Delta Airlines Study Case

“What are the current competitive positions – resources and competitive strategy?”

General figures about the market

Expenses
Salaries + benefits = 40% of overall expenses
Fuel = 10-15% of overall expenses
Services = 15-20% (including sales, marketing, insurance, commissions to outside contractors) of overall expenses
Aircraft and facility rental = 15% of overall expenses

Proportion of planes owned/rented
55% of the fleet is rented / 45% is bought

Flight’s income
Average yield : 14,4 cents
Average load : 69,9%
Average income per ASM : -0,66 cents
Avera stage length : 766
Average income per available seat flight : (average income per ASM x average stage length) -$5,05

Average fare on the Florida market
$158,57 (I gave an indicator 3 to “other legacy carriers”)

Proportion of salaries and benefits in the total money earned by an airline’s employee
Profit sharing and stock options package could represent 40% of the total earnings in a 15yo carrier.

General learnings

Southwest and JetBlue are the only carriers to earn money for each ASM.

Southwest was the first LCC to be. They benefit from their strong experience on this field and from the network and the awareness they built for years.

JetBlue, the last actor arrived on the LCCs market, succeed thanks to its strategy: * Low costs and notably its wages mass * Technology and notably its paperless strategy and the digitalisation of the booking but also TV monitors for travellers, increasing the comfort and the perceived difference with other carriers * Strong branding with high advertising investments

Southwest and JetBlue have in common flexible work rules and limited services for the consumer, which lead to the rationalization of the worked hours and no superficial employees.

Delta is at the industry’s image: working hard to find again the way of profitability. They suffer a strong inertia which make difficult strategic movements