Delta Airlines Essay

1578 words - 7 pages

Delta Airlines and the
Trainer Refinery
American Public University
Strategic Management
05 July 2015
By Jon Kaercher

Abstract

The airline industry is a highly competitive service industry that operates on thin profit margins the airlines have to be flexible and adjust quickly to changes in customer’s preferences, increased fuel costs, and changes in the economy that can have a direct impact on profitability. The airlines look for solutions such as adding services, offering discounted ticket pricing and receiving subsides from the government to ensure they remain solvent This requires each airline constantly monitor its business strategy to ensure that it exploits every ...view middle of the document...

The airlines employ a series of techniques such as seat configurations which offer economy, business class and first class to reach the right balance to meet their customer’s needs. They occasionally overbook based on careful analysis to ensure that they maximize their ability to profit from their flight operation. They also use creative pricing and scheduling techniques based on the economy and the needs and wants of their customers. All of these strategies along with creative marketing, expansion into international markets, the acquisition of new fuel efficient aircraft, and the response of the general public over concerns of excessive noise and engine emissions are all considerations that affect the economic stability of the airline industry. The refining industries success is based mainly on a recurring business cycle. The price of oil is the first key factor in the success of a refinery, this price is determined by the type of oil light or heavy, sweet or sour and the products that can be produced form the oil and the difficulty in their production. The next consideration is the age and capability of the refinery its production output and any required upgrades that affect the cost of operations, additional cost considerations include the transportation of the initial crude and the delivery of the end product, along with the demand for each product have a direct effect on the profitability of the refinery.
2) How is Delta different from other airlines?
Delta airlines has been able to remain one of the top airlines because they” believe that they can create a flying experience like no other”. (Baumoll, J.) They are a legacy airline they have a long history and over the many years they have created an airline that sets the standard for others to follow. A lot of their success is due to the company’s strengths such as employee loyal when the company had financial problems the employees agreed to a pay cut to help the airline stay afloat. The use of technology that meets the needs of its customers such as audio and video access on all of their airplanes and the use of kiosks as a way to keep the customer informed. Delta’s main hub is located in Atlanta which is the most traveled airport in the world and they also serve over 300 countries allowing them to service more passengers. The final key to Delta’s leading position in the airline industry is luxury and amenities. Delta has made improvement to all its airplanes that make it more comfortable for its passengers, such as larger seats and more legroom. Delta does not distinguish itself dramatically from its competitors and it realizes that it must provide a premium service at a competitive price. They have to be innovators in the travel industry by setting the standard of excellent that is attainable and sustainable.
3) How would owning the Trainor Refinery help Delta manage its fuel cost in the future? Is this offset by operation cost?
Delta airlines like most of the airline...

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