Delta is known for its industry leading global network. The carriers of Delta and Delta connections offer service to destinations across six continents in 59 countries.
United Airlines Continental Airlines With Delta Air Lines in mind and the financial information referenced in Appendix A, four airlines were specifically identified as comparable competitive substitutes.
As seen in the following chart, United Airlines, American Airlines, Continental Airlines, and perhaps soon to be a part of Delta Northwest Airlines all displayed similar characteristics that drove them to directly participate in domestic and international air travel: Threats from Substitutes The technological advancements in the past fifty years have been astronomical in creation of new, highly efficient tools that range from medical advances to space exploration innovations.
Inside of this ever-growing journey of technological advances is transportation. With increased efficiencies in modes of transportation, greater threats to the airline industry present themselves.
In order to fully understand what types of substitutes pose a threat to the airline industry, one must first screen possible substitutes to Delta airlines system analysis prospect in the transportation trade.
The main modes that could present themselves include railway, oceangoing vessels, and motor vehicles.
With price-performance tradeoffs in mind, ocean transportation is limited in its appeal, as it lacks the advantage of speed in transatlantic crossings. This leaves railways and motorized transportation, which includes passenger buses and cars. These two modes have always been options that are easily substituted for air travel.
With oil prices increasing at a regular rate and even more so jet fuel costs increasing, both airlines and road transportation seem increasingly unattractive for business or pleasure travel. From Greyhound buses to Enterprise Rent-a-Car, companies are trying to differentiate in the travel industry and all competing against the same negative factor: With innovations in fuel-efficient motors and increased options from ground transportation companies, the travel industry is facing the hard realities that consumers' price-performance evaluation and the industry wide price elasticity have led to a more complex travel industry.
Potential Entrants Although the airline industry has seen better times, the market is still hot and demand is still high. Because of this, new entrants are always a threat to existing airlines.
The more airlines there are, the lower prices will be-due to competitive forces that drive prices down. With this in mind, a few airlines are making an attempt to enter the American domestic air travel industry. One surprising firm that wishes to expand its small operations out of Florida to a mainstream, national consumer base is Disney 3.
With guidance from Disney's already successful travel lines including cruise shipsthere is no reason Disney should not be able to encroach on the commerce sector of airline transportation.
Many foreign competitors to the United States' international airlines are starting to look into the possibility of extending flight operations on American soil. These airlines include Brazilian Airlines Azul and Germany's Lufthansa; there have also been talks of Air France and British Airways making regular flights from domestic cities in America to other American cities.
With new entrants into the marketplace, buyer inclination to specific airlines will increasingly become important to the overall strategic success of Delta. Suppliers Power The airline industry has seen few additions and changes to its suppliers market.
The two main suppliers that supply to the majority of the airlines are Boeing and Airbus. This situation creates little rivalry and a lack of industry intensification. Because supplier power is greatest when they are few in numbers, the supply side of aircraft is somewhat set in stone.
The ability for an airline to switch suppliers is limited and could incur extreme, bank-breaking costs. Although domestic airlines are relatively restrained from gaining suppliers across borders due to current instability of the U.
With focus on the supply side of the industry, Delta must look at the possibility of vertical integration with Boeing or Airbus.
Although Airbus and Boeing openly state that their core competencies have no infusion with actually flying 4Delta still needs to consider all options for any type of integration, whether vertically through suppliers or horizontally through consolidation.
Buyers and Buyers Bargaining Power The overall bargaining power presented to airline passengers is weak to moderate.
This is due to many factors. First, costs incurred in switching one's ticket from one airline to another is fairly high. Second, airlines set ticket prices without allowing consumers to barter on price.
However, the principle of threat credibility in buyer power force comes into play with the innovative ticketing websites that have been introduced in recent years. Websites such as Travelocity and Kayak receive ticket information from all airline websites. Rather than searching by luxury amenities such as fully reclining seat-backsnearly all consumers search on price.
To lower costs, Delta has introduced low fares that can only be found on its website-requiring customers to buy tickets direct.
Complementors Complementors are crucial to the advancement of Delta's services. When a specific advantage or product enhancement affects the overall demand for another product, it can be referred to as a complementary force.
Specifically for Delta, complementors can make or break whether a customer chooses to fly with them or another airline. This is where safety can be exploited by Delta in order to gain increased demand from the general public. If and when Delta develops a safety standard that utilizes the most technologically advanced safety materials and computers, demand will most certainly increase ticket sales.Delta Air Lines Inc.'s average inventory processing period deteriorated from to and from to Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnover.
Delta Air Lines Inc.'s gross profit margin improved from to but then deteriorated significantly from to Operating profit margin A profitability ratio . Delta Airlines is an American airline, offering customers more than 5, daily flights with an extensive domestic and international network that includes destinations in 64 countries on six continents, as of June Headquartered in Atlanta, USA, Delta Airlines is by far the world’s largest airline by fleet size, destinations as well as passenger revenue.
Delta airlines, founder and included in the SkyTeam airline alliance, encompasses a broad domestic and international travel network, with it unsurpassed global network. An Analysis of Delta Air Lines -Based on Case: Delta Air Lines (A): The Low-Cost Carrier Threat In Delta Air Lines began its first passenger service with only five passengers on board.
Today, Delta serves over million passengers annually worldwide. Fuel prices and dropping profits in Q3 were probably an indicator of two years of lost profits at Delta in and With the merger in with Northwest fuel expenses did rise as the fleet size increased.
Additionally, airline expenses rose to handle the larger company that was formed.