Delta Airlines' Footprint in the Global Aviation Industry
As the air travel industry facilitates world trade, international investment, tourism and economic growth, it remains a large and growing industry. Delta Air Inc., headquartered in Atlanta, Georgia, offers air transport and cargo services across six continents through its hubs in Salt Lake City, Tokyo-Narita, Detroit, Atlanta, Minneapolis-St. Paul, Cincinnati, New York-JFK, Memphis, Amsterdam and Paris-Charles de Gaulle.
Founded in 1929 as a crop dusting company, Delta Airlines moved on to aviation very quickly. The company, along with its subsidiaries, serves 350 destinations in about 70 countries. Apart from being one of the largest international airlines, Delta Airlines Inc. is also the largest operator of the Airbus 330 in the world. With a fleet of 800 mainline aircraft, it served over 160 million customers in 2010.
However, other airlines including Cathay Pacific Airways, Singapore Airlines, Ryanair, British Airways, Lufthansa, South African Airways, Air France, Pan American World Airways, United Continental Holdings, Emirates, Korean Air, Malaysia Airlines, Qantas, and Qatar Airways also service all inhabitable six continents, and compete with Delta for the global market shares.
Despite the competition, the increase in demand for regional destinations, and the forecast of 50% growth in air traffic within the next ten years are opportunities that Delta can capitalize on. Investing in technology that allows people to use their Wi-Fi devices like laptops can improve brand image, and fetch additional revenue. Implementing various technologies that minimize the downtime of the aircraft, and increase its efficiency can go a long way in helping Delta survive.
The company generated revenues worth $ 31.5 billion in 2010. Though revenue from cargo decreased by 7% in Q4 of 2010, increase in passenger revenue and other net revenue led to a 14% increase in profit in Q4. This, however, could not stop the company from posting a loss of $ 1,237 million during the year.
Just like most global airlines, Delta also had to cut down its profit forecast for Q2 of 2011 by more than half, owing to high oil prices, the Japanese catastrophes, and the turmoil in North Africa and Middle East.
The fact that Delta has to fend off competition posed by both national and regional carriers, trains, automobiles and buses, makes the company outlook more dismal. Add rising fuel prices, labor-management distrust, declining profits and market share, and poor customer service to the above list and it seems as though the end is drawing near for this airline.
Despite these threats looming over the horizon, Delta does have a few competitive advantages that can help the company survive in the long run. Its largely non-union work force, coupled with its industry leading airport models work to its advantage. Delta is also trying to spend more resources on innovating new technologies to attract customers, in order to stay ahead of its competitors.
To combat the threats, and to increase profits, Delta is also going to invest over $2 billion, to improve product services and airport facilities. This will include renovation of airport lounges, entertainment systems, discontinuing expiration of "Sky Miles", and creating a "Business Elite" class with 34 flatbed seats by 2013.
- Will Delta's expansion pan out as per the company's plans?
- Will it be able to curtail the loss of $ 1,237 million reported for 2010, through its strategies?
- Will Delta airlines work on providing better customer service to keep the end user happy?