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Delta Airline Paper

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Pressures faced by legacy carriers
Global air travel has immensely grown over the past decade and there are signs of continued growth (expansion). The air connectivity was positively impacted by the increased expansion development of Middle East hub carriers(?). International Air Transport Association (IATA) reported that revenues increased to the US $746 billion (2014) from the US $369 billion (2004).
Annual growth in global air traffic passenger demand

Source: Statista
In addition, competition within premium airlines and with the advent of LCCs offering competitive pricing to lure in customers has put immense pressure on the industry. Legacy …show more content…

Source: Televisory’s Research Operating Statistics
Parameters Units American Airlines Delta Airlines United Continental 2014 2015 2014 2015 2014 2015
Total fleet …show more content…

The airline carried more passengers in 2015 than any other US carrier. The next in the line is Delta airlines, which follow a similar model to American. Both Delta and American airlines dominate few cities, wherein they primarily drive connecting flights through their hubs. In comparison with American Airlines and with other legacy carriers, Delta maintains a much older fleet. However, Delta's previous emphasis on older but well-maintained planes is changing now. For instance, Delta during the second quarter of 2016 placed orders for 75C-series planes from Bombardier and 37 Airbus A321ceo aircraft costing nearly US$10 billion (offering benefits such as fuel savings). The United Airlines, another major US carrier, focuses its capacity (focused) primarily on strategically important cities for business travellers. United with its greater exposure on international routes and with smaller hubs rely more on origin-destination traffic. Though, origin-destination traffic enables United to charge a higher fare in comparison with connecting flight fares, it faces greater competition and is, therefore, more susceptible to pricing wars in order to fill empty

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The airline industry is one of the most important industries in modern society as it keeps the world connected. Two of the biggest firms in this market are Southwest Airlines and Delta Airlines. The industry is an example of an oligopoly as only a small number of firms sell their services in a market with high barriers to entry. These high barriers largely come from the capital required to purchase a jet, let alone hundreds of jets, and to operate them with pilots and a crew. In this market, both Southwest Airlines and Delta Airlines share significant market power, and the decisions one company makes impacts the other, they are highly interdependent.

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Delta Air Lines Inc. The Rich History, Financial Statements and Position in the Market Delta Airlines Inc. founded by C.E. Woolman in 1928, began as a humble little aerial crop dusting operation out of Macon, Ga called Huff Daland Duster in 1924. Later renamed Delta Air Service in 1928 and flying its first passenger on June 17,1929 has definitely come a long way. From flying living vegetable plants to now flying over 160 million passengers to their destination of choice each year, is one of today’s global giants in the airline industry. Delta Air Lines commitment to exceptional service has given them the title of trendsetters in the industry.

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The growing competition however does provide consumers with several choices and for Air Canada to be efficiently and constantly drawing its consumer it must offer " money for worth" deals, such as new multi-pass product, holiday packages and other promotional deals that has not yet been utilized in Canadian market. The possibility of Buyer power is moderate. Threat of New Entrants: Air Canada can be considered a fortunate airline as it does not have any major threat from new entrant stepping in Canadian airline industry due to the strict government legislation and regulations. “Even though the entry barriers for new airlines are lower in a deregulated market, still prospect of a new entrant entering the market is weak to moderate. Rivalry:

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When a smaller airline infringes on a major airline’s turf in a major market, attempting to undercut them on price, the FSC often retaliates by lowering price whilst maintaining their premium offerings and perks. This creates downward pressure on average fares in that region, which is good for the consumer and leads to an increase in overall travel volume on those routes (See Figure 4 below) . Spirit is no stranger to this part of the market, and recently found itself in a pricing war in the Dallas-Fort Worth market (American Airline’s largest hub). Spirit attempted to move in and undercut American Airlines, to which American responded by slashing their prices in what Spirit’s management called a “chainsaw approach.” Moreover, not only did American retaliate in Dallas-Fort Worth, they also cut prices in all routes where Spirit overlapped, particularly in Chicago O’Hare Airport, American's third-largest

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Trend Lines: A big month for Delta It's been a big month For Delta Air Lines. On 28 April, the Atlanta-based carrier announced a large order for 75 Bombardier C Series aircraft with options to acquire 50 more. The C Series is a completely new and more fuel efficient next generation aircraft designed to hold between 100 and 140 passengers. Delta's initial order is for the smaller 110-seat CS100 model.

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Delta airline was expanding its business into low-cost airline segment by launching new independent subsidiary by the name of Song. Song’s primary business model was to target women and the segment of business class people. In effect to reduce the cost, Song management decided to fly high load factor on the drag of 900 miles. Moreover, the company increased the number of

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INTRODUCTION. At the present time, the airline industry faces many cost pressures. The industry has made remarkable achievements in improving its efficiency. But cost pressures continue, from record high fuel prices to unjustified increases in charges from monopolistic airports, to further taxes imposed by governments (industryspotlight.org.uk). Higher costs inevitably lead to higher prices for airline passengers.

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Singapore Airlines have to renew their fleet more frequently than Delta Airlines, due to a shorter aging period for their aircrafts. At some point in time, Delta Airlines will end up with a bigger number of aircrafts, which would be older than the ones of Singapore Airlines. If we consider that the average age of Delta’s airplanes is 8.8 years, and of Singapore airlines is 5.1 (both: case - pgs. 2 and 3) then the difference in airplane ages will be 3.7 years.

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Refer to the popular and reliable Skyscanner portal [990] the route between New York and London Heathrow is the most popular one and it is served by 6 Carriers: American Airlines, British Airways, Air India, Delta Air Lines, Kuwait Airways and Virgin Atlantic. According to data from the previous month (December 2017), the most popular company that was serving customers flying between these cities was British Airways. This profitable route gives an example of direct rivals for British Airways in the fight for clients. It is impossible not to find a source in the press regarding the hot competition between BA and Virgin Atlantic [991]. Both companies originate from the United Kingdom, but BA was established long before Virgin Atlantic and gained the reputation of being listed among the best airlines in the world.

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For worldwide airline industry, opportunities can emerge from new client expectations, items, business sector structures or regulatory

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Competition situation Porter’s 5 forces model below describes the competition and the relationship among the different players. (IATA, Profitability and the air transport value chain, 2013) Figure 8 Porter’s five forces model for airports (IATA, Profitability and the air transport value chain, 2013) Market forces Some competition is emerging in the airports sector, largely for regional airports and for some transfer markets. There is little evidence that this is sufficient to constrain charges at large hub airports.

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For instance, with the global financial crisis and later the Eurozone crisis, the number of travellers has significantly reduced due to economic hardships. This has affected the profit levels of the airline as well as slowed down its growth prospects. The airline also faces intense competition from other low cost airlines forcing it to extensively invest in product differentiation to counter the competition. This is an expensive

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