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BACKGROUND Delta Airlines Is an Innovative, Creative Company and a Well-Established and Res Pected Airline

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BACKGROUND Delta Airlines Is an Innovative, Creative Company and a Well-Established and Res Pected Airline BACKGROUND Delta Airlines is an innovative, creative company and a well-established and res pected airline. It is also the oldest and largest air passenger carrier in the w orld as at September 2009, after acquiring NorthWest Airlines. Since its incepti on in 1928 Delta has built a reputation of offering consistent superior customer service to its passengers. For four decades, Delta held the reputation of being the most consistently profitable airline, however with the US Federal Airline D eregulation Act of 1978, coupled with the recession of early 1980s saw the Airli ne suffering its first financial loss in the early 1980s. The company however managed to turn the defeat around and was again profitable w ell into the 1990s. Delta constantly faced challenges - economic downturns, comp etition from low cost carriers (domestic) and other international airlines compe ting for US international travellers. By the time Delta entered the 21st century it was faced with new challenges; such as the crippling of the airline industry in 2001 - a direct result of the terrorist attacks of September 11th, the const antly rising fuel prices, and the economic downturn in 2009. Delta eventually fi led for bankruptcy in 2005, when it was no longer able to meet its financial obl igations. Industry analysts typify the airline industry as unattractive, unstable and cycl ical in nature. Delta operates in an intensely competitive environment, which is still struggling to recover from the most recent recession. Efforts to compete with low cost carriers have not met with expectations. A pioneer of the hub and spoke model which it uses to map its destinations, Delta‘s competitive edge is bei ng the airline of choice for international travel. Through strategic alliances w ith other international and domestic airlines, Delta offers more options to trav ellers in choosing airlines to take them to their destinations. Currently Delta airline flies to over 60 countries and is the only airline to fly to all six [fu lly populated] continents. The challenges facing Delta have significantly impact ed the organization‘s financial stability. Despite the many financial obstacles, D elta‘s cash flow has remained positive. While it is on the road to recovery, the c ompany must find creative ways to stimulate growth in a struggling airline indus try [and by extension the economy] if it is to maintain strong financial health, and remain viable. 1 HISTORY In 1928 C. E. Woolman and a group of investors from Monroe, Louisiana developed a passion for passenger air travel. Formerly Huff Deland Dusters an aerial Crop Dusting Company, Woolman purchased the Crop Dusting Company and renamed it Delta Air Services. In 1934 the company was awarded a mail contract from the US Post Office, and Del ta flew its first passengers on August 5, 1934 from Atlanta to Dallas. The compa ny ‗took off‘ and in 1941 relocated its head office from Louisiana to Atlanta in ord er to access the facilities of the city and the Atlanta Airport as well as to ta p into the growing market of business travellers. The company began expanding, o vertime acquiring struggling Airlines like Chicago and Southern Airways in 1953 and Northeastern Airlines 1972, thus adding more routes. Delta‘s growth continued well into the late 1970s; by 1978 the company ranked 5th in the industry transpo rting some 3.3 million passengers, earning revenues of approximately US$2 billio n dollars. However the Federal Airlines Deregulations Act of 1978 had a game cha nging impact on the Airlines industry, especially legacy carriers like Delta. Th is era saw the emergence of new Low Cost Carriers (LCC), resulting in a more com petitive environment. The company continued on its growth path and in 1990 Delta held the no. 3 position, moving 67.2 million passengers with total revenue earn ings of US$8.5 billion. When Pan Am folded in 1991, Delta assumed ownership of t he once iconic air line acquiring routes in the Central America and the Caribbea n regions. Delta was now transformed from a regional carrier to a competitive Gl obal carrier. The results were also evident in its profit margins, which ultimat ely earned the company a reputation as the most consistently profitable one in t he industry. Delta also earned the reputation of the best paying airline in the industry. Delta‘s employee rewards system resulted in a motivated and dedicated wo rkforce and a high staff retention rate. Notwithstanding, Delta Airlines had its share of challenges over the years. The problems of the late 1980s and early 1990s – the recession, rising fuel prices and the war in the Middle East severely affected the airline industry. Although the airline industry at that time was described as unstable and unpredictable, the early 1990s saw the emergence of smaller low cost airlines, expanding the airlin e industry, and resulting in an intensely competitive environment. In 1996, Delt a Express was launched to compete against these airlines. A financial failure, D elta Express 2 operated until 2003 when it was divested and replaced by Song, a unique low-cost subsidiary airline, which has also been divested. The terrorist attacks of Sept ember 2001 affected the already struggling US Airline industry, as all the major airlines suffered huge financial losses. Delta operated under bankruptcy provis ions for two years (2005 – 2007). During this period, it returned to having a posi tive cash flow. Its purchase of Northwest Airlines in 2008 has resulted in a mor e favourable financial position, as the Airline recuperates from its financial d emise. Currently Delta Airlines operates an extensive domestic and international air ca rrier serving over 160 million persons each year, in markets in North America, S outh America, Europe, Asia, Africa, the Middle East, the Caribbean and Australia . In 2001, Delta formed a global airline alliance called SkyTeam with Air France , Areomexico, and Korean Air. To date SkyTeam is the second largest air alliance in the world and have 13 members and growing. Delta‘s strong employee relations, focusing on its core business (air-transportation), its commitment to providing superior service and employing prudent financial strategies, are the pillars on which Delta Air Lines Incorporated grew and developed. Over the years Delta‘s CEOs have been ‗home grown‘, promoted through the ranks. Richard Anderson, the current C EO was however recruited from United Health Group having had previous experience with Continental Airlines and Northwest Airlines. Delta in Jamaica Delta directly employs six persons in Jamaica. Five persons are stationed at the Montego Bay Sangster‘s International Airport– three in the areas of passenger servi ce, and two in marketing. One individual in the area of passenger service is sta tioned at the Norman Manley International Airport (Kingston). Additional staff i s provided on a needs basis by AJAS. Delta operates up to 10 flights daily from the Sangster‘s International airport, and one from Norman Manley International Air port (D. Harold, telephone interview October 25, 2010). On June 30, 1997 Delta a nd Air Jamaica signed a letter of intent to pursue cooperation in marketing and other services, including a codesharing agreement (Air Jamaica, 1997). All agree ments have since been rescinded. 3 COMPETITIVE ANALYSIS SWOT ANALYSIS OF DELTA Strengths Reputation: SkyTrax, the world's largest Airlin e and Airport review site ranks Delta a 3 star airline. The 3 Star ranking signi fies a "satisfactory" standard of core product across most travel categories. Within this decade, a study was conducted by Harris Interactive of airline reput ations, By measuring the attitudes of over 20,000 consumers, the Airline Reputat ion Quotient (RQ) study rated domestic and foreign airlines on issues ranging fr om safety and trust to customer service and food. Delta was graded with an RQ of 70, bettered only by one airline in the United States and nine airlines worldwi de (Hucko 2000). Geographical Coverage: Delta is the only US airline that flies to all continents , excluding Antartica. They are a founding member of Skyteam, the world‘s second l argest airline alliance that provides flights and easy connections for their cus tomers. Workforce: In September 2009, Delta was the recipient of the "Better Way " award offered by the Air Transport Association (ATA) in association with the F ederal Aviation Administration (FAA). The award recognizes government and airlin e industry employees who work together to advance the inspection and testing of aircraft structure, components, or systems. In July 2010, U.S. airlines reduced overall workforce 2.3% from a year earlier, according to the U.S. Department of Transportation. Delta was the only airline o f seven network carriers to increase its staff complement (4). The Atlanta compa ny has had few labor problems compared with most major airlines — the last strike was a mechanic's walkout in 1947. Entrepreurial Orientation: Joining with other major airlines in the industry to form a global alliance called, SkyTeam. The Sk yTeam alliance results in cost savings by sharing cargo and passenger terminal f acilities, integrating frequent-flyer programs, consolidating sales, 4 maintenance and administrative operation, combining information technologies, an d engaging in joint procurement where feasible (Corridore, 2003, p. 7). Innovation effectiveness: Delta contionuously incorporates and upgrades technolo gy to enhance customer experience. For example, in 2008 Delta installed the Airc ell mobile broadband network, Gogo. This enabled their customers traveling with Wi-Fi enabled devices, such as laptops, smartphones and PDAs, to access the Inte rnet. Weakness Customer Satisfaction: Delta has been consistently slipping in customer satisfaction ratings. In the J.D. Power and Associates 2010 North America Airli ne Satisfaction Study, Delta was ranked 4th of 7 traditional airlines, slipping from third.
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