Research Paper on Delta Airlines

Introduction

Delta Airlines is a Fortune 500 company and one of the successful airlines serving approximately 180 million passengers every year and operating 15000 flights a day. The organization has interests in jet fuel as well as airline business segment. This paper will focus on the airline business segment for Delta Airlines to assess the organization operating advantage by using SWOT, the organization strategy, market share and the overall industrial scenario (McKenna, 2018). This report will determine Delta Airline's competitiveness by assessing the internal environment and the external environment of the organization to review its strengths, weaknesses and the existing opportunities which are vital in the organization strategy development.

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SWOT Analysis

Strengths

Delta Airlines as an established airline has many operating advantages which help the organization to acquire a competitive advantage. Delta Airlines premium pricing with its revenue per seat being above the market average has been essential assurance of the organization quality services. Most customers associate the high seat prices with safety and excellent services which have worked in advantage towards the organization. The Delta Airlines operating hub is one of the best single airline hubs in the world with 970 departures and more than 200 destinations with the organization having 59 destinations from the Atlanta Airline hub. The organization is known for quality services and customer engagement which has been vital in the organization success and improvement of consumer loyalty. The primary Delta Airlines target is the business class travelers who make the majority of the consumers. The strategy in investing in the used planes and the vertical integration of the organization coupled with strategies to minimize the cost implications of unionization has been vital in the organization sustainability (McKenna, 2018).

Weaknesses

Delta Airlines also have short market comings which require to be managed to ensure high performance. The dynamic fuel prices and change in technology significantly affect Delta Airlines efficiency and the ability to reduce the overall overhead costs incurred by the organization. There is a growing number of low-cost dependable airlines which are causing loses to Delta Airlines as many customers are choosing low-cost airlines more. Therefore, the low-cost airlines will continue to cost Delta Airlines which is a premium pricing airline it's market share which will affect the organization profitability in the long term (McKenna, 2018).

Opportunities

Opportunities for businesses such as Delta Airlines refers to avenues that are viewed as areas through which the organization can improve its overall productivity (McKenna, 2018). There are many opportunistic areas that Delta Airlines can use to enhance its returns such as the growing demand for business travel especially in Asia where the airline can increase its number of trips and destinations in Asia to capitalize on the growing market (Dewan, 2018). Besides, the airline can invest in the low-cost business segment to prevent losing market share to emerging low-cost carriers.

Threats

Many threats are facing Delta Airlines that should be addressed to improve the organization overall competitive advantage. Competition is growing in the airline industries which has led to the decline of the overall organization market share and returns. The low-cost airlines are causing a shift from Delta Airlines premium business (McKenna, 2018). For long Delta Airlines has used quality and safety to justify the organization pricing strategy.

Delta Airlines Market Share and Industry Growth

Delta Airlines is one of the largest airlines in the United States and the world with a market share of 16.9%.

The airline transports both cargo and passengers in both international and American destinations. The airline has operating revenue of 44.44 billion USD and has ferried 192.5 million passengers in the last one year. Statistics show that Delta Airlines revenue has been growing steadily for ten years which indicates that the airline is performing well in the market (Statista. 2018). The air transportation industry has been increasing consistently in the past five years, and statistical projections show that the industry will continue to grow which is a significant opportunity for Delta Airlines to improve its market share (Bush, 2016). Globalization has developed tourism and trade which has been vital in motivating people to travel and promoting industrial growth. Besides, technology and the safety of using airplanes in passenger and cargo transport has also played a significant role in air transport growth (Russell, 2018). As more international markets in Asia and Africa opens up the industry will continue to grow sustainably, and it is essential for individual airlines such as the Delta Airlines to align themselves strategically to gain from the growing industry (Dewan, 2018).

Delta Airlines Market Strategy

In 2018, Delta Airlines leveraged globalization, premium revenue and networking with other airlines in the Sky Team to increase its sales (Russell, 2018). The organization strategy focuses on cost capping, increased revenue diversity and fleet transformation by investing in technology, innovation, joint ventures to facilitate maintenance, repair and business expansion. The success of the current company strategy was dependent on the organization domestic network leadership, the transformation of the fleet and excellent global partnerships which improved the airline seamless universal access to customers and also improvement of service to its customers. In 2019, the sole organization strategic direction is to enhance the overall customer experience which will be vital in guarding the achievements registered during the 2017-2018 financial year in which the airline invested in fleet transformation and building a global network (Russell, 2018). In 2019, the airline seeks to invest in the personalization of the customer experience which will be vital in promoting the sale of its premium products to offset competition from the low-cost airlines which are threatening to take business away from the premium-oriented airline services (Durrant, 2018).

Importance of Networking in Achieving Delta Airlines Strategic Plan

To grow sales in a globalized market networking is key towards operating in a global environment and has been vital in helping Delta Airlines to achieve its global expansion strategy without incurring additional costs (Gosai, 2017). The Delta's network has been a combination of desirable global markets such as the Northeast, upper Midwest, and the West Coast through the development of hubs and growing market presence in markets that the airline is less dominant to expand its overall customer portfolio (Durrant, 2018). In Detroit and Atlanta, the organization has worked less towards maintaining its position because the airline is well founded in the two markets compared to the competitors. Collaboration with other airlines has made it easy for Delta Airlines to increase its market reach and offer its customers more complete services even without having to fly its fleets in the markets. The airline in 2018 looked on the Asian market as an opportunity for revenue growth due to the area's strategic position in global business today (Durrant, 2018). In 2019, Delta Airlines focus is on international expansion and customer growth to increase its overall revenue and to achieve this the organization will need to invest in a global network (Russell, 2018). To accomplish this goal, the airline in Asia has partnered with the Korean Seoul Incheon base and Mumbai partnerships which seek to facilitate the external organization expansion (Dewan, 2018). Partnership with Korean Air will launch Delta Airlines presence in Asia and will be a strategic move to achieve its global expansion plan. In 2018, the airline acquired Airbus A330-900s planes to add to its existing fleet and replace the aging Boeing 767-300ERs fleet a move that will lead to a 50% increase in premium revenue opportunities (Durrant, 2018).

Revenue Premium and Globalization Impact on Delta's Strategic Goal

Delta Airlines aims at improving its overall revenue by acquiring new planes to replace its aging fleet (Durrant, 2018). The organization will be able at the same time to enhance the overall customer experience which will help promote long term sales growth and customer loyalty (Russell, 2018). Globalization is an opportunity for Delta Airlines to maximize its existing fleet revenue by ensuring that the new fleet optimizes the airline operations especially in Asia and Europe (Dewan, 2018). Globally, alliances with Virgin Atlantic, Korean Air, and China Eastern will be crucial in the external airline expansion into global markets which will increase coverage and grow revenues (Dewan, 2018).

BCG Matrix for Delta Airlines

The BCG matrix is a corporate planning tool and portrays an organization portfolio on a quadrant figure with the market share on the horizontal axis and the speed of market growth in the vertical axis.

• Question Marks
• International alliances to promote growth.
• Stars
• Large market share.
• Dogs
• Large market share and growth.
• High operating revenue and profitability.
• Premium revenue opportunities.
• Cash Cows
• Acquisition of new planes.
• Large market share with unlimited market opportunities due to globalization and international business development.

Key:

1. Vertical Axis - Market Growth
2. Horizontal Axis - Market Share

From the BCG portfolio, Delta Airlines has innovative and using a transformative leadership approach aims at advancing in the market to expand its overall market share. The airline has introduced new planes that offer greater premium revenue opportunities which will significantly increase the organization international market share and growth in the future (Gosai, 2017). There is a question of the role of international alliances in market share expansion and market growth because it leads to a blurred area of business competition (Lin, 2013).

Possible Strategic Alternative

Investment in Low-Cost Products

The primary threat to Delta Airlines market share is the low-cost airlines due to Delta's specialization in the premium pricing category. Despite the competitive advantage of offering premium products the market for low-cost airlines is expanding as the middle-class individual's domestic and international travel increases which is an opportunity for Delta Airlines to offer greater variety to all consumers to use its services and will reduce the potential loss of customers to the competing low-cost airlines (McKenna, 2018).

Conclusion

As the international air transport industry grows, Delta Airlines will continue to make positive gains in terms of profits and market share. Delta Airlines as a member of the Sky Team has significantly benefited through the expanded market opportunity and also reduced the cost of operations by using other alliance airlines local resources. The organization has invested substantially in customer satisfaction thr...