Delta Airlines - An Analytical View

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Aerospace Industry
American airlines
Renouncing its posture of maintaining high discipline, American airlines improved its
holding capacity (in regards to the available seat miles) to 22.1 billion in April, 1.3% above
the previous capacity of the previous year. However, the airlines could not change this
increase to passenger traffic because of the strengthening of the US currency/ dollar. The
passenger traffic declined annually by 0.3% due to the tremendous change in the domestic
traffic than the Atlantic and Latin American markets. Furthermore, the Texas-based airline’s
load factor percentage of seats decreased on a monthly basis.
Despite the fact that the American airline is the world’s leading traffic airline, there’s
a notable decrease in the amount of income received from the passengers per mile by around
4-6% in the second quarter. In addition the airline has reviewed its second quarter fuel price
upwards from $1.94-$1.99 per gallon, 10% above the previous level since there was a
significant improve in the crude oil cost (Obeng and Sakano 2012, p. 42-48). Resulting to a
downward shift in the pre-tax margin from 18-20% to 17-19%. American had decreased the
check level for total system capacity growth in 2015 from 2-3% to only 2% annually as
compared to the previous quarter. Its main aim is to increase its domestic capacity by 2-3%
and international holding ability by approximately 1% during the financial period (Armen
2013, p. 405). During the press conference on 2017 the American was named the award
winner of the year, an annual award.
PEST analysis.
PEST is an abbreviation of political, economical, social and technological strategy of
analysis what encompasses the external factors that influences the airlines. PEST analysis
majorly focuses on these components.

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Political factors
These factors outline how the government policies affect or influence American
Airlines in this case. The policies include taxation, legislation on labours and environment
trade bottlenecks tariffs and stability. The legal factors like employment laws, antitrust law,
safety and discrimination laws influences the day to day operation of company in terms of
cost and demand of goods and services.
Economic factors
Entail mainly focus on the factors in America that influence business operation such
as economic growth, changes in interest rates, currency exchange rates and inflation.
Social factors
Social factors are in charge of influencing the managerial and operation strategies to
conform to the organisation surrounding norms like population change, age distribution,
cultural practices of the employees and clients and the career attitude (Chang et al., 2014, p.
46-50). These factors many a times influence the recycling the old employees and training of
workers in workshops and seminars organised by the firm.
Technological factors
These factors refer to changes in technology, automation and innovation in the
technology. Environmental factors include the elements of both the ecology and environment
like climatic change and weather. They can act as guidelines of investing in new areas in case
others fails.
Marketing strategy
American airline market mix analyses the 4 Ps, which are product, price, place and
promotion (Armstrong et al., 2015). The major product category in the marketing mix of
American airline include selling of seat tickets for flights, hotel and conference room
booking, cruises, vacations and cars for hire. The seats are charged according to their

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category that is business class, choice class, premium economy class and first class. The
customers are not in any way inconvenienced by the American airline since it offers both the
direct and connecting travels/ flights. There is flagship suite for the international first class
passengers which are available on Boeing 777 with privileges and access to the flagship
lounge. Lounges such as Admirals club for celebrities, politicians, loyal passengers and VIP
and flagship lounge for clients from the other parts of the continent and citizens within the
country too. American airline also earn income from selling seats on British Airways. Main
cabin extra is a plus product of American airline economy which is mainly available on
marine fleet and regional aircraft fleet.
American airline set their prices based on the individual customer choice and demand.
The options available different depending on the traveller, flexible, and cost effective. Choice
is just an ordinary economy ticket plus other charges on additional features and baggage.
Different choices give guarantee clients permission to change the ticket without any charges.
(Sun and Kim 2013, p. 68-77). However, elite members get 3 complimentary check bags.
Choice plus is the same as the essential with 50% additional miles, premium beverage and
same day change in flight and standby. Flexible give the customers an opportunity of 25%
mile bonus, priority baggage privileges and delivery (Adler and Gellman, 2012, p. 34-35). B
The business class gives 25%- 50% mileage bonus, 2-3 checked bags, premium beverage,
same day flight change and standby, and priority baggage privileges and delivery and
dedicated check in counters.
American airline has five main hubs that is in New York, Dallas, Miami, Los Angeles
and Chicago. It as well operates in Washington D.C, Charlotte and Phoenix on a low scale as
compared to the 5 major hubs (Burghouwt 2016). Together with its operating partner in the
regions, the American airline has managed to develop a large local and international network.
Their travels goes up to above 50 countries including approximately 350 stop points by 6700

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flights daily on a normal operations of the company. Dallas is the leading hub with
approximately 140000 passengers per day but the American airline maintains other basses
such as LaGuardia, Pitsburgh and Tulsa International airports with Tulsa handling the Boeing
fleet. A lot of loyalty programs are also provided by American airlines which are used by
passengers’ on board during the journey. Nonetheless, American Airlines use the distance in
a journey upgrades to First of Business class even on partner airlines, car rentals, hotels and
other retail products. The travellers enjoy such a privilege with their families together.
American Airlines issue a classic Platinum or any other higher status, using a visa card.
These cards permit travellers to fly and enjoy other additional benefits. (David et al., 2013,
75).
In addition to activities for promoting the industry, the firm has other ways like use
of billboard, On-board magazines and inflight, airport entertainment solutions as well as
social media forums like Twitter, Facebook and YouTube. Booking is made easier for
customers since they can book without necessarily visiting the station. In other words the
processes have been made digital. During vacation for esteemed customers, American
Airlines offer discounts and hotel services. Compared to any other company, they are leading
with forty billion dollars used as operating revenue.
Financial Assessment and Recommendation
In the year 2017 as the best accounting period for American Airlines compared to
2015 and 2016. The Chief Executive Accountant of the American Airlines confirms the year
was completely different from any other year. It was year that the company recorded best
result outcome ever hence the need to give credit. (Warren and Jones, 2018). At least
everyone in the team contributed in a way to finally achieve good results. A section took
delivery of new aircraft and much more – all while running a solid operation and taking great
care of our customers. In order to maintain a positive growth like the previous year where the

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company did well, American airline must be ready to put in practise exceptional
achievements and capabilities in every department of operation be it in finance, customer care
desk, and security and labour relations. (Bamber 2013). Its executive leadership must also
clearly show innovation and strategic thinking that sets the company apart.
Delta Airlines
Delta airline has a unique tremendous change. Delta’s stock DAL, +0.70% shot up
6.6%, the biggest one-day percentage gain since January 2015. Trading volume reached 16.1
million shares, compared with the full-day average of 8.3 million shares. Delta`s September
load factor declined to 84.4% from 84.6%, as a 0.6% increase in capacity outpaced 0.3%
growth in traffic. The air carrier said in the wake of Hurricanes Irma and Maria, it now
expects third-quarter adjusted operating margin in the range of 15.5% to 16.5%, down from
guidance provided a month ago of 16.5% to 17.5%. Earlier before Delta Air Lines Alaska
Airlines was the best ever in entire America. Delta surpassed every factor of hindrance in the
country, even with multiple meltdowns that resulted in thousands of cancelled flights and tens
of thousands of passengers stranded. The outlook for unit revenue for the next couple months
continues to improve.
PESTE Analysis
Just like American Airlines, Delta Airlines operations are also affected by political,
economic, social, technological, and environmental, in different ways though.
Political factors.
One political factor that contribute widely to airline business id basically, political
stability. Delta’s business operates in a number of nations which impliy the political status
and its environs matter to the flights. Give for instance, most restricted rules were eliminated
in the US reducing on a lot of barriers to the airlines industry operations. Since then, a
positive impact has been recorded on the Delta airlines. Nonetheless, this political is almost

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similar in other countries. According to most of the markets, rules and regulations still apply.
Therefore, the amounts generated as profits by businesses in such restrictive environment is
very high. Most airlines opt to partner with countries purposefully to generate the best
services and products. Apparently, individual countries that give in to partnership
demonstrate they no longer restrict the environment for other airline businesses among
others.
Economic factors
The economy of any nations does automatically well with airlines. Several
governments consider this factor and implement in strategies to promote and protect airline
businesses. However many government are yet to introduce laws to open up their market to
the airlines companies. In circumstances of economic shortcomings the airlines industry and
their business usually get severe and adverse impacts (Hooley et al., 2012). A close
assessment previous studies explain downturn impacted no longer impact on the airlines
business. Not only did the business class economy fliers too saw a decline in business but
both the passengers and the airlines companies were impelled to revisit their prices.
Recession impact on the revenue and employment levels in the global economy
(Edelman and Singer, 2015, p. 88-100). Both of these things attribute to the consumers ability
to buy goods and services. A lot of the world’s economic activities are determining factors
determine the Airline brand. (Doganis 2013). When estimated, then current status of the
economy equals profits and revenues of Delta. Nonetheless a lot has changes and the status of
employment improves, hence more business ideas pertaining to airline industry (Lim and
Hong 2014, p. 530). Rapidly growing middle class is also an economic importance for Delta
airlines. A big groups of people are using air travel for tours at time business travel too. In
sum, the economic alteration imply an increased demand of air-travel.

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Social factors
Social factors are also an important factor determining the demand for air travel. The
demographic changes in population in particular are significant to Airline Company. The
only convenient means of movement for the generation yet to come and the current ones.
Any increase in population determine the demand for air travel. The social capital developed
by the airlines industry is also an effective technique behind the rising popularity of the
airlines industry. Delta airlines industry is a large employer globally. Delta airlines alone
have created job opportunity for thousands of people. The entire society, both business and
work are acquired from the wide network of flights in the world. This network has added
speed to business and common life.
Technological factors.
Technology is currently of more concern and significant for organisation than ever. In
case of the airlines industry, from fuel efficiency to range and convenience, technology is
important in all these regards. As a matter of time, the Airlines plans to have better and fuel
efficient planes, which everyone desires to have around. Information technology attributed
change in many issue, for instance, in terms of booking and managing operations, IT as it is
referred has a big role. In addition, the use of mobile devices has spread all over the world.
Delta Airline companies are utilizing digital technology to promote their brands and market
their services. Technology make things easier and efficient for customers to check and make
remote booking without necessarily travelling to the booking offices that making life more
good for clients.
The external factors influencing the operation of the company are such that, the
airlines industry is responsible for around 2% of the entire emissions globally. Sustainability
is a equal concern for the airlines companies like any other business. However, the airlines
companies have tried on reducing the emissions and cut down their CO2 emissions.

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Delta also takes its environmental responsibility seriously and has made
improvements across its operations both on the ground and in the air. Delta has started
several initiatives across its operations to reduce emission of carbon II oxide, acknowledging
the environment is worth care by society today. Sustainability initiatives developed good
reputation are significant in managing operations in a better way. For reward, any brands that
manages its environment have more customer loyalty and also grow a larger customer base
unlike to rivals with the environment. Investing in environmental initiatives has its own
benefits and it is why Delta’s is putting much effort.
Marketing Strategy
The 4 P`s of marketing theories are similarly applicable to Delta Airlines despite
different products, Price, place of operation and promotions. In terms of product, Delta
Airlines provides two key products, transportation and cargo services, which is the marketing
mix product strategy of the company. The company has a wide network worldwide.
Approximately, the company runs 5,400 plus flights every day without any technicality.
(Jarach 2017). Delta Airlines provides good and distinct products to satisfy different groups
of its customers. It is transforming its service to be more merchandised approached. Five
distinct travel experiences are offered which include Delta One TM, First Class, Delta
Comfort+ TM, Main Cabin and Basic Economy. The first three include premium amenities
and services such as complimentary refreshments, alcoholic beverages, extra leg room
whereas main and esteemed customers get the classic services upgraded as per their
preferences (Ferrell and Hartline 2012). Delta cargo hires cargo space on regularly scheduled
passenger aircraft to transport cargo within its localities and outside the world.
Prices charges in the airline industry are often determined by the level of competition
and since Delta Airlines is one of the most largely operated airlines in US. Flight prices also
rely on jet fuel prices. Delta, as they are known uses a fuel hedging program in minimising

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the risk of changes in fuel prices. In different ranges, Delta Airlines offers differentiated
services to accommodate all preferences. The Delta One TM, First Class, Delta Comfort+
TM are premium services and are therefore expensive. The Main and basic are affordable
classes however passengers can buy extra amenities as per their requirements (Shaw 2012, p.
30-55). Customers can also avail discounts through Delta’s frequent flyer program
Delta Airlines has a network of 312 destinations in 54 countries. The place strategy in
the marketing mix of Delta Airlines can be related with its extensive reach. The main hubs
include Amsterdam, Atlanta, Boston, Detroit, London-Heathrow, Los Angeles, Minneapolis,
St. Paul, New York-LaGuardia, New York-JFK, Paris-Charles - de Gaulle, Salt Lake City,
Seattle and Tokyo-Narita. The network is centered on a system of hub, international gateway
and key airports. With individual hub gathering traffic from neighbouring regions and
distributes to other hubs. Delta Airlines has collaborations with international as well as
regional operators to magnify its network.
Delta Airlines has a strong brand image (Coursaris, Osch, and Balogh, 2016, p. 6-
24).A good illustration was in 2007 when Delta brought a new livery to oversee its rebrand.
Delta Airlines has an extensive and common loyalty frequent flyer program called sky miles.
Customers earn the privilege by flying on Delta or its associates or by using partner
companies such as credit card, hotels, car rental. The mileage credit can also be used to
represent membership at Delta Sky Clubs. Inclusive is a website app where it markets itself.
Financial Analysis and Recommendations
Notably, Delta Airlines had 2015 as the best accounting period followed by 2016 then
2014. The company had registered income of 12.05 billion (Parise 2016). According to the
Board of management, 2015 performance was such an amazing production in all it
departments. The result at the end of financial year illustrates the willingness and hard work
the Delta team portrayed, thus considered running the best airline in the entire world. The

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management ascertained, the success of their hard work had allowed them get to the top. The
overall demand environment remains solid as they looked ahead, (Redondi et al., 2012, p. 1-
4). The breadth of their network scale allows them to focus our commercial efforts on those
areas of the business with the best opportunity such as the domestic marketplace, while
limiting their activities to any sort of threats
The company should consider investing in this market because it has proven that
international expansion is a more profitable opportunity than increasing domestic flights
(Kimes and Wirtz 2015, p. 1-68). This strategic step confirms Delta's current lead position in
international travel, and it prevents low-cost competition from Southwest (the airline
continuing to expand into and dominate domestic markets). According to Delta's plan of
reorganization filed in Delta plans to diversify their international capacity. The company
plans on having a domestic/international capacity mix of 60 to 40 despite the mix at 70 to 30.
Delta is on-track to sustain profitability in the airline industry when it can plan to improve its
scope specifically in the Asia/Pacific, Latin America, and Africa/Middle East/India regions,
Delta airline should adopt its marketing promotion it had in the beginning. Every
research gives it an organized one with one the most powerful strategy among other
companies. These recommendations considers Delta's past-the fact that this airline is the
longest-running, founded in 1924. In the 1930's and 40's, flying was a privilege, an event that
often required a patron to dress up. By then, airlines operated 100% on-time and customer
satisfaction was part and parcel of the purchased ticket. Delta Air Lines return such years and
make flying an extravagant event to be experienced again (Kaufman, 2013, p. 343-377).
Apparently, such a change must not impact on the flight charges, maybe by minimal variation
in the margin. In least complicated process the company can importantly commence in
business class, and work its way to regular coach as a short-term promotional investment
(O'Connell and Williams 2016, p. 195-220).

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