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Delta’s CEO on passenger fees, mergers, and why subsidies are bad for business

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A big chunk of private-sector infrastructure opens at New York’s JFK airport today. It’s the new Delta Air Lines terminal, with its $1.6 billion worth of lounge area, gates, and services.

Delta’s Chief Executive Officer, Richard Anderson, joins Marketplace Morning Report host David Brancaccio to discuss the industry, mergers, passenger fees, and why Delta thinks its about to have its most profitable year ever.

On Delta’s business performance:

Anderson: “Delta had a quite profitable year last year and 2013 will be the fourth year in a row of significant profitability. 2013 should be our most profitable year in our history. Fuel prices have come down, but it’s almost the quintessential American story of aviation in the U.S., if you think back to 9/11. The industry was rocked by 9/11. Then we had fuel prices run from $20 a barrel to $150 a barrel. Then we went through the financial crisis. And through all of that, without a government intervention, we remade ourselves. And today, Delta is the most profitable airline in the United States, if not the most profitable in the world.”

On consolidation, mergers and competition:

Anderson: “The industry went through — after deregulation — a fair amount of consolidation. Now, you essentially, if the US Airways-American merger when it’s approved, will have four really big strong airlines in the U.S. And when you think about the necessity of having a strong airline industry, you can have a strong airline industry and at the same time have a very contestable, competitive marketplace because you have four big players that each have the capital to invest in their employees, airplanes, communities, and in customers.”

On tech at Delta and why the company still uses older planes:

Anderson: “The best example and the best notion of how to explain this is that we think a mix of airplanes is appropriate when you are operating the airline for a return on invested capital.  When you think about it from a technology perspective, just think of it this way: The president of the United States flies around on some of the oldest aviation technology in the world — that technology was invented in the 1960s-70s. We have a lot of new technology airplanes, but we also have a very good mix of airplanes — both mature fleet and new fleet.”

Click on the audio player above to hear more.

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