Delta Airlines' Roller Coaster Ride in the U.S
Delta Airlines Inc., headquartered in Atlanta, Georgia, is the world's second largest airline in terms of passenger traffic. With an extensive domestic and international network, it is one among the few airlines that provides flight services across all six inhabited continents. Apart from being the world's largest airline operating under a single certificate, it is the second largest airline in the U.S, and was ranked No.1 in the US for the highest passenger numbers in 2009.
Delta Airlines, which is the mainline component of Delta Air Lines Inc. in the US, serves long-haul international services, and high volume domestic flights. Its operations are run via the world's largest commercial aviation hub at Hartsfield-Jackson Atlanta International airport.
In 2010, Delta Airlines generated revenues of $ 952.3 million from baggage fees, and $698.6 million from reservation change fees, the highest for any US carrier. Despite revenues of $ 28,063 million, it still posted a loss of $1,237 million.
Delta employs about 80,000 people worldwide, and has taken measures to discourage employee representation through Unions. Its pilots are the only employees to be represented by a Union. Delta Airlines claims that its employees show high levels of commitment and provide excellent service, because it provides high wages, lifetime employment, and has created a 'familial' atmosphere. Despite being part of an industry that is large and growing, this legacy carrier suffered severely in the wake of the terrorist attacks of September 11, 2001. Flight travel within the US plunged; carriers had to spike their internal security arrangements, which created a big hole in their purses.
Although Delta Airlines escaped the ignominy of bankruptcy, that did not ease its position in the US market. Among the airlines that compete with Delta for the US market are AMR, United Continental Holdings, Deutsche Lufthansa Group, Ryanair, along with the recent market entrants include Air Tran, Frontier, JetBlue and Southwest.
Economic slowdown, changes in government policies and taxes, price wars sparked off by discount airliners, surging oil prices and terrorist attacks figure among the factors that threaten the survival of this legacy airline in the U.S. Its new partnership with the Saudi Arabian airlines has displeased many people. According to this agreement, Delta cannot fly any Jewish passenger on board, as Saudi Arabia does not allow passengers with Israeli visas. A US Senator has called for an investigation to check whether Delta Airlines is violating any US law or regulation by honoring its agreement with the Saudi Airlines.
This, coupled with its bad customer service rating, is complicating things for Delta Airlines. Recently, Delta Airlines received much negative media coverage as it charged $200 as extra baggage fees from 34 US military soldiers returning from Afghanistan.
Apart from the imminent problems, the future also looks pretty bleak. Surging fuel prices and revenue losses have prompted Delta Airlines to inform the DOT that it plans to stop serving 24 low-traffic destinations in the US. However, Delta Airlines may allocate $600 million to its US DB plans in 2011, as against $728 million it had allocated in 2010.
Though the future of Delta Airlines in the U.S looks uncertain, what with the Japanese Tsunami expected to bring more losses, the company can still look at a few opportunities to turn the situation around. It can acquire smaller airlines, or tie up with them, to increase services and decrease competition. It can try and raise money through debt, and look at expanding its markets abroad. It can also look at technology that can result in cost savings.
An example of one such technology is Prekote implemented by Delta for its surface treatment on its aircraft. This is both environment friendly, and estimated to save the airlines over $1 million annually, as it puts aircraft back in the air sooner. Delta can also concentrate on flying safety, to rise to the No.1 in flying safety, from the No.6 position it currently holds.
These opportunities are of no consequence if the end user (customer) is not happy. To continue being the second largest airline in the U.S, Delta has to make a few choices.
-Will Delta address customer complaints, and improve its customer service?
-Will it let go of the partnership with the Saudi Arabian Airlines, in order to keep its Jewish customers happy, and to not violate any US law or regulation?