Business Analysis of Delta Airline - Essay Example

? Strategy/Problems in Mgmt Parameters of the industry Delta Airline is one of the largest airlines company in the United s that is headquartered in Atlanta. Delta Airlines is the sixth oldest airlines company and is the oldest in US. Delta Airlines was founded in 1924 and started operations in 1929. The company runs its flight operations in the domestic as well as international markets with around 80000 employees in its fleet. Delta Airlines operates 5000 flights on a daily basis and caters to passengers in all the continents except Antarctica. The hub of operations of Delta Airlines is the Atlanta International Airport which is one of the busiest airports that cater to around 91 million passengers every year. Delta Airlines was ranked first in terms of its fleet size in 2011 and in terms of passenger traffic in 2012. The company has also reached the second highest position in terms of the revenue passenger-kilometer flown. Delta Airlines earned total revenue of $36.67 billion in 2012. The total sales of the company have increased by around 4% from 2011 to 2012 (Delta Air Lines 1). The major competitors of Delta Airlines are the United Continental Holdings, Air France, South West Airlines, British Airways and several other airlines in the industry. The airlines industry is highly competitive and the revenues are drives by the excellence in customer service. One of its major competitors, the United Continental Holdings has earned total revenue of $37.15 billion but the growth rate of total sales has been moderate at 0.11%. PEST Analysis The analysis of the airlines industry in which Delta Airlines operates could be conducted with the help of an estimation of the general environmental factors as given below. Political The deregulation of the airlines industry is one of the key changes in the political scenario that would affect various market players like Delta Airlines. The deregulation of the airlines industry would lead to inflow of more number of airlines as well passengers. Delta Airlines being one of the major players would have to be concerned about sustaining its position on economies of scales due to increase in flight operations and associated cost. The liberalization of boundaries in the sky is also a change brought about by the political regime that would lead to increase in operations and market size of the airlines industry. Economic The deregulation of airlines industry, increase in the low cost airline has brought about increased competition in the airlines industry is terms of catering to passengers at competitive cost. Thus the cost burden on the airline industry has increased as a result of which the economic profits of the players have reduced sharply. The net profit of Delta Airlines increased by 44% from 2010 to 2011, whereas it increased by only 18% from 2011 to 2012. Social The social factors like the incidents of the Terrorist attack on the World Trade Centre has caused hesitance among the passengers to fly. This has resulted in lowering of the confidence among passengers to fly. This would affect the airline industry and its major players like the Delta Airlines in terms of loss of revenues. Technology The advent of e-commerce and online mode of booking tickets, etc. have reshaped the operations of the airlines industry. The major players like the Delta Airlines are required to spend less on their physical infrastructure. The cost of overheads in the airlines industry would decrease with the applications of technology put in place for booking tickets, travel arrangements, etc. Porter’s Five Forces Analysis The analysis of Porter’s Five Forces with respect to the airline industry in which Delta Airlines operates has been explained as follows. Supplier Forces The bargaining power of the suppliers is one of the important aspects that are considered by major players like Delta airlines in the airlines industry. The fuel is one of the major supplies for airlines operations that could not be substituted and the supplies are done from the refineries. Trading Refineries in Philadelphia is the largest supplier of fuel for Delta airlines and the industry. Buyer Forces The bargaining power of the buyers and the customers for Delta Airlines in the airlines industry is very high due to deregulation and liberalization policies for the aviation industry. The customer loyalty in the airlines industry varies with the increasing competition and enhanced level of services in the industry. Substitute Forces The substitute forces for the airlines industry are not so strong due to the time factor. Travelling by land and sea may not be acceptable in many cases as a substitute for the airlines industry. However, the travelling expenditure could be spent by the customers on holidays and vacations. Delta Airlines operating in the airlines industry should take into consideration the substitute forces with respect to its business. Entry Forces The threat of new entrants is moderate. This is because the flights operating between various countries are owned by operators of a certain nation. Thus new entrants are rarely created unless there are major changes in the policies of the government. Delta Airline which operates in the US airlines industry, however, needs to be up-to-date with the policy changes in the aviation industry and must track the entry forces. Industry Rivalry The rivalry in the airlines industry is ever increasing due to the lowering of regulation barriers. Due to increase in the number of low cost airlines, there is competition for landing and departure slots in the airports. The price of the tickets has also become competitive due to the increase in rivalry in the airline industry. Delta Airlines would need to consider these factors to assess the industry rivalry in their business. Conclusion Delta Airlines is one of the major players in the US airlines industry. The airlines company has been able to consolidate its position over the years. An analysis of the airlines from political, economic, social and technological perspective shows that Delta Airlines would need to adapt to the forces of change in the industry. The changes are brought about by the deregulation and liberalization of policies with respect to the aviation industry. The increase in the number of players and the enhanced level of services and competitive price offered in the airlines industry are important areas of consideration in the business of Delta Airlines. The threat of new entrants, substitute options, industry rivalry and the bargaining power of suppliers and the customers are also considered by Delta Airlines that are deemed to influence the operations of the airlines industry. Work Cited Delta Air Lines. ABOUT DELTA. 2013. Web. 12 September. 2013. < http://www.delta.com/content/www/en_US/about-delta.html>. Read More