SWOT Analysis for Delta Airlines

SWOT Analysis for Delta Airlines: Performance and Its Experience with Quality

Abstract

Tourism and hospitality are two distinct industries, yet very closely connected and independently related. Nevertheless, the pair cannot function efficiently, both locally and globally without the essential support of the aviation industry. Typically, the aviation industry thrives on multiple airlines, which offer transport and travel services. Delta is one such discipline, and the indispensable airline’s services in the industry cannot be underestimated. Delta has been around for more than 80 years to date, and the company has been growing over time to realize fortunes not only in the corporate environment but also across all economic platforms in local and global markets.  The SWOT analysis is a tool that analyses the strengths, weaknesses, opportunities, and threats of a business entity, and the apparatus has been used critically to bring on board the case of Delta. Indeed, the risks facing Delta include the depletion of natural resources like aluminium and fuel. Reduction of jet fuel means the prices have surged and the cost of purchasing a single aircraft at Boeing has escalated. The strengths of Delta is that the airline has global coverage, the brand name “Delta connections” and “Delta” locally and internationally respectively has sold the reputation of the company well. The substantial investments in technology and infrastructure have opened up new destinations in American and Asian markets, hence giving delta an opportunity for more clients and investors to escalate the profits. Consequently, Delta has a niche in the aviation industry globally, and despite the challenges, the future is promising for the airline.

Keywords: SWOT analysis, Delta Airlines, Sky team, Aircraft, local and international airports, technology, globalization, innovation, bankruptcy, Delta airlines` alliances

I. Introduction

With its heard quarters and hence the most significant corporate hub in Georgia Atlanta (Hartsfield-Jackson International Airport), the Delta Airlines is one of the oldest and most established US-based airlines. Commonly known as Delta, the airline has an extensive network of service both locally and internationally; with an approximate coverage of 5,400 flights on a 24-hour basis.  Delta airlines have destinations in 54 countries across the world (in 6 continents). The average number of destinations as of 2016 was 319, and have been increasing steadily since then (Kumar, 2008). Delta is a member of the Skyteam alliance, and among other partners, the company runs joint ventures with aviation organizations like Alitalia, Air France-KLM, West Jet, Virginia Australia, AeroMexico, Virginia Atlantic, and Korean Air (Teker, Teker, & Güner, 2016). Unlike the international influence Delta has attained to date, apparently in the US, the airline thrives on the brand name “Delta Connection.”

Delta airlines are an influential company, whose stake in the aviation industry is phenomenal. Against the international ranks as of 2013, the airline was the runners-up regarding scheduled passengers offered travel services (120.6 million people), and the first runners-up in both the carrying capacity and revenue clientele-miles flown worth 4.4 billion and 277.6 billion respectively (Laming & Mason, 2014). Typically, Delta airlines have been a core member of the aviation industry to date and hence is a significant organization as far as the tourism and the hospitality segments are concerned. Tourists are a people who value diversity in culture, traditions, moral ethics, and socio-economic explorations. Tourists travel globally to tour different destinations internationally, hence the desirability of a competent and reliable transportation system which has a globally recognized and established land and airborne infrastructure.

Delta is one such company with a global reputation, well-equipped infrastructure, globalized work culture, and technological edge in the aviation market. Therefore, Delta is an integral function of the tourist arena, as far as the hospitality industry is concerned intercontinentally. Nevertheless, the Delta has a margin of strengths, weaknesses, opportunities, and threats which dearly influence and determine its present and future operations as an airline (Ahmed, Zairi, & Almarri, 2006). Therefore, it is not only crucial to discuss Delta airlines about the tourist environment both locally and globally, but it also essential to discuss the Performance and Experience with Quality as well as the SWOT analysis in conjunction with the airline.

II. Background information

Delta airlines began on a humble economic and social background by the brand name “Huff Daland Dusters” which functioned as a crop dusting organization in Georgia Macon. The firm would later be called Delta Airlines following the pioneer operations of passenger transportations in 1934 (Yamanouchi, 2012). Up to the mid-twentieth century, the company had gained more financial capabilities, and in 1972 it merged with the Northeast airlines, whence it gained command over the trans-Atlantic routes of Pan Am (Luo, 2014). Moreover, significant developments at the airline took place in 2008, when the Delta airline gained merger with Northwest Airlines. Apparently, the airline roves six continents, serving 312 diverse communities, 319 destinations, and 648 urban centers globally in unison with others Skyteam affiliates to the alliance (Pearson & Merkert, 2014). Furthermore, Delta has a fleet up to 800 aircraft off worth, under the competent operations of 80 thousand experienced and reliable staff.

The SWOT analysis is an essential tool in the discovering of opportunities and the realization of the weakness of Delta airlines, to manage the airline’s strengths and avert the impending risks (Newton, Paul; Bristoll, 2013).

The SWOT analysis apparatus is a formula that would carefully and reliably guide the market maneuvers of Delta, to carve a niche corporate environment of Aviation industry. In fact, the tool would examine and focus on how the airline takes advantage of the available strengths, opportunities, and abilities. Furthermore, the device would be instrumental in strategizing on the possible competition in the market, so that the airline discerns on how to best realize competitive edge and survive the threats. While the opportunities and threats frequently relate to the outside environment, the weaknesses and strengths of a business entity (in this case; Delta airlines) are affiliated to the internal environment of the company; such as understanding inputs the SWOT analysis tool at the best place worth of strategic planning in the organization.

The aviation industry and tourism are intrinsically bound together, yet directly linked to the hospitality industry in the globalized markets. Therefore, Delta and tourism are partners in the corporate environment. The elements of tourism and hospitality entail traveling, lodging, planning, and transportation among others integral disciplines. The tourism industry depends heavily on the availability of transport. The multi-million-dollar discipline is hence dependent on Delta airlines, as one of the central custodians of air travel. Consequently, different units within the airline, including marketing, management, human resources, porters, bartenders, housekeepers, and general staff in aircraft are very crucial.

Purpose

The purpose of this paper is to improve understanding of SWOT analysis for Delta Airlines performance and the experience. The core agenda of this research entails doing a detailed literature review on Delta Airline; a US-based Aviation Company. Realizing the historical background, managerial capability, culture and traditions of work ethics, coverage, and other critical operations under the organization would offer a better platform to carry out an informed SWOT analysis program on Delta. The SWOT analysis would then be discussed by analyzing both the internal and external environment of Delta airlines to relate the two. Indeed, the opportunities and threats of an organization are external, while the strengths and weaknesses are internally based on the SWOT strategy. Therefore, the ultimate function of this assignment would demystify the opportunities and strengths of Delta, how to overcome threats and build a robust and influential platform worth the reliable, competent and trusted needs of the tourism sector both locally and internationally.

Specific objectives

In the quest to meeting the purpose of this assignment as outlined hitherto, this research seeks to meet reason behind the following objectives;

1. To demystify the historical background, present operations, and future capabilities of Delta Airlines founded on experts` views and evidence-based studies.

2.  To research the SWOT analysis and relate the tool to Delta airlines to realize the opportunities and strengths of the organization, while at the same time strategizing on how to overcome weaknesses and avert threats at the firm.

3.  To relate the operations of Delta airlines to the tourism industry, while insisting on the need for quality, competence, trust, reliability, and efficiency of the brand to survive both land and airborne (onboard) competitions in the aviation industry.

III. Literature review

Strengths

The name of a business organization is typically a critical measure of whether the organization is a brand or not. For the case of Delta Airlines, the name is a global brand, as the firm towers above its peer aviation and hospitality firms in the contemporary world. Delta airlines have won multiple awards as an exemplary organization on the world arena, plus the fact that it has been functioning for the last eight decades, hence the acclaimed brand it is. It annually provides aviation services to more than 180 million customers and was voted as one of the world’s most respected 50 companies for the fifth time in six years (Delta, 2017). The aviation industry has been evolving rapidly because of globalization and technological inventions, but Delta airlines had remained afloat because of its competitive edge in the market. Major cities in America are directly related and affiliated to this airline, including the New York City where the delta airline Skylifts are exclusively dominant; for instance, at the Bronx Zoo (Helms & Nixon, 2010).

The fleet ownership of Delta Airlines is a very advantageous occurrence because of the cost convenience. As opposed to multiple airlines in the aviation industry, approximately 75 percent of the fleet at the company is owned by Delta Airlines itself, which translates to more than 580 aircraft. Therefore, the airline saves a lot of costs because of the significant fleet ownership. Typically, tax breaks are common experiences, considering that the 75 percent of fleet owned would therefore not remit the taxes, which is a tremendous financial strength for the company (Laming & Mason, 2014).

In the aviation industry, collaborations, corporation, and joined the effort is critical for different airlines to survive the competition, and Delta is no exception because the firm has capitalized on this platform in entirety. The many alliances the company has established with other hospitality and aviation organizations are worth the international partnerships that make the operations efficient globally.  For instance, the Sky team alliance is a noble association, and Delta is one of the 15 members wielding the market share advantages in the market.  The Codeshare agreements that come with the corporation are very beneficial to every single airline, and hence Delta thrives on strengths hitherto. Critically, the Code shares permit two or even more airlines to take occupation of one flight, which technically makes the brand look familiar and famous in the industry (Jurevicius, 2013). The technique is suitable for exposure and exploration to new markets, and hence more clients in the tourist and hospitality industry, in general, have developed the desire and more attention for Delta Airlines.

Delta airlines is an innovative organization, and this serves as a significant strength for the company. The company values customer relations that are satisfactory. Furthermore, the improved technological adjustments plus sufficient service delivery has attracted hundreds of thousands of clients to the airlines. The layout of the airport infrastructure is convenient and admirable for instance; because of heightened security, able and willing staff to offer services, charging systems for client electronics, and competence on the part of the staff as well as professionalism (Yamanouchi, 2012). Moreover, the investments made in a mega project at Philadelphia; of the jet fuel refinery is amazingly profitable. Delta airlines spent 40 percent of the profits made on fuel. Consequently, when the refinery is ready and functional, significant costs would be cut and profits for Delta would escalate.

The onboard experience is yet another milestone in the strength-list of Deltas, which the company has wielded to gain a platform for the hospitality industry. The flat fuel beds which allow comfort for long distance passengers are fulfilling. The new Boeing 737-900 ER fleet of over 100 aircrafts the enterprise has purchased is a worthy investment. The customers enjoy the ambient environment, good lighting, enough space and huge overhead bins, as well as up to date internalized systems. Therefore, Delta Airlines has much strength in the aviation industry that has worked to the advantage of the brand.

The investments hitherto are significant milestones Delta airlines has made, and the blueprint of the infrastructure is both local and global. The projects have a high potential of generating income in tens of millions of dollars to the company. Furthermore, the smaller cities in the US like Greensboro, Buffalo, and Rochester have been opened up, and the hospitality industry decentralized in entirety. Indeed, Delta has not only improved and modernized the land-based infrastructure but has also made apt and convenient the airborne services. The replacement of the turboprop planes by the jet fleet is a conspicuous and bold move for the airline, because; comfort, convenience, reliability, and reduced fuel consumption is then guaranteed (Rivkin & Therivel, 2005).

Weaknesses

Corporate restructuring seemed inevitable for Delta since 2005, to continue functioning, after the company signed bankruptcy in chapter 11, and that was a significant setback for the firm (Jurevicius, 2013). Then, the company had $20 billion in debt, and there were much concern and tension whether Delta would continue to function, considering that then the organization had become significantly fuzzy in most of its operations locally globally. Nevertheless, in 2009, the organization overcame the state of bankruptcy. It is, however, essential to consider that despite the end of the hard-financial season for Delta Airlines between 2005 and 2009, many interested and affiliated partners have questioned the leadership of the industry. Compare with 2015, the revenues of Delta Airlines decease 2.6% in 2016 report (Delta, 2017). Furthermore, it is a weakness to the company to date because many investors were lost and potential ones scared away because of the historical mismanagement.

The other major weakness for the airlines is that Delta has put more than enough dependence on the revenue sourced from the North American markets. Typically, the delta airline services are not equitably spread across the network of the company`s operation routes. Indeed, 80 percent of the profits made in the airline are generated from the North American markets. Barely less than 20 percent of the profits come from the rest of the local and international operationalized routes. Technically, if anything happens to sway the North American markets negatively, for instance, an economic recession, then Delta would be adversely dealt a blow (Pearson & Merkert, 2014).

The other weakness of Delta is that the company has a weak, less sophisticated, and averagely incompetent managerial platform. Consequently, decision making is customarily flowed and blind to the impending future challenges. The 2005-2009 bankruptcy could have been averted had the responsible stakeholders planned for time. Allegedly, the surging fuel prices led to the downfall. Furthermore, lack of enough coverage of the international routes and inefficient performance their is could rage havoc to the company in future. Delta Airlines also has $3.4 to $3.7 billion in long-term debt in 2016.In essence, the future uncertainty is a challenge for the airline (Delta, 2017).

Opportunities

Despite the weaknesses, Delt has reemerged with the zeal to make substantial successes, which entails the merger with north-west airlines. In the year 2008, the alliance between the two airlines gained affirmation from the experts that it would not threaten the success of the company. Furthermore, the Department of Justice approved the collaborations.  Because of the merger, operational costs were deescalated, and the unnecessary competition between the two firms was abated. Because of the alliance, Delta airlines can wield $ 17.7 billion, which would increase if the economy is stabilized. The opportunity has given Delta airline access to the extensive Northwest market. Furthermore, the firm has gained an edge in the hospitality industry, because the amenities, food packages, and affiliated corporate items have been printed and branded as such. In fact, there is a likelihood that the giant pioneer for American Airlines, AMR, would be purchased by Delta if the firm confirms a stable economy for over a decade.

The other opportunity Delta airlines stands in light of is the Asian market exploration.  Asia has been opened up by the twenty-first-century globalization effects, which gives Delta an edge in the market, considering that the firm has advanced technological exposure and innovative capabilities to efficiently invest in a highly competitive environment. The express non-stop ravels to Tokyo in Japan right from Washington DC in Seattle would be such a significant investment breakthrough for Delta. Armed with the new Boeing 747-400`s, Delta would be able to meet the specific needs of the clients, especially those in the tourism segment of the economy. The seat would go in flat positions as beds, well-equipped interior, spacious overhead bins, and entertainment; all onboard to ease the travel. The in-flight services would then be upgraded, particularly at strategic destinations in line with the hospitality industry, for instance, the New York City JFK international airport (Phadermrod, Crowder, & Wills, 2016). The postmodern appeal the airport would embrace is the best move ever for a developed world, which thrives on robust socio-economic backgrounds to wield existing profits.  Over 30 new towns have been connected by over 100 daily flights of Delta airlines in the US, and this has broadened the market and outreach of the company. The newer destinations are building, the better for the organization because a new clique of the clientele is being attracted to the airline both locally and internationally. Moreover, the towns like Dallas, Cleveland, and Miami have opened up for Delta, as they have become reliable destinations for both the airline and its brands.

The advanced technology that the airline has embraced means the company is projected to add up to 4 million seats at the LaGuardia base annually, considering the new huge planes that were not in operation for the last two decades. Indeed, more services would be delivered to the clients, the air congestion would be reduced, and the win-win situation is a plus for the organization regarding revenue and brand protection against competitors. Delta has technically doubled its operations at the airport (LaGuardia), with more than 35 gates and a sky club at the C terminal (Rivkin & Therivel, 2005).

Indeed, Delta has many opportunities because of the increased and new destinations, being supported by the television ads (the New York`s Subway), supporting significant leagues in the country like the Mets team. In essence, Delta has launched the best infrastructural network to thrive in its aviation business by creating more opportunities in the tourism segment, corporate sector, and other integral financial platforms.

Threats

Just as is the case for most of the airlines in the aviation industry, Delta faces dire financial consequences about fuel prices across time. Because of the escalating depletion of natural resources, jet fuel prices have been going exceptionally high across successive decades. In fact, just like most airlines apparently, Delta itself was brought into bankruptcy between 2005 and 2009 (Lander, Robinson, MacDonald, & Martin, 2014). In the case of Delta, only little is left for other airline functions after a whopping 40 percent of the income is typically spend on fuel. Furthermore, other than the difficulties met in operationalizing the airline despite the surging fuel prices, the unpredictable and fragile economy the US faces today is a big threat to the organization. Indeed, financial setbacks in the country mean fewer people travel, only a few are able and willing to spend, and hence the reduced number of tickets sold out at the airline. The 2008 recession still haunts American companies to date, and Delta has not fully emerged from the challenge because, despite the many products and services offered, the target buyers cannot pay the costs, hence a shrinking market for the airline.

Delta faces a threat of terrorism and hijackings. Though terrorism is a common problem across the aviation industry, the case of Delta is of more concern, considering that the airline has just emerged from bankruptcy barely a decade ago, has invested heavenly in the recent times, and faces much competition in the future uncertain. Categorically, if Delta experienced a case of hijacking apparently, the media would exaggerate the scenario most probably, and the speculations could deal a blow to the company’s reputation. Locally, Delta faces stern competition from the Southwest Airlines (which offer cheaper airfare than Delta), hence the reducing margin of profits for the company.

The other threat facing delta is yet again the issue of the depletion of natural resources. Aluminum is one of the core raw material for the Boeing manufacturing industries. Nevertheless, with the increased consumption of the resource and the steady reduction in availability, the manufacturing companies are charging relatively high for the planes. Consequently, Delta has to spend more to purchase and independently own its aircraft. Delta airline buys new jets. The new planes are not made of iron ore that has been recycled. Thus the prices are meant to go even higher for Delta in the next 5 to 10 years. F

Finally, any case of a disease outbreak would mean Delta will be dealt a blow. Cases of swine flu and Ebola epidemics are occasionally realized, and such would mean quarantines imposed and reduced traveling. A good example is the 2010 swine flu outbreak, which reduced accessibility for most Asian airlines. In fact, for Delta, if such a case existed in the North American markets (which fetched 80 percent of revenue for the firm) then Delta would succumb to economic pressure.

IV. Conclusion

Table 1: SWOT of the Delta Airlines

 Key Findings

• SWOT analysis can conduct a comprehensive research to formulate corresponding development strategies and countermeasures based on the research results at Delta Airlines.
• The organization’s historical background, management capabilities, professional ethics, culture, and traditions provide a better platform for Delta’s SWOT analysis program.
• Delta Airlines’ dependence on North American market revenue is too high to be an incompetent distribution management platform.
• Due to the rapid development of the aviation industry, Delta Airlines is a global brand and has strong strength and has brought advantages to the brand.
• Delta Air Lines is expanding the company’s market and expand the scope to make their services more convenient.

Contributions

Delta Airlines delivers its customers to all parts of the world, pursues innovation, is aggressive and enterprising. They become successful competitors in the market and open new routes and partners to expand their business. SWOT is based on the established internal conditions of Delta Airlines. SWOT analysis has its foundation. Starting from the industrial structure, it thoroughly analyzed and explained various aspects of Delta Airlines. Delta used value chain to deconstruct the value creation process of the company and paid attention to the analysis of the company’s resources and capabilities. They use a variety of research methods to analyze the company’s various environmental factors, namely external environmental factors and internal capacity factors. External environmental factors include opportunity factors and threat factors. These are favorable and unfavorable factors that have an external environment that directly affects the development of the company. They are objective factors. Internal environmental factors include preponderance factors and weaknesses. They are the positive and negative factors in the company’s own development, not only to consider the history and the status quo, but also to consider future development issues. The advantage of the SWOT method is that it considers the problem to be comprehensive, it is a systemic thinking, and it can be tightly combined and clearly organized.

The SWOT analysis is an imperative and indispensable instrument for measuring the strengths of an organization, realizing the available opportunities as well as to identify the weaknesses and avoid the potential threats.  Delta airline is one of the oldest and most influential airlines in the US. The company operates in six continents, in 54 countries, and more than 319 destinations within its service delivery scheme. With a population capacity of more than 800 aircraft and 75 percent independently owned, the firm commands substantial profits in the aviation industry. The weaknesses include the declaration of bankruptcy and poor management regarding future planning, while the threats facing the organization include the escalating prices of jet fuel and the depletion of aluminum hence escalating the costs of aircraft at the Boeing`s manufacturing outlets. The strengths of Delta are that it has global coverage and has a competitive niche in the aviation market. Furthermore, both local and international routes know the brand. Multiple investments in land infrastructure, hi-tech technology in the onboard services, convenience, competence, and comfort all have created new opportunities to generate more profits for Delta airlines. Despite the threats, the emphasis is placed on the analysis of the company’s external environment and internal resources starting with structural analysis. The SWOT analysis approach hitherto has the potential to sustain Delta in the aviation industry, which is highly competitive.

Delta’s main route is in the Northwest Market. In the most important international aviation market, Delta Air Lines can achieve virtual mergers with powerful partners through airlines with Asia, such as Japan Airlines, China Airline, Singapore Airlines and other airlines. Since government regulations do not allow airlines to acquire ownership of foreign airlines through cross-border mergers and acquisitions, it is of utmost importance for Delta to establish international cooperation through equity participation. It provides our clients with a truly global network. They can continue to invest and are committed to providing their customers with the best service and the top brand in the industry.

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