Question

Delta CEO Bastian wondered how he should respond to increased global competition, including
the threat posed by rapidly expanding Persian Gulf carriers and the European ultra-low cost competi-tors, all of which are making inroads into Delta’s profit sanctuary on international routes. Meanwhile, the domestic U.S. airline industry is getting more consolidated, and thus making the few remaining competitors more potent. In addition, the U.S. also has its share of ultra-low cost competitors such as Spirit Airlines and Allegiant Air. Will they be expanding and making inroads to Delta’s routes? At the same time, customer service has become much more important given the recent high-profile inci-dents. Customers and regulators are becoming increasing vocal in demanding better customer service.
He could also see changing demographic trends would drive changes, and Delta’s strategy needed
to adapt to meet the needs of new consumer groups. Importantly, looming demographic shifts repre-sented an opportunity to offer new products and services.
Sipping his Diet Coke, and looking at the A-380 flight by Korean Air taking off, Ed Bastian won-dered, what does Delta need to address all these threats, and what would Delta need to do to create a competitive advantage? He needed to outline proposals to present to the next Board of Directors meet-ing concerning new products and services Delta should offer. How could Delta be better positioned to meet emerging challenges and opportunities, both domestically and globally? Ed Bastian started to type on his laptop...

Delta CEO Bastian wondered how he should respond to increased global competition, including
the threat posed by rapidly expanding Persian Gulf carriers and the European ultra-low cost competi-tors, all of which are making inroads into Delta’s profit sanctuary on international routes. Meanwhile, the domestic U.S. airline industry is getting more consolidated, and thus making the few remaining competitors more potent. In addition, the U.S. also has its share of ultra-low cost competitors such as Spirit Airlines and Allegiant Air. Will they be expanding and making inroads to Delta’s routes? At the same time, customer service has become much more important given the recent high-profile inci-dents. Customers and regulators are becoming increasing vocal in demanding better customer service.
He could also see changing demographic trends would drive changes, and Delta’s strategy needed
to adapt to meet the needs of new consumer groups. Importantly, looming demographic shifts repre-sented an opportunity to offer new products and services.
Sipping his Diet Coke, and looking at the A-380 flight by Korean Air taking off, Ed Bastian won-dered, what does Delta need to address all these threats, and what would Delta need to do to create a competitive advantage? He needed to outline proposals to present to the next Board of Directors meet-ing concerning new products and services Delta should offer. How could Delta be better positioned to meet emerging challenges and opportunities, both domestically and globally? Ed Bastian started to type on his laptop...

As infored person about the difficulties Delta is facing in the marlet, what would be your recomendation to the CEO of delta, to improve, delta’s maket share, profitability and its competative advantage? ( only basd on information given on first post)

Answer 1

Delta has 2 markets: Domestic and International

In both markets it faces competitive challenges on 2 fronts:

- Big strong airlines - namely Persian Gulf airlines in international sector and consolidated big airlines in domestic sector.

- Budget airlines - on both sectors

So 2 product line with 2 sets of strategies need to be evolved by Delta:

1) Budget Product - To deal with Budget airlines

- Delta must granularize its existing products and services like seat location, food menu, baggage allowance, in-flight entertainment and internet service, flight delay and cancellation insurance, on-ground help, lounge access, loyalty program etc. These granular modules may be priced and offered optionally to customers on "pay as you use" basis . Fulfillment should be fully digitally enabled. The large existing bouquet of services and partner will give Delta a huge advantage over its competitors if it can monetized well.

- Efficient milking of assets is key to keeping costs low - so Delta will need to ensure streamlining of its ground operations, fuel sourcing as well as aircraft seat utilization. If must choose its routes such that capacity utilization is maximised.

- Punctuality is key because the budget traveller's core need is quick and timely transportation. So should be single most important performance measure Delta will need to adopt.

2) Full - Service Product - to compete with consolidated domestic and international persian gulf players

- Delta must come up with a differentiated service for customers. It can tie-up with leading digital service providers like netflix and amazon to exclusively offer their membership services in-flight as well.

- Persian Gulf airlines have a distinct advantage of cheaper fuel. So delta must work out a competitive fuel-sourcing arrangement.

- Delta airlines would do well to streamline its routes with its competitor airline partners to create minimal overlap and a win-win situation for both.

- Last but not the least zero-delay at click of button customer service be it for flight booking/change/cancellation or any other service should be priority-packed for Delta frequent fliers. Delta should evolve its frequent flier program to encompass social community collaboration in line with the modern times and technology.