Pratt Institute | DM 672 | Business Strategy - Analysis - Leadership - Culture - Outlook - Business Model - Strategy - Customer Interface - Recommendations AGENDA COMMERCIAL AVIATION IN U.S. Helps Drive - $1.142 trillion in economic activity - $346.4 billion in earnings - 10.2 million jobs Contributes - $692 billion/year to U.S. GDP - 5.2% of U.S. GDP Traffic - 40,000+ daily commercial departures - 2 million US passengers daily
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- New value-for-money strategies- Enhance the customer experience- Customer retention initiatives- Invest in new technologies- Renegotiate lease & labor agreements
Pratt Institute | DM 672 | Business Strategy LEADERSHIP
The Huff Daland Dusters founded
(pre-Delta)
1924
Begins operating as Delta Air Lines
1934
Chicago and Southern Air Lines merger
1953
W.T. Beebe becomes Chairman and CEO
1971
1928
Merger: Huff Daland Dusters + Delta
Airlines. Renamed Delta Air Service
1945
Official corporate name becomes Delta Air
Lines, Inc.
1966
Delta founder C.E. Woolman dies. Charles H. Dolson named CEO
1978
The Airline Deregulation Act
passes
Source: Delta website - Delta Through the Decades
Pratt Institute | DM 672 | Business Strategy LEADERSHIP
Delta celebrates its 50th year of service
1979
Western Airlines merges-becomes 4th
largest US carrier
1987
Leo F. Mullin is named President and CEO
1997
Delta declares Bankruptcy. Richard H.
Anderson becomes CEO
2006
1981
Delta launches Frequent Flyer
Program
1991
Pan Am Merger
2001
U.S. airspace closed for two days after terrorist attacks on
Sept. 11th
2008
Merger with NWA
Source: Delta website - Delta Through the Decades
Pratt Institute | DM 672 | Business Strategy
The Work Environment - Delta has always been family oriented but changed with the times
- Committed to maintaining corporate culture, committed to
employee and customers satisfaction. Anderson demonstrates
this through:
1. Employees: Profit sharing & Stock Options
2. Emphasis on customer service
3. Providing compensation packages
- Employees believe culture changed, but Anderson understands
both cultures of Delta and NW
- Delta is non-union, NW is unionized (pilots)
CULTURE
Pratt Institute | DM 672 | Business Strategy OUTLOOK
Industry Airline Revenue Growth(PROJECTIONS)
- Profitability in 2009 due to:
1. Lower fuel costs
2. Capacity Discipline
3. Merger synergies
- Reduction of Domestic Capacity
- Delta and NW Traffic updates
Text
"They're definitely taking capacity down probably more than what people thought they would be doing,"Helane Becker, airline analyst at Jesup & Lamont Securities
Facts & Updates
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-10
-2
2
6
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2010 20122008 2009
Ch
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% o
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line
Ind
ust
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YEAR
2011 2013
Pratt Institute | DM 672 | Business Strategy OUTLOOK
Industry Airline Revenue Growth(PROJECTIONS)
Text
US Personal Consumption expenditures for US airlines are expected to grow at an annual compounded rate of 5.9% between 2008 and 2013.
Consumer Spending on airline travel Growth Slows and Flattens.
-6
-10
-2
2
6
10
-4
-8
0
4
8
2010 20122008 2009
Ch
ang
e in
% o
f C
on
sum
erS
pen
din
g f
or
Air
line
Ind
ust
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YEAR
2011 2013
Pratt Institute | DM 672 | Business Strategy OUTLOOK
INVESTMENT OUTLOOK
Text
US Personal Consumption
expenditures for US airlines
are expected to grow at an
annual compounded rate of
5.9% between 2008 and
2013.
Consumer Spending on airline
travel Growth Slows and
Flattens. 3.0
CHINA EASTERN
CHINA SOUTHERN
TAMDELTA
AMERICAN US AIRWAYS
CONTINENTAL
UNITED
2.04.0
HOLD BUYSELL
14
12
16
18
NU
MB
ER
OF
IRP
s
20
22
3.5 2.5
Source: WSJ DAL Financial Reports FEB. 2009
Pratt Institute | DM 672 | Business Strategy MARKET FORCES
- 461 destinations in 96 countries- More than any other U.S. airline- Delta has 1,534 flights per day- Delta Connection: 2,533 daily- Delta + Alliance: 6,795 daily
- Inconsistent Message
- Does not speak to the customer experience
“Welcome Change, Welcome the new Delta” Approach
- Multiple agencies do work for them over the years
- The Merger is a new opportunity
Marketing
Pratt Institute | DM 672 | Business Strategy CUSTOMERS
baggageclaim
planningtrip
reservation airportarrival
check-in securitycheck-in
boarding
customer experience mapping
DeltaAwareness
DeltaAwarenessContinues
de-boardingservice airportdeparture
follow-up& memory
Pratt Institute | DM 672 | Business Strategy CUSTOMERS
United
ContinentalDelta
Southwest
BritishAirways
US Airways
American
JetBlue
VirginAtlantic
Pratt Institute | DM 672 | Business Strategy RECOMMENDATIONS
Creating Value- Reduce costs, capacity, and increase efficiency- Focus on domestic vs. international- Evaluate and streamline suppliers- Renegotiate contracts- Evaluate and divest noncore business units & programs- Monitor competition and borrow ideas from international market
Capturing Value- Transparent & effective MarComm- Maintain & revitalize marketing & customer retention initiatives- New & enhanced value proposition opportunities- Charge for EVERYTHING
Pratt Institute | DM 672 | Business Strategy RECOMMENDATIONS
Ideas...- Enhance the customer experience
- Technology (RFID & ICT)
- Sell more Advertising (Captive audience who you know all about)
- Trade content for passenger feedback, information, & marketing