Delta Case Study Essay
Delta Case Study
Delta airline has a long history whose roots begin at the year 1924.This airline has grown to become one of the largest airlines serving the United States of America and also majority of the world through its international routes. The aim of this paper is to see the history of the airline together with its financial position with concentration on the various strategies the company has implemented to reach where it is right now. The paper will also include various suggestions to the airline to help it to grow further. Delta airlines began in the year 1924 but during that time it was known as Huff Daland Dusters. This was the first aerial crop dusting which had its headquarters in Georgia. The following year, the company moved its headquarters to Louisiana. The directors of the company were B.R Coad and Collett Woolman.Huff Daland went on its first international route and that was to begin its services in Peru which brought in enough money and increase in purchasing power. The year 1928 gave birth to what is known as Delta Airlines today. Furthermore, the year 1930 came with a major setback to the airline.
Delta failed to secure a commercial airmail contract and therefore suffered major losses which forced the airline to suspend passenger service. As time went by, the year 1934 seemed to be the year for Delta Airlines as they secured a low-bid contract for the new Route 33 airmail service between Dallas and Charleston, South Carolina, via Atlanta .The airline also resumed passenger services that year. The following years were very successful periods for Delta airlines as it managed to spread its wings to various states around the United States and it also managed to purchase airlines such as Chicago airlines and Southern Air Airlines. As the jet era began, Delta Airlines added jetliners to modernize their fleet and fleet in the 1960s, following the purchase of the Douglas 8 that entered service in 1959. The same year also provided a new image for Delta as it redesigned its logo to what is present today. In 1970, Delta became an all jet airliner.
The airline continued buying out its competitors and this time it was North East airline that was purchased in the year 1972. The great reign of Delta Airlines reached another milestone in the year 1975 when the launched the first airline called Delta Air Express which guaranteed air express service with high priority and guaranteed cargo services. As the deregulation act came into place, Delta launched its first transatlantic flight from Atlanta to London under the leadership of the new CEO David Garrett which followed another expansion to Frankfurt the following year. In 1979, Delta celebrated its 50th year of service with flights to Frankfurt and it became the first airline to board one million passengers in one city in one month. In addition to the above achievements, the 1980’s brought mixed feelings at the company. With the development of computers, Delta managed to begin computer based reservation systems and launch its first frequent flyer program.
But the airline suffered losses in the year 1982.Employees then took payroll deductions to raise about $30 million to purchase the company’s first Boeing 767 which was named “The spirit of Delta” in 1982.Between the year of 1984-1987, Delta merged with several regionals and partnered with some to increase its services to Hawaii. It also became the fourth largest carrier in the U.S and fifth in the world with its services to Portland, Oregon and Tokyo in 1987 under the new chairman and CEO; Ronald Allen. The airline expanded its operations to Asia in 1988. As Delta Airlines continued soar higher, the year 1991 was no different. The airline purchased all of Pan-Am’s Trans-Atlantic routes and shuttles hence making it the largest acquisition of flights in airline history and also making Delta a global carrier. Apart from making profits and expanding its routes, Delta Airlines also fulfilled its social and cooperate responsibility by painting one of its aircrafts with the Olympic flag.
It was then named the official airline of the Olympics 1995 Olympics games .It also received an award for the best major carrier for long and short haul flights. The airline also took a major step which till today has changed the history of the airline industry and that was making all its flights NON-SMOKING. Furthermore, between the years 1996-1999 had various achievements for Delta such as being named the global airline of the year and the best managed airline. It also installed automatic defibrillators on board aircrafts and purchased modern aircrafts such as Boeing 777.To meet the demand of low cost travelers, Delta announced its low cost airline “Delta Express” with services from Orlando FL. In 1997, Delta was the first airline to board more than 100 million passengers in a year.
The year 20th century started with the airline reporting losses for the first time in 6 years during the year 2001.This was because of the attacks on the world trade center which forced the government to shut down the US airspace for 2 days. The following few years saw a lot of changes in terms of marketing techniques, new check in systems and also few code sharing with the regional carriers to enhance the airlines services. But the year 2005 started being a year that the airline would face what can be termed as the most difficult phase in their entire history. Delta filed chapter 11 for reorganization under the bankruptcy code.
The airline later managed to expand it routes as early as November 2005 back to Latin America and Caribbean routes. The airline has since then managed to grow rapidly implementing various new methods of check in or purchasing tickets. With modern fleets, international alliance and great service, Delta has gone to become one of the best airlines in the world and has won major awards in the 20th century such as best airline website, Best airline lounge and Best frequent Flyer program.
History of Airline Industry
The airline industry first started the transportation of passengers in October of 1925. There was an improvement in planes with pressurization in 1949. In September of 1953, the first jet passenger plane gets introduced. The FAA was first established in August of 1958. In February of 1974, the first large body planes with multiple aisle were introduced. A little over two years later, the first supersonic travel was introduced in August of 1976 with the Concorde Tu-144.
History of Delta Airlines
Delta has close to 90 years of history that didn’t always involve passenger travel. In 1924, a crop dusting company called The Huff Daland Dusters was founded. Four years later, Huff Daland Dusters merged with Delta and kept the name of Delta. In 1941, Delta headquarters moves from Monroe to Atlanta. Delta gets its first stock traded on the New York Stock Exchange in 1957. Delta’s first merge occurs in 1972 when it merged with Northeast airlines; this merge made them a major carrier in New York and Boston. This is also the year that Delta started operating with the Boeing 727. In 1981, Delta Airlines launches its Frequent Flyer Program. Another merge happens a few years later in 1987 when Delta merged with Western Airlines.
After this merge, Delta became the fourth largest U.S carrier and the fifth largest in the world. They also introduced some international travel in the same year. After years of pay and job cuts due to the major decline in airline travel after the September 11th attack, in September of 2005 Delta Airlines files for bankruptcy. In December of 2006, Delta files for a five year reorganization plan that would allow Delta to emerge from bankruptcy as a stand-alone company; which wasn’t approved until January of 2007. In 2008, Delta merged with Northwest Airlines which made Delta the world’s largest airline.
Delta Airlines corporate strategy puts major focus on its staff achieving its objectives. The company carries out this strategy by having the top management committed to making sure its employees are satisficed (Delta Air Lines Inc. 5). The company has formed this business culture because they have realized that by having a satisfied work force, their customers the needs and expectations will be handled in an effective manner (Nancy 3). As a direct result of to this corporate culture adapted by Delta, managers and employees have established solid professional relationships, and it is because of the implementation of this strategy that Delta’s staff has been described as being an incredible work force (Data monitor 6).
Also, Delta airline is able to provide their customers with high quality services due to their strategy of focusing on their employees’ satisfaction. Delta Airlines has provided its employees with good working terms and conditions, and it has also motivated its employees to provide high quality services by offering them financial awards, delta merchandise, gift cards, award banquets, and promotions (Delta Air Lines Inc. 3).
Business Level Strategy
The business level strategy of Delta Airlines places emphasis on customer service and/or service delivery. Delta Airlines is committed to its customers (Delta Air Lines Inc. 7), which means that its core business focus is to meet and satisfy their customers’ needs and expectations. One of the most effective methods to achieving a competitive advantage is the company’s commitment to its customers (Nancy 1). Their business strategy has enabled Delta Airlines to provide its customers with the lowest fares possible within the market (Data monitor 5).
The airlines fear ratings are clearly displayed at ticket counters and on their website, which has permitted Delta to provide their customers with adequate travel data in order for them to be able to easily make reservations and inquiries at their own convenience. Also, communicating effectively with their customers has helped Delta’s relationship with the market. The Airline rapidly communicates travel news, as well as diversions, delays, and cancelations notifications to its customers in order to ensure that they are not disappointed, and can make more informed decisions.
Delta’s SWOT Analysis
Acquisition of NWA
World’s largest mega carrier & flight network
Pacific & Atlantic Ocean flight routes
SkyTeam & SkyMiles alliance
Brand & History
Reduce operational cost & capacity
Streamline operations & supply chain
New value for money strategies
Enhance the customer experience
Customer retention initiatives
Invest in new technologies
Renegotiate lease & labor agreements
Low on time rating
Susceptibility to service disruptions
Technological dependence for operations
Strengths and Weaknesses
Since the establishment of Delta Airlines, it can be considered an airline that has stayed in business despite its ups and downs. Although Delta has experienced many obstacles throughout its nearly 90 years of history, it continues to have many accomplishments that many other airlines do not have.
One of the major points to Delta Airlines success is its ability to “help more than 160 million travelers get to places they want to go to each year” as stated on the Delta Airlines website. Delta is assembled around many of its strengths one of those currently being “the largest airline in the world today” according to the index on Delta Airlines website. One of the strong points in being one of the world’s largest carriers today is having numerous hubs in major cities in the United States. Atlanta and Minneapolis are two of the biggest hubs of Delta Airline; some other cities include Cincinnati, Detroit, New York, and Memphis (Mutzabaugh, 2013). Having as many as 567 worldwide destinations in over 100 different countries allows an U.S. airline company to expand to different countries globally. Another strength Delta has is their superior customer service abilities. Their customer service is what helps Delta to be what it is today.
The passenger service, a successful history of flight, and flying to different continents around the globe leads to Delta having one of the highest gross revenues in the airline industry. In 2010 Delta earned profits of more than $590 million and $1 billion in 2012, this is a massive improvement from the $1.2 billion beating it had in 2009. As the each year went by revenue rose about 4% between 2011 and 2012, accomplishing a remarkable high of $36.7 billion (Hoovers Inc., 2013). Delta Airlines has been recognized to be the global air travel markets best mega carrier, and this is proven by the fact that Delta operates over 5000 flights on a daily basis (Delta Air Lines Inc. 8). Both their corporate and business strategies are highly innovative, and as a result of these strategies, and with the aid of their employees, that they have been able to provide high quality air travel services and become a major player in the market.
The company’s high quality and efficient air travel services also demonstrate its business strengths. Delta earned $22, 687 of revenue in 2008 due to their acquisition of the North West Airlines operations, which compared to the previous year amounted to a growth of 18.5%. (Delta Air Lines Inc. 6). It is safe to say that no airline is without flaws and there are many weaknesses within Delta Airlines itself. Being the best in the business doesn’t mean that you don’t you’re your own drawbacks. Along with being a top brand in the airline industry means that you have competitors. One of Delta’s main competitors in the airline industry is United Airlines which is rated the world’s most admired airline on Fortune magazine’s 2012 airline industry list, the industry leading loyalty program that provides more opportunities to earn and redeem miles worldwide, and also the world’s most comprehensive global route network stated on United’s website.
Delta’s Airlines has significant weakness which pose as challenges to their success, such as the 2000 job cuts and 20% capacity reduction they have undergone can defiantly be characterized as weaknesses. However, due to the 2009 economic grapples such the cutbacks were necessary in-order to reducing the high costs associated with operations (Data monitor 4). And compared to its main competitors, Delta’s on-time ratings for are comparatively low. It’s important to note that Delta Airlines services have not achieved comprehensive differentiation (Data monitor 9). Another major issue that could affect the performance of Delta Airlines in the market is the possibility of employee strikes.
Currently within the United States, the Maintenance, Repair and Overhaul (MRO) market is exceptionally strong, and it is predicted that within the next three years the Maintenance, Repair and Overhaul market will increase over 10% (Nancy 3). Such evidence validates the fact that there indeed are opportunities within the external environment which Delta Airlines could use to their benefit by decrease the costs associated with repairing and maintaining its serving fleet of aircraft. Furthermore, due to an increase in the use of online marketing in the air travel market, air traveler are much more aware of the numerous air travel services and prices being offered by the many travel companies and airliners that exist in today’s world. A clear example is how advancements in technology can be a major influencing factor is illustrated in the fact that customers of air travel services in today’s world have the capability to conduct a real time, reliable, and efficient comparisons of all the different rates being offered, and the ability to simply and conveniently schedule a flight reservation online (Nancy 4).
This is true about both the air travel market here in The United States and abroad. Indeed, the current external environment offers Delta Airlines the opportunity to achieve a competitive advantage, and become a leader in the air travel market by executing of its customer focused strategy. On a Global scale, the airline industry has witnessed significant development and growth of which is attributed to advances in air travel technology, and alternative fuel sources. This worldwide growth will give Delta Airlines the chance to become a leader in the global travel industry by implementation of their effective business strategies (Nancy 1). Although flue cost and air travel technological advancements are factors that have created new opportunity for Delta Airlines; nevertheless, the ever rising costs fuel, and the high level competition in the air travel market and are major threats to the success of the airlines.
Delta has claimed many breaks through from the company establishment date. Research and development over the duration of time has given Delta market presence in the industry over the years along with a deeply rooted foundation. Technology enhancements would complement Deltas competitive position; this action would bring excitement to the airline industry that would bring investors to the table. Broadening the profits, Delta is becoming a leader in the market with something truly innovative to offer customers.
Deltas progress statically is doing well, shown in last year‘s third Qtr. ending with a surplus of 56.67% currently outpacing its historical five year pace. Delta currently is seeking to reduce the loan rate on a pricey $1.34 billion loan from outstanding lenders currently. At this rate, Delta should have enough capital to venture out and achieve something great to autonomously boast in the industry in the near future.
Delta Airlines has established itself as a leading carrier and a great company. In order to accommodate specific areas which would enable Delta to increase their efficiency and profitability they have modernized their business strategy. Managers at the Delta airlines consider the motivation, training, and general well fear of their staff to be of high importance. Clear improvement in services demanded by air travelers such as the addition of Wi-Fi service and investing in matters such as the renovation of cabin is sure to be increase customer Satisfaction and boost demand for Deltas services by customers. Delta expanded in both the regional and international markets by merging with Northwest airlines. The numerous profitable markets that can be penetrated and/or expanded present Opportunities for Delta airlines. Things such as staggering economy, government uncertainty, and major weather changes present threats to Delta. Delta marketing method and business strategy are the reason it is one of the best carriers globally.
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