IV. The Future of the Airline Industry
The Airline Industry is in an interesting situation. Simply adding a low cost alternative is not enough in the industry. The Internet has made the power of buyers grow with the transparency of ticket prices. This is not something that will change any time soon. Because of this profitability is predominately reserved for low-cost yet distinctive carriers. No consumer wants to ride what they consider a “lesser” airline. Airlines need a way to distinguish themselves from one another while also acknowledging the increased power of buyers. The future of the industry is in JetBlue’s “cheap chic” style. Airlines need to maintain a cost effective price point while also not appearing cheap. Small
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Through similar mergers in the 1980s and 1990s, Delta extended its reach into trans-continental and international markets (Rivkin 7-8). According to its stated position today,
“Delta Air Lines serves more than 160 million customers each year. With an industry-leading global network, Delta and the Delta Connection carriers offer service to 356 destinations in 65 countries on six continents.” (Delta.com).
The result of this objective is the third largest commercial carrier in the world, having a strong presence in major hubs such as Atlanta, Dallas, Cincinnati, and Salt Lake City (Rivkin 8).
As with all airlines, Delta’s recent performance has been significantly impacted by industry shifts and external events. Terrorist attacks and escalating costs have significantly impacted Delta’s profitability in recent history (Rivkin 4). The company has also been losing valuable market share to the low-cost carrier Southwest Airlines throughout the southeast and specifically in the lucrative Florida market (Rivkin 8). JetBlue also began encroaching on key Delta routes, and this seems only likely to increase (Rivkin 9). Despite this, Delta has still performed better than any other legacy carrier (Rivkin 8). Still, recent history has brought several changes to this legacy carrier, and the company has turned its attention towards new competitive strategies.
II. Analysis of Delta’s Competitive Strategy and Position
In recent
The targeting strategy that Delta Airlines follows is a Single Segment Strategy. Business fliers are the main target for this airline. In order to reach their target market, Delta Airlines is conveying its message that it delivers everything business fliers need through advertising in broadcast media and other national media. A differentiation strategy is the extensive flight service and brand legacy of Delta Airlines is recognized throughout the airline industry as unique. There are several benefits of Single Segment Marketing. The company can gain more competitive edge. Their major competitors are United Airlines, Northwest Airlines, American Airlines, and British Airways. Also, the company can create more fine-tuned offerings at the right price for the specific market segments as well as have a clear picture of the
Delta airline uses merger so as to be able to expend its business. In 2008 the company merged with Northwest airlines. It operates in Europe, North America and Asia/Pacific regions. Once the merger was complete, Northwest Airlines and all its constituents become wholly-owned by Delta Airlines. The merger saw to it that Delta Airlines started operating in the Northwest for FY 2008. In the period of two month that is from October of 2008 the time the merger was completed to December of 2008, the company had increased it revenues to $2 billion. Having a flexible nature, allows Delta to improve customer services, and in the long run be able to achieve its strategic objectives.
While Frontier and Delta are both popular choices of airlines for Americans, Delta has become more of a household name because of their friendlier service, more comfortable cabins, and their limited extras fees. Frontier airline still is a worthy competitor by being cheaper, but they also have many added on fees for things that are free with Delta. Overall, Delta knows how to take better care of their customers and make sure everyone is satisfied.
in revenue passenger-kilometers flown with 277.6 billion. In 2015 their revenue was up $40.704 billion, operating income was up $9.520 billion, and net income of $926 million. Delta’s total assets were down in 2015 with $53.134 billion. Total equity was up with $10.85 billion. The results that we will be discussing will include the RPM, ASM, and Load Factor from May 2015 and May 2016. The results will show the year to date traffic results and the monthly traffic results change.
The Delta airlines serve more than 170 million customers each year.the survey conducted by Business travel news annually the delta airlines came No.1 for four continues years.
Based on the SPACE matrix, Delta Air Line is in the Competitive quadrant which suggests that delta should focus on integration, market penetration, market development, product development. With the help of SWOT matrix there are seven alternative strategies that Delta Air Line can opt from in order to increase its business and sustain (Appendix A).
Market structure can be defined as patterns of behaviour by enterprises in an effort to adjust to the markets in which they operate (buy or sell). Pricing strategies and collusive behaviour mergers are a few dimensions of market conduct. It is the industry norm for a legacy carrier to offer service to most popular destinations; Delta reducing routes to a similar schedule as the low-cost airlines is not an option in the multi-billion dollar industry. In order to gain market share from low-cost airlines, Delta must create a value proposition that differentiates itself from its competitors. Many customers will pay a premium if the level of service provided is higher than the low-cost, no-frills
The company I chose to research is Delta which is in the airlines industry. Delta is one of the world’s largest global airlines that assist more than 160 million travelers get to destinations around the world. The company started in 1924 as a small aerial crop dusting operation known as Huff Daland Dusters. In 1929 Delta had its first passenger flights that went from Dallas, Texas to Jackson, Mississippi. This flight was taken on an airplane that carried 5 passengers and 1 pilot. Delta has been offering its service to customers for 85 years. For four consecutive years, Delta has been ranked No. 1 in the Business Travel News Annual Airline survey. This is a huge accomplishment because it is a first for any airline. It is important
The domestic US airline industry has been intensely competitive since it was deregulated in 1978. In a regulated environment, most of the cost increases were passed along to consumers under a fixed rate-of-return based pricing scheme. This allowed labor unions to acquire a lot of power and workers at the major incumbent carriers were overpaid. After deregulation, the incumbent carriers felt the most pain, and the floodgates had opened for newer more nimble carriers with lower cost structures to compete head-on with the established airlines. There were several bankruptcies followed by a wave of consolidation with the fittest carriers surviving and the rest being
Delta’s biggest expenditure is the cost of fuel. Delta knows that the cheaper you can purchase aircraft fuel, the more profit you can make in the long run. Since Delta’s merger with North West Airlines in 2008, Delta also gained a financial benefit of the merger in the buying power when it came to fuel contracts. The volume of fuel in which the combined planes used did result in significant savings.
Delta Airlines is a commercial airline company that has been around since 1924. They fly to many destinations all over the world. Their fleet of airplanes consists of 822 airplanes. Delta Airlines is currently headquartered out of Atlanta, Georgia. Getting from point A to point B with Delta would be easy and plausible with their ability to service over 325 travel destinations all over the world. They are even able to broaden their horizon with their seven airline partners making it easier for their clients to get where they want to go around the world. Delta has top of the line pilots with stringent requirements ensuring their pilots have the ability to safely and accurately fly from point A to point B.
From the humble financial portfolio as a crop dusting outfit in the mid twentieth century, to the multi-billion dollar portfolio of a major airline in the twenty first century, Delta Air Lines has risen as a successful business. The airline industry is directly affected by outside economic conditions and is also cyclical in nature. These factors make it very difficult for airlines to make predictions to stay financially afloat. Delta has ridden the bumpy path of the last twenty years and managed to survive. In the past twenty years there has been many events that
2. Why have all of the low-cost subsidiaries of full-service airlines, including Delta Express, failed?
There have been few inventions to change how people live and experience the world considerably as the creation of the airplane. Today, traveling by air has become the norm and it would be difficult to imagine life without it. Air travel has improved the way people are able to conduct business by shortening travel time and changing their thought of distance. The companies within the airline industry exist in a very competitive market. One of those companies, Southwest Airlines, features low-fare, no-frills air service with frequent flights of mostly short routes. Costs are kept down by the exclusive use of Boeing 737 aircraft, which allows for low maintenance costs and quicker turnaround times for flights, and by an emphasis on ticketless travel (Encyclopedia Britannica). This paper will address two segments of the general environment and how they affect Southwest and the airline industry; evaluate how Southwest has addressed two forces of competition; predict what Southwest might do to improve its ability to addresses these forces; assess the external threats affecting Southwest; discuss Southwest’s greatest strengths and most significant weaknesses; determine Southwest’s resources, capabilities, and core competencies; and analyze their value chain.
After exploring possible opportunities and deciding how I wanted my airline to operate, I had the idea to make my airline a Low-Cost Carrier. Thus, I would operate my airline to offer the minimum with the price of the ticket without sacrificing safety. Everything additional that you want, comes at an additional cost. This is a way for me to lower my operational costs, therefore, being able to offer lower fare prices to my customers. As a student, I know how difficult it can be trying to find airline tickets that I can afford. My target audience was those people, like myself, always looking for the best deal. Although this type of market plan is not for everyone, there will always be costumers who would pay more to have a more luxurious