Delta Airlines

2336 Words Mar 24th, 2011 10 Pages
Situation Synopsis:

Margins in air industry have been shrinking for decades. Low Cost Carriers (LCCs) such as JetBlue and Southeast have made inroads to Delta’s Florida market which stands for 30% of Delta’s revenues. After 911 Attacks, the demand decreased. DeltaExpress, Delta’s low-cost subsidiary, is launched to respond LCCs threat but it is not as successful as it was thought it would be.

Delta’s current Strategy:
Delta mainline is a legacy airline and competes utilizing its low price and productivity. DeltaExpress tries to build on Delta’s leading position. DeltaExpress is an integral part of Delta and centrally managed in terms of pricing, flight frequency and routing and all the resources are shared. It benefits from the high
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In operations, Delta’s over-gauged hubs are under performing because of extra capacity and low load factors. Delta is not adapted itself suitably with the new trend in forward integration with travel agents and launching online ticket selling websites and is losing the related cost savings in this section.

Key Success Factors:
Cost, capacity management (load factor, turn time), channel management, differentiation, union relations and personnel management are success determinants in the industry. Pay cut negotiations with unions failed. In terms of integration with distribution channels, Delta has not caught up with Internet technology in order to reach the customers and share the benefits of omitting intermediaries with passengers. Delta has not differentiated itself by enhancing in-flight experience for passengers aligned with a “unique culture” leveraging its reputation.

Competitive Situation Analysis
Competitive Forces:
Buyers have a high power. They are knowledgeable about the price and have lots of choices. Suppliers’ power is high since there only two major plane manufacturers. Barriers to entry are high due to low margins and high up-front costs. Totally, competition is high with few major players and lots of cost-cut players. Overall Consumers have many choices and cost/ Differentiation is a critical competitive factor (Appendix

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