Delta Airlines Inc

The case study details the difficulties that Delta Airlines has faced both from its founding and in its efforts to become competitive in the airline sector. Customers' demographic features have changed, necessitating a matching shift in the technique employed to deliver their desired services. For instance, the iGeneration and the Y generation, who prefer to utilize the internet and prefer to book flights closer to departure times, have made it necessary for Delta Airlines to adapt the way it approaches customer care (Hofbauer, 2006). The nature of services provided in the airlines industry has been constantly changing due to the emergence of better techniques of customer service, management of customer luggage, the pricing structure, and the inflight services. There are local 'legacy' carriers in the United States such as American Airlines and international airline companies such as Qatar Airlines, Etihad Airlines, and Emirates Airlines that have achieved global competences which pose a major threat to the competitiveness of Delta Airlines. The characteristics of the population of the United States has been changing due to the increase in the population of African Americans and Hispanics, which further affects the design of transport systems at Delta Airlines (Baroto et al., 2012). This paper presents the analysis of competition from other airlines and changes in demographic trends as the major challenges affecting Delta Airlines and recommends a solution which can be implemented to address the two challenges. It also presents the recommendation of the procedures that need to be followed to ensure the solutions are implemented successfully at Delta Airlines.
Background
Delta Airlines is an American Airline that was formed in 1924 and has been involved in the transportation of goods, travellers and cargo to different parts of the world. It has also undergone significant expansion in terms of facilities, acquisition of aircrafts, and the number of employees. Currently, it has approximately 80,000 employees and increased coverage of most destinations in the United States and globally. Nevertheless, Delta Airlines has undergone a number of challenges from the time of its formation to the present date. For instance in 2004, it almost attained bankruptcy but restricting efforts were made in terms of job cuts and expansion of its activities in Atlanta which made it a super-hub in the provision of flight operations (Korsaa & Røge Jensen, 2010). In 2005, it underwent restructuring such as targeting an operational cost reduction by $3 billion by 2007. The measures implemented included; the reduction of CEO pay by 25%, executives' pay cut by 10% and piggybacking onto the 32.5% of its customers that were taken by other airlines in 2005. In 2005, Delta Airlines commenced a merger talks with Northwestern Airlines to create a larger airline under the Delta name. This resulted into a greater airline with a total of 786 aircraft and an investment value of $17.7 billion (Baroto et al., 2012). It has been affected by the global economic recession that have been coupled by global increase in fuel prices and terrorist attacks in the United States such as the 9/11 attack in 2001 that affected the operations and sustainability of most airlines. Delta Airlines has also experienced difficult times in terms of implementing the most effective leadership structure in order to promote the implementation of competitive policies.
The political, economic, social, technological, legal and environmental factors have greatly affected the capacity of Delta Airlines to achieve competitiveness in the US and globally (Goyal & Negi, 2014). Delta Airlines has also encountered challenges in terms of the variations and changes in the demographic characteristics of the US population such as the increase in the number of minority groups who seek its services and the differences in customer service requirements for different generations such as baby boomers, generation X and the iGeneration.
Alternatives
Changing its Operations from hub-and-spoke to Point-to-point strategy
It has been suggested that one of the solutions that can be applied to improve the competitiveness of Delta Airlines is to change its operational strategy from hub-and-spoke technique to point-to-point method. In this strategy, it will be possible to reach the specific destination of the customer without the need to connect via the hub or the terminus. This strategy is likely to result into a number of advantages for Delta Airlines which is likely to result into its competitiveness both locally and internationally (Elian & Cook, 2013). For instance, it is likely to reduce congestion at the hub and reduce travel time. It will also reduce the likelihood of baggage loss or the arrival of baggage later compared with passengers since the former are not transported as fast as the latter. The strategy point-to-point results into lower rate of fuel consumption because a plane uses the shortest distance between destinations without the need to connect via the hub. There will also be less interdependence in trips but there will be a constraint of the need to allocate enough facilities and personnel in different locations to satisfy the schedule of flights (Alderighi et al., 2007). This has an impact of minimizing the risk of domino effect which occurs when there is a delay in the arrival of one flight that affects the departure of another flight.
However, the alternative of point-to-point operation is not possible at this time due to a number of constraints that the airline company undergoes such as the need to allocate more facilities and employees in different points which are of high cost and less likely to be afforded by the airline (Cook & Goodwin, 2008). In some cases, resources may be allocated to different points but the operations of the airline may be limited in those points. This will result into inefficient use of resources. There is also the constraint of lack of control of the activities of the airline since it will not be possible to promote centralized decision making during the operations.
Shift from First Class to Economy Class
It has been suggested that Delta Airlines should shift in the nature of services provided from first class 'legacy' services to economy class. This is a strategy where pricing is provided at a low rate with a few privileges to customers. It is believed that this strategy will enable the achievement of increased customer preferences to use the airline compared with other legacy airlines such as American Airlines, Etihad Airlines, and Qatar Airlines. However, this solution of operation is rejected because of a number of constraints such as increased competitiveness of airlines which provide high quality services at high cost of travel (Button, 2008). It is also likely that bad schedule incidences will be encountered with the use of economy pricing strategy since the cost of flights will limit the travelers' options for peak and non-peak hours during travel. The airline will also operate on a no refund policy as it applies to all economy airlines in the United States. Due to no refund policy, there will be a requirement for passengers to schedule their flights properly. Increased incidences of rescheduling flights can affect the preference of customers to use the airline. According to Elian & Cook (2013), there is also the constraint that main travellers will be restricted from carrying their baggage despite the existence of a high number of passengers who prefer to carry them. There will be additional charges to travelers for extra security for the luggage in case they are allowed to carry them, resulting into additional high cost of travel. This can affect the competitiveness of Delta Airlines and prevent is ability to retain customers. Therefore an alternative solution must be sough rather than the implementation of economy class technique of pricing. The solution of focusing on economy class of flights is still not relevant at this time when many airlines are achieving competitiveness through high quality services at high fares. This results into uncertainty regarding the effectiveness of cost effective fares on promoting the competitiveness of Delta Airlines.
Focusing on Services that Appeal to iGeneration and Millennials
Due to the greatest percentage of the iGeneration and Millennials among the travellers who use Delta Airlines services, it has been suggested that its competitiveness and the ability to address the changing demographic characteristics of travellers is to focus on the needs of these groups of travellers. In order to achieve the needs of Millennials and iGeneration, it is recommended that services should be provided in the forms of the existence of flight time options, the existence of range of inflight services such as meals and breakfasts, the availability of entertainment facilities such as the internet in the waiting rooms and in the planes, and personalized customer services (Goyal & Negi, 2014). Services can also be improvised to achieve the needs of the Millennials and the iGeneration by increasing baggage management practices and the implementation of policies that permit passengers to carry them. It has also been suggested that fares should be charged at a lower rate so that the iGeneration and Millennials can afford the costs of travel from one location to another (Button, 2008). However, this alternative solution has been rejected due to a number of reasons which are against the strategic objectives of Delta Airlines such as the need to serve all passengers in different demographic groups in an equal manner so that all customers are satisfied with its services. This option of increasing competitiveness also ignores other demographic groups such as generation X and baby boomers that are more likely to participate in transport activities. It implies that Delta Airlines will lose most of its customers who are within generation X and Baby boomer generations to other airlines. There is a limitation of inflight services such as breakfast, internet and baggage management services are increased in favor of passengers, and it will result into additional cost to the airline because the flight charges will be low while the cost of operation will increase. This will result into a reduction in the airline's profits in a particular year of operation (Elian & Cook, 2013). This strategy also ignores the fact that other factors such as ethnicity and economic status of the population determine the frequency of travel of passengers. It does not put into place how these factors will be accounted for when services are focused mainly on the needs of Millennials and iGeneration.
Leadership and Management Systems Changes
The solution of making changes to the management and systems changes has been suggested as an alternative to improved competitiveness of Delta Airlines. The management systems can be changed so that there is greater focus on efficiency of operations and timely delivery of services to customers. Management and systems changes can be changed in a manner that the hierarchy of decision making is less bureaucratic and promotes fast implementation of decisions (Gill, 2002). For instance, flight operational management services can be improved by increased training of the operators on efficient methods of coordinating operations at the control centers. Management systems can be improved in a manner that there is increased utilization and maintenance of facilities to reduce wastage and destruction to ensure they are able to remain operational for long time without the need for replacement. However, this solution was rejected because it poses a number of constraints to the focus on achieving competitiveness because it emphasizes on structure of leadership and managerial changes but it does not focus on methods of overcoming competition from other airlines (Hofbauer, 2006). It is also less effective in promoting customer-focused services that can promote its competitiveness in the airlines industry. For instance, it does not explain the measures that will be put in place to promote customer access and satisfaction. Currently, Delta Airlines has not encountered significant managerial, operational challenges and the solution of making changes to the current structure will not be effective in achieving the desired performance objectives.
Proposed Solution
Focus on Operational Niches in New Destinations
It has been suggested that Delta Airlines should use the strategy of finding niche destinations which are not exploited by other major airlines. This can be achieved by operating in countries in Europe, Asia, and South America where most major airlines do not operate. This solution has been suggested to be the most effective in addressing the problem of competition from other airlines because it provides Delta Airlines with the ability to provide passengers with services without experiencing any competition from other airlines (Alderighi et al., 2007). It has also been suggested as the best strategy of serving the changing demographic characteristics of customers because it will be able to change its operational strategy depending on the customer needs in the countries in which it operates. This solution is most effective because legacy airlines such as American Airlines, Etihad Airlines, and Emirates Airlines do not operates in all countries around the world. It would be reasonable for delta Airlines to venture its operations into countries that are not well-served by the legacy airlines. It is likely that it will achieve a competitive advantage since customers will prefer its legacy services and experience in the airlines industry. According to Goyal & Negi (2014), the diversification of operational destination by focusing on regions or countries that are not well-served with airline services is a better strategy of overcoming competition among airlines. It ensures a new market is created which provides a constant demand for flight services. According to my personal experience, legacy airlines which have opted to operate in new markets have been able to increase their operational competence by improving their ability to provide customers with flight services and increase revenues. An example of such an airline is Qatar Airlines which has achieved fast growth and competitiveness due to its niche operations in Eastern Europe niche which is not well-served by other legacy airlines. It has always experienced absence of competitors in Eastern Europe and flies to 27 destinations. It also intends to open a new niche in Helsinki and Zagreb.
Recommendations
In order to implement the strategy of niche operations effectively, it is recommended that Delta Airlines should conduct a market research in different countries to determine the number of airlines operating in their airports. This can be followed by establishing the passengers who travel within a particular duration such as daily travel demands in those airports. Delta Airlines should enter into agreement with the operators of the airports in relation to the need to operate between the United States and those countries. After signing the agreement, it can start operating in these niches while increasing marketing activities in order to create awareness about its niche operations. According to Cook & Goodwin (2008), marketing is important in promoting awareness about the operations of an airline in a particular niche of operation.
In order to resolve the issue of lack of customer awareness of its services in the new niches, Delta Airlines can use the strategy of using social media, public relations, and integrated advertising as a means of promoting its services. According to Korsaa & Røge Jensen (2010), the issue of diversity management can be resolved by recruitment of employees of different cultures and nationalities as an illustration of its focus on addressing the needs of diverse populations. The management of the airline needs to increase cooperation with other countries in order to achieve the effectiveness of niche operations.

References
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Goyal, R., & Negi, D. (2014). Impact of Global Economic Crisis on Airline Industry. IRACST- International Journal of Commerce, Business and Management (IJCBM), ISSN, 2319- 2828.
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