Running head: DELTA CASE STUDY 1

Delta Airlines Case Study

Ryan Kenney, Natalie Soobrian, Destiny West, Ronequal Williams, LeRon Neal, Rebecca Nixon

Saint Leo University

GBA-498
DELTA CASE STUDY 2

Dr. Cernata Morse

DELTA CASE STUDY 3

Table of Contents

Introduction........................................................................................................................4

Delta Airlines Case Study...................................................................................................4

Internal Organizational Analysis.......................................................................................7

Mission & Core Values.............................................................................................................7

Resources and Capabilities......................................................................................................7

Financial Ratios........................................................................................................................8

Strength/Weakness...................................................................................................................9

Firm’s Competitive Strengths................................................................................................10

Markets Served.......................................................................................................................12

PESTEL Analysis....................................................................................................................12

Industry Driving Force Analysis...........................................................................................13

Industry Key Success Factors................................................................................................15

Porter’s Five Forces................................................................................................................16

Opportunities/Threats............................................................................................................17

External Analysis Conclusions...............................................................................................18

Strategic Analysis.............................................................................................................19

Firm’s Current Strategic Strategies......................................................................................19

Strategic Options....................................................................................................................19

Strategic Option Selection Criteria.......................................................................................19

DELTA CASE STUDY 4

Strategic Option Evaluations.................................................................................................20

Recommendations..................................................................................................................22

Appendix A (SWOT Matrix).............................................................................................23

References.........................................................................................................................24
DELTA CASE STUDY 5

Introduction

Delta Airlines started out as crop dusters known as “Huff Daland Dusters in the 1920s in

Monroe, LA. Founders of the company are, C. H. McHenery, Malcolm S. Biedenharn, Travis

Oliver, and Collett E. Woolman.In 1929, the company was renamed to Delta Air Service. In

1941, Delta Air Service moved the headquarters to Atlanta, GA which is where they still are

today. “Delta is the oldest airline located in the US and headquartered in Atlanta, Georgia

(Bhasin, H., 2018).” Delta services more than 300 destinations worldwide in nearly 60 countries.

The company provides aircraft aviation services to almost 90,000 passengers annually. Some of

these customers travel for leisure and others travel for business. Delta employs roughly 80,000

employees across the world. Delta provides a great company culture and benefits to its

employees, and employee turnover appears to be low. Delta is the 2nd largest aircraft carrier in

the United States. Their most significant competitor is United Airways. Delta has remained

successful in this market due to their high customer loyalty and engagement as well as having the

great staff to provide service to passengers around the clock. The following is an analysis of

Delta airlines market share, opportunities, internal and external landscape, financial overview

and lastly will provide some recommendations as to how Delta can remain a top competitor in

today’s market.

Delta Airlines Case Study

As the aviation industry grows and becomes more competitive, offering lower and

cheaper fares, we will analyze where Delta stands in the Airline industry, if their current

strategies are effective, and offer recommendations to management.

Problem: Delta’s Differentiation Strategy

DELTA CASE STUDY 6

In today’s competitive age, airlines try to attract the customers by offering low cost fares,

which even the lower middle-class families can afford. We all know that airline companies rely

on people to travel by air just as much as it has for many years now with airlines trying to find

different strategies to sustain more profit. Delta follows a differentiation strategy. Now, Delta’s

prices for their tickets on the more expensive end of the airline industry. They do give

services/accommodations which entice customers to sometimes choose them over the

competition. Delta elects to keep spending cash on things in and around the flying experience so

they must keep the ticket prices high. Yes, Delta has included improved food, more films on the

flights, and more beer. In conjunction with those changes, Delta even started incorporating

entrees at no extra charge in the residential markets. They are always attempting to enhance their

clients’ experience with all the data they gathered on what people want in an airline experience.

They went all out for the overall presentation of their brand. Steimer (2018) mentions that “Delta

has used heart rate monitors on volunteer customers to track their heartbeats at 11 stressful

moments during the travel experience, such as finding a parking spot at the airport, moving

through security and boarding the plane (Steimer, S. 2018).” By doing this Delta searches for

approaches to enhance the movement involvement with each minute. This all sounds good but in

hindsight, but it was just a matter of time before they are going to the drawing board trying to

find another way to balance out the books with the high fuel prices, flight cancellations due to

weather/technical problems, and ongoing pilot shortage is hindering their current business

model. The one thing people want to do more is get from point A to point B without it costing

them an arm and a leg. Now, they have managed to drop the price some, according to Time.Com,

“Delta Tickets dropped 17% to $238 this year, from $269 in 2016 (Renzulli, K. A., Leonhardt,

M. 2017).” in their current business model. The price drop doesn’t look enticing compared to an
DELTA CASE STUDY 7

airline like Frontier who “offers the lowest average roundtrip airfare at only $111 (Renzulli, K.

A., Leonhardt, M. 2017).” Delta airlines differentiation business model will fail, therefore

instead of concentrating on providing major amenities at a high cost why not focus more on

lowering their air fares to meet the customers’ needs and wants. This current strategy does not

allow Delta to be able to successfully lower their fares like Southwest Airlines while also

maintaining their high cost amenities as well because they cannot afford it due to the issues they

are currently facing. There is no way to provide everything on their current strategy and still be

able to drop ticket prices. They must change their business strategy. They cannot afford to be

losing out on filling their flight seats because they want to put money in the accommodations

while still charging high ticket prices. They seem to have this idea that all these immensities

justify their ticket prices and yes, some people may purchase them but the main crowd that

would help them stay in a positive profit revenue are taking their business elsewhere and the

low-cost airlines are seeing all the profits from it. Their ability to lure customers over simply

because they are cheaper price point will always win out the majority. There is a deeper pool

Delta can choose to jump in and start competing with the rest to pull in a bigger profit margin if

they are willing to change strategies. Even AcademicMind.Com says that, “Delta has also made

some missteps in its differentiation strategy including its attempts to launch a low-cost airline

brand, its many route eliminations, and some announced services not yet implemented (i.e. iPod

docking). Overall, the brand image of Delta has fared well despite the negative publicity

generated by its bankruptcy (Baumwoll, J., Howland, B., Kruse, J., & Lamb, S. 2018).” Even

now, Delta Airlines, with the issues the industry is dealing will and them not being able to lower

their fares, have filed for the Bankruptcy protection as an “in case precaution”.
DELTA CASE STUDY 8

Internal Organizational Analysis

An internal analysis of Delta Airlines will be done to examine factors inside the company

that contribute whether a competitive advantage can be sustained. Internal factors focus on a

company’s strength and weaknesses in their ability to target their customer’s needs. We will

take a close look at the internal make-up of Delta, outline their resources and capabilities, and

depict some of their unique strength and weaknesses. Conclusions of the internal analysis will

summarize some of the strategies Delta Airlines can focus their efforts better on.

Mission & Core Values

Delta’s mission statement reads as follows: "We—Delta's employees, customers, and

community partners together form a force for positive local and global change, dedicated to

bettering standards of living and the environment where we and our customers live and work."

For a mission statement to be effective it needs to encompass these 9 key components:

customers, products/services, markets, technology, concern for survival, philosophy, self-

concept, concern for public image, and concern for employees. Delta’s mission statement is

effective because it briefly touches on each of these components (Jurevicius, 2013). Delta

further strengthened its business strategy by developing their own set of core values; these values

define their vision and shape the company’s culture and ethics. Delta has strong core values of

honesty, integrity, and respect as their foundation of who they are.

Resources and Capabilities

Delta Airlines is one of the world’s largest airlines operating both domestically and

internationally. Over the years Delta has had to restructure their business model to keep up with

the evolving changes in the industry. Today Delta considers their business model one of their

strongest resources which is tailored to attracting corporate travelers, customer service, and is
DELTA CASE STUDY 9

supported by their operating strategy. Delivering high quality customer service is at the top of

Delta’s priorities. Catering to customer needs, constantly improving travel experience, and great

employees are the foundation of Delta’s business model. Delta was also first to introduce the

“hub and spoke” system for passenger travel in 1955 (Delta Flight Museum, 2017). This system

allows Delta to bring scheduled passengers to a main hub where they can connect to other Delta

flights into smaller airports. With their fleet of 867 aircraft and over 80,000 employees, Delta has

the capability to offer 15,000 flights daily to 304 destinations in 52 different countries. Annually

Delta Airlines serves roughly 180 million customers across the globe. An internal analysis is of

Delta’s resources and capabilities is necessary to conclude whether the company can sustain its

competitive advantage. This internal look will be done by using the VRIN analytical technique.

Resource/Capability Is it (V)aluable? Is it (R)are? Is it Difficult to (I)mitate?

SkyTeam Alliance Y Y Y
Customer Service Y Y N
Hub & Spoke System Y N N
Low-unionized Labor Y N N
Owns own Fuel Refinery Y Y Y
IT Systems Y N Y

Financial Ratios

Delta United Continental

Return on Assets 6.10 4.70
Current Ratio 0.42 0.56
Debt to Equity Ratio 63.51 163.43
Income / Employee $41,115.00 $23,731.00
PE Current Ratio $11.49 $12.49
Operating Cash Flow/Sales % -28.55% -38.42%
(Delta Air Lines Inc., n.d.)

Return on Assets indicator measures how well a company turns assets into profits. Delta has a

small margin of advantage over United Continental, which indicates Delta is operating more

efficiently. Current Ratio expresses the ability to meet short term obligations and indicates cash
DELTA CASE STUDY 10

flow in the near term. A healthy number exists between 1.2 – 2.0. Delta appears to have more

liquidity issues than United, although both are below the desired goal. Debt to Equity ratio is

used to measure the ability to repay debts. Lenders prefer to see a 2:1 ratio, which places Delta in

a better standing to repay debts than United. Income / Employee is a measurement of generating

revenue. A higher ratio indicates greater efficiency and competitiveness to generating higher

levels of revenue, of which Delta has an advantage over United Continental. PE Current ratio is

an indicator of growth and how much an investor will pay for each dollar in company revenue. A

higher PE indicates more growth. Delta has a lower PE than United, indicating slower growth.

Operating Cash Flow is a comparison of operating cash flow to net sales. It is an indicator of

how well a company can turn sales into cash. The higher the percentage, the better. In this case,

Delta and United are both in the negative because of both companies experiencing a significant

drop in cash from previous years.

Strength/Weakness

Delta continues to have many strengths and proven to be a strong leader in the aircraft

industry. They are 2nd to none other than United Airways. Delta has exceptionally high visibility

to the consumer and offers extensive flight options around the globe. They provide customer

loyalty programs to their frequent travelers, which can get them free flights, upgraded seating,

and first boarding options. Delta works to revitalize old aircraft to bring into their fleet. Delta

offers exceptional customer services. And Lastly, their most powerful resource has been their

employees who live out the Delta mission every day.

Of course, nothing can be perfect, and Delta has some work to do. Delta appears to be

slightly higher priced than their competition forcing consumers to shop around for the best price

for their business leisure or vacation pleasure. To combat consumers shopping around, they could
DELTA CASE STUDY 11

align their fare prices closely with the competitions. Further, Delta has experienced system

outages, extensive customer delays, and long wait times which also has forced some consumers

to look elsewhere for their traveling needs. Like all businesses, Delta has some improvements to

make, and therefore it’s essential to conduct a SWOT analysis frequently to ensure they are

keeping up with the demands of the industry.

Firm’s Competitive Strengths

From inception, Delta always has and continues to have a robust entrepreneurial culture.

Delta originally started as a small crop-dusting operation then expanded to what we know Delta

to be now, a world-recognized aviation transport industry. Further, Delta has a stable company

and employee culture. One of the best in the industry (McKenna, E., 2018). With more than 80%

of employees agreeing that Delta is a great organization who cares for their employees and the

people they serve. Delta’s company motto is, “if we treat our employees right, they will treat our

customers right,” (McKenna, E., 2018). Company culture continues to be a strong aspect of the

Delta family.

Moreover, another competitive advantage, Delta has excellent customer service, they

continue to provide top quality customer service, and when something doesn’t go right, they find

new ways to help make the experience better the next time around. Delta has found new ways to

help ensure traveling for the consumer is more comfortable with a self-service kiosk for printing

boarding passes to a self-service kiosk for bag drops (Zhang, B., 2017). As their most valuable

competitive advantage is paying attention to the customer's needs, always striving to rise above

and offer exceptional in-flight services.

Internal Analysis Conclusions

DELTA CASE STUDY 12

After extensive analysis of the Delta organization, the company appears to have a strong

presence in the aircraft industry. Delta strategically places massive and miniature aircraft hub

through the world to extend their reach to customers. Delta has also partnered with other aircraft

industries overseas to ensure the continued extension of their services to world travelers further.

Delta also has shown us that they have a strong business and financial acumen in the market

providing they are not going anywhere anytime soon. They have the adequate resources

(employees) and capabilities (aircraft) to ensure their mission never dies. Delta continues to

strive to provide high-quality customer service. However, over the last several years all aircraft

industry providers have experienced system-wide outages (Zhang, B., 2017), Delta is in the top

spotlight for system-wide outages.

Delta continues to struggle with long customer wait times however they are addressing

this matter with callback customer service options, where a traveler can call customer service

and leave their phone number, and a Delta agent will call them back once it’s their time instead

of holding for an extensive amount of time. Even with the increased competition with fair prices

and fuel on the rise, Delta continues to remain a strong competitor in the market. Delta offers

nearly fifteen thousand flights a day to world travelers making them 2nd in the aviation industry

(McKenna, E., 2018).

External Organizational Analysis

An External Organizational Analysis provides insight on the external environment in

which Delta operates. Much of the analysis focuses on factors that are out of the control of the

company, but awareness is necessary to ensure strategies are developed to respond to potential

threats and opportunities.

DELTA CASE STUDY 13

Markets Served

Delta Airlines is recognized for their worldwide services offering thousands of flights to

consumers daily. With more than 800 total aircraft, Delta services more than three-hundred

destinations in more than sixty countries and is a 24/7 operation. Delta offers more than fifteen

thousand flights a day to traveling customers. Also, to provide an abundance of flight options,

Delta also serves as a refinery division to the aviation industry supplying fuel to aircraft

transportation industry (McKenna, E., 2018). Delta’s most significant competitors in the aircraft

industry are United Airway and American Airlines. All organizations offer the same type of

service, flying passengers daily to their desired destinations. Although, Delta may be priced a bit

higher than their competition they put themselves in a different class than the rest, offering

comfortable seating and gearing themselves more towards the traveling business industry than

the competition. Delta continues to remain a strong competitor in the aircraft industry because of

their ease of access, many flights options, and relatively affordable pricing options.

PESTEL Analysis

PESTEL analysis is a tool used to set the framework of the macro-environmental factors

that may have a profound impact on the company’s performance. Here is a brief PESTEL-DC

analysis explaining how multiple factors in Delta’s macro-environment affect their business

operations and profitability. Politically, since Delta operates globally, Delta must follow other

government’s strict regulations. This may cause major hindrances and barriers on Delta’s ability

to make a profit in these countries. Also, there has been political turmoil between European and

Middle Eastern countries and if these relationships don’t improve neither will Delta’s

competitive advantage. Economically, Delta always must worry about the possibility of a

recession and lower priced competition. Recessions equal reduced spending so during this time
DELTA CASE STUDY 14

most tend to cut out travel out of their budget since it is a luxury. Some people are brand loyal

but if there is a chance to save money people will go elsewhere, Delta needs to stay current and

rival competitors when possible. A couple of social factors that Delta must worry about are post

9/11 safety concerns and changes in their consumer’s needs and preferences. Delta must keep

the pace with consumer spending habits and preferences to sustain consumer satisfaction levels.

Operational optimization and staying current with technology advancements is another factor

that effects Delta’s business strategy. Smart phones and tablets have revolutionized IT systems,

people are accustomed to simple clicks and swipes when making online purchases. Delta must

compete with this preference of convenience by integrating their internet website with mobile

phone apps that support different operating platforms. Environmentally, Delta has the

responsibility to reduce their emissions footprint and operate under more eco-friendly conditions.

They should be striving to achieve this by finding new ways to reduce their CO2 emissions and

becoming more fuel efficient. Legally, Delta must abide by all laws and regulations passed by

government agencies which affects them domestically and internationally. These laws put into

place to mitigate legal risks and protect both their employees and passengers.

Industry Driving Force Analysis

1. Changes in Industry’s Long-Term Growth Rate

Delta Air Line’s earnings for the year has decreased -6.23% from $3.40 billion in

comparison to the prior year. Although, their return on assets (ROA) is 6.80%, which is higher

than US Air Lines Industry of 6.41%, but their return on capital (ROC) has increased to 14.25%

from 13.75% due to their reinvestments, expansion, and disruption to stay with what is new in

the industry. As a result, Delta Air Lines return on equity (RDE) is 26.46%, an increase from the

lowest of 20%.
DELTA CASE STUDY 15

2. Changes in Cost and Efficiency

With the rising cost of fuel, Delta Air Lines had to cover the cost by increasing the price

of upgrading discounted tickets and reducing the amount of fare increases to more business-

oriented routes, since there is not enough competition from airlines with low cost competitors.

Unfortunately, with Delta’s fuel expense rising $350 million in the third quarter paying an

average of $1.91 per gallon. Delta expects even more of an increase still to come at

approximately $2.05 to $2.10 per gallon in the first few months of this coming year. Therefore,

ticket prices have not increased, but if it comes to that at some point, the effects would be less

customers willing to travel or will choose an airline with cheaper rates.

3. Increasing Globalization

Delta has increased globally reaching fifty-two countries with an ingenious strategy,

involving over $2 billion in value partnership of their airline associates. There are threats in

many ways, such as terrorism, disease, drug and human smuggling, and weapon smuggling. All

these present safety risk for any airport and the whole nation. There are ways an airport can

manage all these risks. For instance, screen baggage and passengers, full body scanning and

biometrics, improvements on the functions on the human resources, trained programs, and

improvements for employee background screening procedures.

4. Effects on Changes in Long-Term Growth Rate

Including Delta, the merger resulted in all the airlines being in control of more than 80%

of US Commercial Air Travel Market, which made it simple carriers to co-operate. As a result,
DELTA CASE STUDY 16

from mergers and investments, there has been a ripple of industry consolidation. Mergers reduce

competition in some regions, and results in efficient utilization of resources:

Mergers

 American (AAL) merged with US Airways in 2013

 AirTran merged with Southwest (LUV)2011

 United (UAL) merged with Continental in 2010

 Northwest merged with Delta (DAL) in 2009

 US Airways merged with America West in 2005

Industry Key Success Factors

Industry key success factors are factors centered around competition, they directly affect

a company’s ability to prosper in the marketplace. Delta Airlines is a customer service-based

business, to be successful they effective in the following areas: superior customer service,

maintaining the serviceability of its fleet, caring for and prioritizing its employees, and global

reach/opportunities for expansion. Over the past few years, Delta has been making investments

to take their customer service experience to the next level. They have improved in-flight options

like: offering free WIFI, improved food menus, and bettering entertainment like games and

movies. They’ve also made an investment into digital support have focused customer support on

social media. They are the first airline company to start a Twitter account, their goal is show

they are listening to their customers by responding. Aircraft fleet wise, Delta does things a little

different than most airlines when it comes the acquiring new aircraft and their maintenance

operations. “While most big carriers replenish and expand their fleets with brand new jets,

which are either leased or purchased, Delta has purchased a mix of new and used aircraft over

the past several years” (World Airline News, n.d.). Less money spent on brand new aircraft is
DELTA CASE STUDY 17

part of the reason Delta has been able to pay off its ten-million-dollar debt. Recently, Delta has

been named one of Fortune‘s “2018 Best 100 Companies To Work For”. Delta prides their

selves on their strong company culture and the outstanding work environment they create for

their employees. Consistently Delta prioritizes building trust, pride, and camaraderie to fuel

business performance by scaling for everyone, regardless of who they are or what they do for the

organization. Lastly, Delta has an advantage over some of their competitors because they operate

on a globally. Delta's’ international partnerships allow them to fly into 52 different countries.

Delta can forge new alliances and expand their operations even further.

Porter’s Five Forces

Competitive Rivalry – There is a lot of competition within the airline industry because

airlines typically fly from the same places for same prices. It is difficult for an airline to

differentiate themselves with the established number of airports. Typically, all airlines service the

same airports, which means much of the competition is through offered services, amenities, and

brand awareness. Airlines are aware that customers can easily price compare airlines for the

same airport. The exception are the value carriers, who offer reduced services, but still fly to and

from the same airports. Because customers can expect cramped and crowded seating and similar

offerings of services, competition remains high.

Buyer Power – Very high for the consumer. It is easy for a customer to select a different

airline if an airline offers better prices or services. Market research and 3rd party sites and apps

simplify the search process for customers to find the best deal.

Supplier Power – There is high supplier power for aircraft specific products, such as

engine and airframe parts. Because each aircraft is built by a specific manufacturer with specific

parts, there is little option for the airline to have power. The supplier can control prices and
DELTA CASE STUDY 18

availability. There is low supplier power for general airline industry products, such as paper

products, beverages, clothing, etc. Delta can substitute products easily because they are not

specifically produced with an aircraft.

Threat of New Entrants – Little threat of new entrants into the industry that can

compete with Delta. There are several barriers to entry that would need to be overcome,

including very large start-up costs and Government regulation. No company started since the

year 2000 has been able to exceed 2% market share. (DePersio, 2018)

Threat of Substitution – There is little threat of substitution. There are no direct

substitutions to travel the distance and speed air travel offers. Until some form of technology is

developed to match the distance and speed of air travel, substitution will be minimal.

Opportunities/Threats

Delta remains a strong competitor in the aircraft industry. However, there are always

opportunities and threats that an organization should evaluate. Delta has experienced some

technical difficulties over the last few years, and they have the resources and capabilities to

invest in a long-term solution for these disadvantages. Additionally, Delta appears to be priced a

bit higher than the competition. Delta could benefit from revamping their pricing model to be

more in alignment with the competition. Another opportunity Delta could benefit from would be

to not charge so much for advanced flight cancellation or change fees. Instead of charging a $200

change or penalty fee, they could charge something more reasonable for those passengers who

provide advanced notice.

It is a competitive market for the aircraft industry, with rising fuel costs, and other

carriers offering low-fare tickets, passengers are always looking for the best deal versus the

quality of service. As a worldwide business operation, one of the most substantial threats Delta
DELTA CASE STUDY 19

faces is security threats. Security always remains a top priority for all aircraft carriers, and with

increased world animosity this continues to remain a threat to this industry.

External Analysis Conclusions

Delta Airlines is a well-known company known for their world-wide services, with more

than eight-hundred aircrafts that offers over fifteen thousand flights each day. To improve

Delta’s performance, it must assess its external and competitive environment. Thus, will show

the main opportunities Delta can take advantage of and the threats it must deal with. Delta

responds to external issues in a proactive and energetic aspect by using its strengths and

condensing its weaknesses. Through this, Delta can accomplish the firm advancement it needs to

absorb a secure existence in the market.

Delta’s dedication combines use of their advantage of comfort, entertainment, excellent

customer service skills, and their competition that sets them ahead of all the rest of the airlines.

Delta ensures they can find great quality products offered on their flights and since they are not

loyal to any brands, the results are that you will save money in the long-run. Delta would need

to stay strong for the threats from the market because of the risk of investment loss and

customers loss due to the flight cancellation or change fees. Delta strongly believes there is no

compromise when it comes to doing good business as well as practicing a good business. Delta

aims to go above and beyond profitability and reputation with little threat of new entrants into

the industry. Delta has what it takes according to their external analysis to continue to develop

into a sustainable business.

DELTA CASE STUDY 20

Strategic Analysis

Firm’s Current Strategic Strategies

Delta continues to be innovative about their process for traveling customers. Their current

strategies, a) consists of partnerships across the country to allow for more ease of access, b)

customer loyalty, c) developing ways to make check in and bag drop off easier for travelers and

d) advance meal selection prior to boarding. These functions allow Delta to better serve the

customer and make for an easier flight, whether for business of leisure.

Strategic Options

Delta has certain strategies that either are in the process of improvement or is needed to

assist competitive strategy. First, customers should be more involved in selecting the food and

beverages offered during their flight. Second, there is a need for improvements in customers

overall expectations. Third, improvements need to be made with technology to improve or repair

possible glitches in the REID System and new possibilities to improve customers satisfaction.

Fourth, even though there are improvements pertaining to Delta’s security in the future, it is

important to stay up to date with an organization’s security. Fifth, improvements are needed to

benefit employees, since the less worry will allow more time to concentrate on providing better

customer satisfaction. Last, improvements are crucial in marketing to decrease prices, therefore,

will attract more customers in the long-run.

Strategic Option Selection Criteria

Delta has proven that they are more concerned with the comfort and pleasure their

customers experience in their travels by investing a large amount of money in customer

improvements. Improvements to their SkyMiles Program allowed Delta’s customers the

opportunity to pre-select their meals up to 6 days prior to their flight. In the future, Delta has
DELTA CASE STUDY 21

plans to invest in their customers overall expectations by including a cabin moderation program

that highlights improvements to customers entertainment and comfort. Delta’s security will also

be in the works for the near future in planning on redesigning the gate and boarding experience.

Delta’s assistance with the REID System has been beneficial on improving their technology,

since it will show various benefits in the long-run. Employees are a crucial part of any

organization, which is why Delta made many improvements in their benefits, which releases any

financial burdens, allowing more qualified employers, improves productivity, and reduces

expense for the organization with premiums being tax deductibles for employees. Delta can

benefit in the strategic approach, Customer Lifecycle Management (CLM), to improve their

marketing. CLM recognizes and separates each customer based on behaviors, attitudes, and

experiences with an organization.

Strategic Option Evaluations

Improvement options allowing Delta’s customers input regarding options for food and

beverages/customer satisfaction:

Delta’s customers are now able to pre-select meals, but only if they are members of the

Delta SkyMiles Program. Although, these are improvements, it is essential that employees at

Delta hold regular meetings to discuss business and service goals to develop a “service promise”

that captures a shared vision in the quality of service Delta expects to achieve. A team should be

appointed to be responsible for improving excellence in service, by exploring options to enhance

customer service that reduces customer complaints. Social media is a great way to receive

customer feedback since of the worldwide population of approximately 7.3 billion, 2.3 billion

actively use social media. Therefore, allow social media to be a tool to connect, share, identify
DELTA CASE STUDY 22

questions, research influences, which will assist in knowing exactly what customers like or

dislike about their flight experiences involving Delta’s food and beverages.

Security Improvements:

Delta has plans for late 2021, to redesign their gate and boarding experience. First,

counter tops that will be made of stainless steel will allow several passengers to put items in bins

at the same time, versus slower less experienced passengers to be passed by more experienced

passengers saving time and will shorten the lines. Second, new conveyer belts that are

automated moving passengers with 25% larger bins that have RFID tags attached for

accountability through the x-ray machines then directly to the front of security checkpoint. This

avoids delay since only the ones with items not allowed will automatically be diverted to

security, so it does not hold up passengers that follow the rules. There is a camera that will take

a picture of the contents that are linked to that bin to assist security.

Technology Improvements:

Delta has made various improvements to their technology in assisting in the development

of the RFID System. RFID allows Delta to print out a tag, which has embedded microchip and

antenna that uses radio frequency identification so that each bag is easily detected. Therefore,

RFID assists in reading the bags through their handling system, on the tarmac, and on the belt

loader, assisting employees in sorting bags between ones that have connecting flights versus the

ones that do not to ensure customers will not be delayed. Delta’s mobile app is another great tool

for customers in locating their luggage, since it is equipped with RFID showing the location on a

map showing the progress with push notifications and allows claims to be filed. In the future,

RFID will offer chips that are connected to smart phones via Bluetooth, which allows customers

access to their flight information saving time it takes waiting in lines. Furthermore, RFID
DELTA CASE STUDY 23

bagging system in beneficial for Delta since they have a hand in its developments which is an

advantage between Delta and its competitors.

Employee Benefits Improvements:

Delta take very good care of its employees, providing improvements to employee

benefits, which reduces worry allowing more time for their employees to provide the best

customer satisfaction. Delta offers life and health Insurance, disability insurance and income

replacement in case they suffer a serious illness or disability.

Marketing Improvements:

Delta would benefit on marketing improvements to decrease prices to attract more

customers in the long-run. Customer Lifecycle Management (CLM) is an excellent approach

that will recognize and separate each individual customer based on their behavior, attitudes, and

experiences with an organization. It will be beneficial to become familiar with each of the

different stage of customer behavior that will assist in identifying what stage each customer is by

their lifecycle.

Recommendations

Delta Airlines could take a cost leadership strategy approach. By doing this Delta

could turn their company into the most minimal costing contender. There’s only one cost leader

in most industries so why not be that “one”. Delta can achieve this initiative with modernization,

economies of scale, and possibly from a replacement admission to basic resources. The way

Delta can become more effective is if its fees are lower than their competition by charging the

basic industry price. They can do active hiring. Delta airline must attract potential employees to

apply with them. It can be done by launching recruitment campaigns and advertisements. Hiring

procedure can be kept easy and more effective with the help of special events like Pilot Career
DELTA CASE STUDY 24

Show to provide job and networking opportunities. Attracting next generation interested in flying

is key, to overcome the pilot shortage in the long run. Delta can purchase older aircrafts. It will

lower the fixed cost of Delta Airline, allowing them to quickly meet the demand while

maintaining the low fares to the customers and not burdening the same level of fixed cost of the

other airlines. Delta can enter the international markets. They have already positioned

themselves as a North American Airline, they are missing out on large profit by not entering the

international market. They can gain profit, as well as brand image,if they try to enter the

international market even though considering potential international disaster threat. Delta can

take a web(technology) strategy approach as well to cut cost. FastCompany.Com says, “E-

commerce won’t influence these numbers right away. But over time, Delta’s partnerships and the

ventures that result from them could help build new sources of revenue and could cut operating

costs dramatically. And better, more accessible information could strengthen customer loyalty

(Hammonds, K. 2012).” is They could try is hedging, over the counter/exchange traded, it helps

airlines to manage the volatility in fuel prices, the basic meaning of hedging is to protect airlines

against price volatility. Here Delta can get the fuel at the agreed upon rate or exchange-traded

rate whichever is used to hedge. Lastly, stop serving to poor servicing routes. This will make

them stay competitive and help them minimize the losses coming out from routes that do not

perform well. This can be done by either reducing the number of flights on that route or by

replacing the bigger aircraft with smaller and high energy efficient aircrafts.

Appendix A (SWOT Matrix)

Strengths Weakness
 Strong competitor in the aviation  Opportunities for new market entry
industry  Associated Airfare costs
 High visibility and recognition  System Outages
 Customer loyalty  Transportation delays
 Aviation refresh programs  Over-booking of flights
DELTA CASE STUDY 25

 Employee engagement and culture  Long wait times in line and via the
 Customer service phone

Opportunities
 Financial capabilities
 Utilizing more resources to expand
potential markets
 Long-term sustainability (revamping
pricing model)
 Adding additional partnerships
Threats
 Rising fuel costs
 Competitive market share
 World and US Threats on Airport
Security
 Priced higher than the competition

References

Baumwoll, J., Howland, B., Kruse, J., & Lamb, S. (2018, June). Delta Airlines: An Analytical

View. Retrieved October 8, 2018, from

https://www.academicmind.com/unpublishedpapers/business/management/2008-06-

000aao-delta-an-anyalytical-view.html

Bhasin, H., BhasinI, H., & Facebook. (2018, April 23). SWOT analysis of Delta Airlines - Delta

Airlines SWOT analysis. Retrieved September 12, 2018, from

https://www.marketing91.com/swot-analysis-of-delta-airlines/

Delta Air Lines Inc. (n.d.). Retrieved September 1, 2018, from

https://financials.morningstar.com/ratios/r.html?t=DAL

DePersio, G. (2018, January 11). Analyzing Porter's Five Forces on Delta Airlines (DAL).

Retrieved September 1, 2018,

from https://www.investopedia.com/articles/markets/012816/analyzing-porters-five-

forces-delta-airlines-dal.asp 

Hammonds, K. (2012, July 30). Delta's Web Strategy Takes Flight. Retrieved October 9, 2018,

from https://www.fastcompany.com/40733/deltas-web-strategy-takes-flight
DELTA CASE STUDY 26

Jurevicius, O. (2013, January 27). Mission Statement for Success. Retrieved September 9, 2018

from: https://www.strategicmanagementinsight.com/tools/mission-statement.html

McKenna, Erin, "Delta Airlines: A Strategic Analysis" (2018). Honors Senior Capstone Projects.

32. https://scholarworks.merrimack.edu/honors_capstones/32

Parks, P. (2018, August 18). Has Delta Air Lines Inc's (NYSE:DAL) Earnings Momentum

Changed Recently? Retrieved from https://simplywall.st/stocks/us/transportation/nyse-

dal/delta-air-lines/news/has-delta-air-lines-incs-nysedal-earnings-momentum-changed-

recently/

Pedrasa, I. P. (2016, July 10). Food for the skies. Retrieved from

http://business.inquirer.net/211752/food-for-the-skies

Renzulli, K. A., & Leonhardt, M. (2017, March 13). Best U.S. Airlines 2017: Flight Prices, Fees,

Reviews | Money. Retrieved October 13, 2018, from

http://time.com/money/4695479/best-us-airlines-2017/

Simmons, C. (2017, October 17). Delta to offer Delta One customers option to pre-select meals,

plans expansion to other cabins. Retrieved from https://news.delta.com/delta-offer-delta-

one-customers-option-pre-select-meals-plans-expansion-other-cabins

Smith, P. (2017, July 20). The pilot shortage is real and airlines must change before it becomes a

full-blown crisis. Retrieved September 5, 2018, from

https://www.businessinsider.com/airline-pilots-reveals-truth-myth-pilot-shortage-2017-7

Staff, D. (2017, July 25). Airlines facing crisis that could 'put some airlines out of business'.

Retrieved September 5, 2018, from

DELTA CASE STUDY 27

https://www.bizjournals.com/dayton/news/2017/07/25/airlines-facing-crisis-that-could-

put-some.html

Steimer, S. (2018, January 24). How Airlines Get Customer Experience So Wrong with So Much

Data. Retrieved October 8, 2018, from

https://www.ama.org/publications/MarketingNews/Pages/how-airlines-get-customer-

experience-so-wrong-with-so-much-data.aspx

Why rising fuel prices haven't turned into higher airline fares. (2018, May 21). Retrieved from

https://www.dallasnews.com/business/airlines/2018/05/21/rising-fuel-prices-havent-

turned-higher-airline-fares