Delta Wants Georgia Power to Pay for Losses... That Are Delta's Fault

Passengers wait after the lights went out at Hartfield-Jackson Atlanta International Airport, Sunday, Dec. 17, 2017, in Atlanta. A sudden power outage at the airport on Sunday grounded scores of flights and passengers during one of the busiest travel times of the year. (AP Photo/Branden Camp)

Remember how right before Christmas, the Atlanta airport lost power causing the world’s busiest air hub to grind to a standstill?

Well, Delta Airlines– the biggest user of the airport– is pissed. And they want Georgia Power, the company that furnishes the airport’s electricity, to pay up to the tune of as much as $50 million:

Someone’s gotta pay for this.
That’s the message Delta Air Lines CEO Ed Bastian sent to Georgia Power over the massive power outage at Atlanta’s international airport, which canceled more than 1,000 of the company’s flights.
The outage hit Hartsfield-Jackson International Airport on Sunday afternoon, but power wasn’t restored until after midnight. Those crucial hours may have cost the airline anywhere from $25 million to $50 million.
“It was a very difficult experience. And it was shocking, candidly, that it took so long to get the power back on,” Bastian told the Atlanta Journal Constitution. “I know they worked hard to deliver, but to be out of power for almost 12 hours is unbelievable.”
Even $50 million may be a conservative estimate, he said, because it doesn’t include incremental costs like the hotel rooms the Atlanta-based airline paid for on Sunday night.
“We will certainly be seeking the opportunity to have a conversation, and then seek reimbursement,” Bastian told the newspaper. “I don’t know whose responsibility it is between the airport and Georgia Power, but we’re going to have conversations with both of them.”

It’s unsurprising that Delta would be seeking to recoup cash from somewhere, given the scope of its losses.

However, airline industry experts have hinted that Delta may be grievously overstating the legal responsibility that Georgia Power, or the airport itself, maintains for the airline’s losses. Delta’s cancellation of an interline agreement with American Airlines long ago might actually be the reason it sustained much of the economic damage it did, with the lack of this key agreement making rebooking passengers much tougher– and therefore increasing the prospects of Delta having to pay out for pricey line items like passenger hotel rooms with no legal recourse to other players.

As previously reported by RS Insider, in 2015, Delta canceled the interline agreement in question.

As noted by one airline industry executive with whom RS Insider spoke, the lack of that agreement compounded the problems Delta was experiencing in the wake of the blackout– the airline would have had a much easier time rebooking passengers on other airlines, and avoided forking out for hotel rooms, had they kept the agreement in place.

In other words, the extent of Delta’s financial losses related to Atlanta rests in large part with Delta, not with the airport or Georgia Power.

That is even more likely to be the case legally, with Georgia Power contending in an interview with CNN Money that the utility “cannot and do[es] not guarantee uninterrupted electric power service.”

At present, Delta seems to be focused on pressing its case with the incoming mayor of Atlanta, Keisha Lance Bottoms, perhaps an indicator that it has less of a leg to stand on, legally, than it is suggesting in its comments to the media.