Delta Airlines is the oldest airline in the USA headquartered in Atlanta Georgia founded in the year 1924 as Huff Daland Dusters. Also credited to be the worlds second largest passenger airline, Delta has carried around 160 million passengers recording 277.6 billion passenger kilometers.
Centered on strong core values such as honesty, integrity and respect Delta Airlines has also exhibited undying commitment towards the environment and society investing in numerous corporate social responsibility initiatives. With a fleet size of around 857 aircraft, Delta flies to around 340 destinations across the world.
The company registered an annual turnover of USD 43 billion in the year 2017 and currently employ more than 80,000 people. With a rich history to back it, Delta Airlines continues to be amongst the top players not just in the USA but also in the world aviation industry.
Strengths in the SWOT analysis of Delta Airlines
Strengths are defined as what each business does best in its gamut of operations which can give it an upper hand over its competitors. The following are the strengths of Delta Airlines :
- Revenue Premium: Delta Airlines owes its continued success to its revenue premium which is around 107 %. This is possible because Delta’s revenue per available seat mile was much above the industry average indicating that the airline was the preferred choice for many customers.
- Airline hub: Delta Airlines operates from the world’s most solicited airline hub Atlanta which is also the biggest single airline hub in the world. Currently, the airport has 970 departures to 210 destinations out of which Delta serves around 59 countries.
- High customer engagement: The level of customer engagement of Delta Airlines is high and this helps them gain repeat business from current customers. Some of the frequent flier programs of the airlines give huge discounts to foreign travelers as well as automatic upgrades to higher classes. The airline also ensures that they are in constant touch with their customers.
- Focus on business travelers: The prime target segment of Delta Airlines is business travelers. The reason for this is the high margins and low price sensitivity of such travelers. They have been hugely successful in luring business travelers by personalized services. The airline trains all its employees in customer interactions and focuses on making the in-flight experience safe and comfortable.
- Operating Strategy: The key elements of the operating strategy include investing in used airplanes, reducing the impact of unionization, vertical integration etc. The airline also owns their own refineries which in turn is helping them streamline costs and improve operational efficiency. This move has helped them reduce their fuel cost by .1$ per gallon.
- Multiple hubs: Though Delta Airlines primarily operate from Atlanta, they also have hubs in Seattle and New York. After the acquisition of 49 % stake in Virgin the airline has been able to operate more flights to London as well as secure more usage of the Heathrow terminal. The airline also acquired stakes in Northwest Airlines which opened up new avenues in China for the airline.
Weaknesses in the SWOT analysis of Delta Airlines
- Poor margins: Delta Airlines just like most other companies in the domain have been suffering from low margins. The unit revenues were reduced drastically and this coupled with escalating fuel prices reduced margins significantly.
- Unnecessary investments: Delta Airlines has been involved in a number of outages recently and the airline was losing its face in the USA. In a bid to avoid future outages the airline invested in various shore up systems including a 200 million USD data center which has been eating into the revenues of the business.
- Brand switching: The growth of low-cost airlines have lured business from Delta Airlines and people have been switching brands from high-cost airlines to low-cost ones. This has resulted in the dip in business.
Opportunities in the SWOT analysis of Delta Airlines
Opportunities refer to those avenues in the environment that surrounds the business on which it can capitalize to increase its returns. Some of the opportunities include:
- Growing demand for business travel: The number and frequency of business travel across the world have grown in the last few decades. This is growing more in Asia than in other parts of the world and this means that there is more scope for business there for Delta Airlines.
Threats in the SWOT analysis of Delta Airlines
Threats are those factors in the environment which can be detrimental to the growth of the business. Some of the threats include:
- Competition: The airline faces a lot of competition from brands such as Lufthansa, Air France, Air India, Singapore Airlines etc.
- Low-cost airlines: The growing impact of low-cost airlines is shifting a lot of business from premium airlines like Cathay Pacific and Delta Airlines. However, airlines like these which are using quality as their USP may not be able to compete on the pricing aspect but yet be unable to sustain margins.