Delta Airline Case

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Summary of Case In the case study changing Dynamics of the U.S. Airline industry were discuss and dealt with. Between 2001 and 2005, Delta Airlines, the third largest U.S. Airline, lost $10 billion. Delta wanted to increase its liquidity so they decided to sell its subsidiary Atlantic Southeast Airlines to Sky West Airline for $425 million in August 2005. Analysts believed that Delta was on the merge of bankruptcy. The Civil Aeronautics Board 9cab) imposed major restriction on marketing entry and market access. There were regulation on rates, routes and services that reduce amount of competition among industry participants. The Airline deregulation act was passed in 1978. It provided the airlines with freedom to decide their routes and…show more content…
They also face competition at their hub airports in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Amsterdam and Tokyo-Narita. The airline also has competition in smaller to medium-sized markets from regional jet operators. They faces problem with foreign carriers, both on interior U.S. routes and international markets. The company fares and rates vary by significant price competition. They set ticket prices in most domestic and international city pairs without governmental regulation. Prices and rates are subject to the jurisdiction of the DOT and the government of the foreign countries involved. Most of their tickets are sold by travel agents therefore fares are subject to commissions, overrides and discounts paid to travel agents, brokers and wholesalers. Delta is considered to be one of the largest airlines in the United States, capturing approximately 17.5% of domestic commercial airline market. The market shared is measured in terms of domestic revenue passenger miles. “Delta 's operating revenue on a GAAP (2) basis grew 27% to $7 billion in the June 2009 quarter compared to the prior year period as a result of its merger with Northwest Airlines. On a combined basis (3), total operating revenue declined $2.1 billion, or 23%, and total unit revenue (RASM) declined 17%.” (Delta, 2009). Northwest’s operations for the period from October 30 to December 31, 2008, increase their operating revenue $2.0
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