown was some act of nature or some other disaster. But, it wasn’t an Act of God. This was a disaster of Delta’s own making, within Delta’s control, created by its arrogance, exacerbated by its greed, engendered by its own computer experts.

Delta’s culpability is at least double what it has announced in terms of its own operational losses. Delta owes its passengers far more than $200 in airline scrip, an elimination of change fees, and permission to rebook their travel at a higher cost in the future. At the very least, Delta should allow passengers to use their airline tickets without restriction for a year following this debacle.

Passengers who lost vacations, missed weddings and funerals, couldn’t use prepaid lodging and forfeited irreplaceable family time together should get even more compensation. Perhaps a free ticket on Delta to be used sometime in the next year might be a good place to start.

Paul Jacobson, Delta’s Executive Vice President and Chief Financial Officer, just announced that the airline is on track to generate $1.5 billion in cash flow despite its IT disaster and the announced $150 million loss. However, such a decision is not expected from Delta, which focuses on its bottom line and restricting competition more than on its customers who make Delta’s success possible.

Unfortunately, passengers have little recourse in the court of law. Delta is governed by federal preemption and travelers are notoriously unorganized for a unified lawsuit demanding compensation for Delta’s mismanagement and technical failures.

Delta’s haughty arrogance in this situation may result in DOT action that will mandate airline compensation for passengers in case of future IT failures. Justice is not served when consumers are punished for Delta’s admitted failures.