DELTA Airlines SWOT Analysis

Delta Airlines SWOT Analysis

DELTA airlines is one of the largest airlines in the US; it is a legacy carrier, one of the oldest airlines in existence. The airline has nine hubs, operates over 5400 daily flights, and serves over 325 destinations, over 50 countries globally, and more than 180 million customers annually. This SWOT analysis looks into the brand’s internal and external market competitive position.  It looks into the strengths, weaknesses, opportunities, and threats of the brand.

Delta Airlines – at a Glance

NameDelta Airlines
Websitehttps://www.delta.com/
FoundersEd Bastian
Chief Executive Officer (C.E.O.)Collett E. Woolman
HeadquartersAtlanta, Georgia, United States
Year FoundedMarch 2, 1925
Type of companyPublic
Revenues (FY 2021)$29.9 billion
Key Products/Services Onboard experiences, Inflight entertainment, First Class, Basic Economy, Food & Beverage
Key CompetitorsQantas Airways, Deutsche Lufthansa, American Airlines Group, United Airlines, Southwest Airlines.

Strengths

Wealth of experience

Delta airlines is so far the largest and oldest airline standing. The brand has been in operation for more than ten decades; this is a huge achievement. Customers are now more careful to only settle for the best experience. Given the brand has accumulated a vast wealth of experience over the years, it is a custodian of industry pertinent insights. And while the current age is termed ‘the information age, the saying ‘experience is the best teacher has Delta airlines above others in the industry with the least experience. Delta airlines has competitive experience in employee management, customer-first philosophy, strategic alliances and acquisitions, and financial management, among others.

Enormous fleet

Delta Airlines owns the second-largest fleet of aircraft in the entire globe. The brand boasts 886 commercial aircraft from Airbus and Boeing. This is a major strength for the airline; the brand is able to serve numerous clients in numerous destinations, has flexibility in scheduling destinations, has control over customizing their aircraft, and also has a direct influence on the plane’s operational service standards as well as safety. A large fleet ensures huge leverage in building brand equity.

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Strong brand image and value

 Delta has a strong brand image and equity. It is ranked position 6 by Forbes on World’s best employers ranking for 2022; this was an improvement from position 14 in the previous year and was attributed to its people-focused culture. Delta Airlines was ranked the Top US airline of 2021 by the Wall Street Journal. The ranking considered 7 key operational and customer metrics like on-time arrivals, prevention of extreme delays, competition factor, and lowest complaints registered in government, among others. The J.D Power report also ranked the brand as the best in the US in 2022 based on passenger satisfaction metrics. The Points Guy report and World Airline Awards both ranked the airline as the best in the US. This has earned the brand increased customer recognition, customer loyalty, word-of-mouth marketing, ease of purchase, and enhanced credibility, among other network effects.

Acquisitions and partnerships

Delta Airlines has largely grown through strategic alliances and acquisitions. The brand is in alliance with SkyTeam and codeshares agreements with a huge number of airlines, including Korean Air, Czech Airlines, Virgin Australia, and Virgin Atlantic, among others.

This has been a major strength for the brand as it provides great leverage in expanding into international markets and finding international customers. If the brand were only limited to the US, then it wouldn’t have achieved such massive potential. The brand is well-versed in handling strategic alliances.

The brand has also made numerous acquisitions over its lifetime, including Northeast Airlines and Western Airlines, among others.

Strong financial performance

With such a massive fleet and market coverage, the brand is able to widen its revenue base through multiple revenue streams greatly. The brand is critically aware of its debt-equity ratio, a move that has earned the brand the ‘Investment grade label’ from financial rating agencies. This ensures that the brand is able to finance its growth projects and, at the same time, ensure seamless operations.

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Brand loyalty programs

In a bid to ‘lock-in’ customers and bolster brand loyalty, Delta airlines has launched reward packages targeted at different audiences. Their frequent flyer program is SkyMiles with the flagship sky club. Another program is the sky bonus which provides SMEs with numerous air travel benefits.

Weaknesses

Heavy dependence on the US market

Although the brand has done a huge job in expanding its operations to numerous international markets, a huge percentage of the brand’s income comes from the US market. The majority of its hubs also lie in the US. Having the majority of its operations in a singular market raises the challenge of a ‘single point of failure. In the event an adverse economic, political or social occurrence befalls the market, the brand would be at risk of sudden collapse. To avoid such situations, the brand needs to decentralize continuously.

Corporate restructuring of 2005; Bankruptcy

The English men say, ‘once bitten, twice shy.  In 2005, the brand filed for bankruptcy. The brand was in debt of more than $20 billion, and the brand’s operations were significantly fuzzy. And while in 2009, the brand overcame the state of bankruptcy, the brand lost many investors in the process, and potential investors were scared away because of the brand’s mismanagement at the time. This could have investors cautiously dealing with the brand.

Opportunities

Strategic alliances and acquisitions

Delta airlines has vast opportunities to explore with regard to strategic alliances and acquisition as a tool for growth and expansion. These alliances help the brand gain more synergies. For mergers, Delta airlines continue to gain from de-escalated operational costs, more collaboration between brands, gain in financial strength, elimination of unnecessary competition, and increased market share, among others. With every passing day, the brand stands to gain from the acquisition of undervalued brands in the market that have strategic advantages and collaboration with numerous brands that can offer competitive advantages in areas of operation or in entering new markets.

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Changing customer needs and preferences

Continuous investment in customer-first philosophy is a rich area filled with opportunities for growth. Customer wants and needs are continuously evolving with regard to comfort and necessity while aboard. Research in this area defines a brand’s equity, customer experience, competitive edge, and customer loyalty, among others. Any laxity in this regard could spell doom for any brand in the market, while investment in this regard would ensure an increased customer base and loyalty.

Technology advancements

Technological advancements have continued to offer leverage industry innovations; the creation of competitive products and services in the airline industry. It helps differentiate the brand from the competition. Technological advancement plays a critical role in the creation of air crafts that are at the center of the industry. Delta airlines would do well to invest in emerging technologies like AI, blockchain, Augmented Reality and Virtual Reality, Beacons technology, Robotics, biometrics, Wearables, big data analytics, and mobile solutions, among others.

Threats

Stiff competition

The brand faces stiff competition from leading brands like United Airlines, Southwest Airlines, and American Airlines Group, among others. There is stiff competition with regard to fares, routes, schedules (both frequency and timing), products and services, frequent flyer programs, and customer service, among others. Any gain by competitors in any of these areas means decreased market share for Delta Airlines.

Rising fuel and raw material costs

Rising fuel and raw material costs threaten the brand’s profit margins as well as the brand’s fares; these two factors are very critical in a brand’s arithmetic for survival in the market.

Other threats include terrorism, disease outbreak like in the case of the corona, and depletion of natural resources like aluminum and fossil fuels that are critical for the running of the airline industry.

Conclusion

Delta Airlines is a strong brand with a huge asset base, strong alliances, and acquisitions. The brand is highly rated in the industry, with strong customer satisfaction rates across the globe. With such strengths, the brand faces numerous opportunities like research and development into customer needs and preferences, more technological advancements, and strategic alliances.

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