Sherri Bell, Ashley Bellavia, Tiffany Feeney, & Danielle Penn Industry Analysis
Fuel Weather Mergers Competitors Customer Service
Industry Trends Fuel Weather Mergers Competitors Customer Service
Industry Trends Fuel Weather Mergers Competitors Customer Service Boeing 717s vs. Boeing 737s +20 seats
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Factors That Affect a Commercial Airline Flight'...
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>EU 2012 plan to a cap-and-trade system for green...
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Deltas Innovations Fuel Efficiency </li></ul><ul...
Recommendations Fuel Weather Mergers Competitors Customer Service <ul><li>Retire older, less fuel efficient planes </li></...
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Global warming leading to increased severe weath...
Industry Trends Fuel Weather Mergers Competitors Customer Service U.S. Department of Transportation’s Air Travel Consumer ...
Recommendations Fuel Weather Mergers Competitors Customer Service <ul><li>Larger planes, less fuel </li></ul><ul><li>Effic...
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>‘ Tis the Season for Mergers </li></ul><ul><ul><...
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>‘ Tis the Season for Mergers </li></ul><ul><ul><...
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Merger Challenges </li></ul><ul><ul><li>Business...
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Government  </li></ul><ul><ul><li>Mergers face t...
Recommendations Fuel Weather Mergers Competitors Customer Service <ul><li>Identify strengths and weaknesses in logistical ...
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>International </li></ul><ul><ul><li>Weakened dol...
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Domestic </li></ul><ul><ul><li>Parallel circumst...
Industry Trends Fuel Weather Mergers Competitors Customer Service Alternatives
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Efficiency </li></ul><ul><ul><li>Boeing 737 = $1...
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Trade-offs </li></ul><ul><ul><li>Booking time & ...
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Responses </li></ul><ul><ul><li>Infrastructure, ...
Recommendations Fuel Weather Mergers Competitors Customer Service <ul><li>Partnerships with alternatives </li></ul><ul><li...
Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><ul><li>Frequent Flyer Miles - </li></ul></ul><ul><u...
Wrapping It Up Fuel Weather Mergers Competitors Customer Service <ul><li>Delta, like other airlines, has been affected dra...
Sherri Bell, Ashley Bellavia, Tiffany Feeney, & Danielle Penn Thank you
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Delta

  1. 1. Sherri Bell, Ashley Bellavia, Tiffany Feeney, & Danielle Penn Industry Analysis
  2. 2. Fuel Weather Mergers Competitors Customer Service
  3. 3. Industry Trends Fuel Weather Mergers Competitors Customer Service
  4. 4. Industry Trends Fuel Weather Mergers Competitors Customer Service Boeing 717s vs. Boeing 737s +20 seats
  5. 5. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Factors That Affect a Commercial Airline Flight's Fuel Efficiency </li></ul><ul><li>Aircraft model, series, and age </li></ul><ul><li>Engine models and usage </li></ul><ul><li>Maintenance history </li></ul><ul><li>Passenger loads, baggage and cargo loads </li></ul><ul><li>Routing, altitude, stops en route </li></ul><ul><li>Departure, approach patterns, congestion (ground & air) </li></ul><ul><li>Weather, temperature (ground & air) and winds aloft </li></ul>
  6. 6. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>EU 2012 plan to a cap-and-trade system for greenhouse gas emissions </li></ul><ul><li>&quot;Open Skies&quot; agreement - $7bn cost reductions, increase travel 24% </li></ul><ul><li>Virgin exploring renewable energy technologies </li></ul><ul><li>Jet fuel prices soared 6% this year </li></ul><ul><li>Responsible for 3.5% climate change, 4% by 2050 </li></ul><ul><li>Air travel future growth increase 5% by 2015 </li></ul>
  7. 7. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Deltas Innovations Fuel Efficiency </li></ul><ul><ul><li>Added winglets improve aerodynamics, </li></ul></ul><ul><ul><li>3.5% improvement fuel, </li></ul></ul><ul><ul><li>5% improvement in range </li></ul></ul><ul><ul><li>Single-engine taxi, reduced aircraft weights, improved flight </li></ul></ul><ul><ul><li>routings, saved 25 million gallons </li></ul></ul><ul><ul><li>Increased reliance on contract carriers & smaller jets (50-70 seats) </li></ul></ul><ul><ul><li>Use flight control software to sequence arrivals </li></ul></ul>
  8. 8. Recommendations Fuel Weather Mergers Competitors Customer Service <ul><li>Retire older, less fuel efficient planes </li></ul><ul><li>Optimize routes, speed, flight path, lowering altitude, and bottlenecks </li></ul><ul><li>Tech innovation reduce fuel and CO2 20-30% </li></ul><ul><li>Multimedia services </li></ul><ul><li>” Hedging&quot; contracts, Delta $90/barrel </li></ul><ul><li>Alaska Airlines lighter cart $500,000 </li></ul><ul><li>Eco-Power engine cleaning system- saves 1 million </li></ul>
  9. 9. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Global warming leading to increased severe weather </li></ul><ul><li>The number of category 4 & 5 hurricanes </li></ul><ul><li>- almost doubled in last 30 years </li></ul><ul><li>1/4 domestic flights delayed arrival in 2007 </li></ul>
  10. 10. Industry Trends Fuel Weather Mergers Competitors Customer Service U.S. Department of Transportation’s Air Travel Consumer Report
  11. 11. Recommendations Fuel Weather Mergers Competitors Customer Service <ul><li>Larger planes, less fuel </li></ul><ul><li>Efficient Routes </li></ul>
  12. 12. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>‘ Tis the Season for Mergers </li></ul><ul><ul><li>American / Delta </li></ul></ul><ul><ul><li>Not likely; significant overlaps in Southeast </li></ul></ul><ul><ul><li>American / Continental </li></ul></ul><ul><ul><li>Problematic due to redundant hub locations </li></ul></ul><ul><ul><li>American / Northwest </li></ul></ul><ul><ul><li>Has the money to thwart Delta offer </li></ul></ul><ul><ul><li>Americans best option to merge </li></ul></ul><ul><ul><li>American / US Airways </li></ul></ul><ul><ul><li>Unlikely paring – different business model </li></ul></ul>
  13. 13. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>‘ Tis the Season for Mergers </li></ul><ul><ul><li>Delta / Northwest </li></ul></ul><ul><ul><ul><li>Global scale – gateways to Asia, Latin America, Europe </li></ul></ul></ul><ul><ul><ul><li>through acquisition of hubs </li></ul></ul></ul><ul><ul><li>Delta / United </li></ul></ul><ul><ul><ul><li>High yield investment following cost cutting and restructuring </li></ul></ul></ul><ul><ul><ul><li>= a tactical fake </li></ul></ul></ul><ul><ul><li>United / Continental </li></ul></ul><ul><ul><ul><li>They would practically have a hub in every major city </li></ul></ul></ul><ul><ul><ul><li>around the perimeter of the US </li></ul></ul></ul><ul><ul><ul><li>Would be an very effective competitor </li></ul></ul></ul>
  14. 14. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Merger Challenges </li></ul><ul><ul><li>Business Model </li></ul></ul><ul><ul><li>Often do not change the fundamental business model </li></ul></ul><ul><ul><li>Employment </li></ul></ul><ul><ul><li> Two work forces organized on the basis of seniority </li></ul></ul><ul><ul><li>Technology </li></ul></ul><ul><ul><li>Reservations, baggage handling and functions, logistics and </li></ul></ul><ul><ul><li>systems integration, stitch together web of domestic and </li></ul></ul><ul><ul><li>international flights </li></ul></ul><ul><ul><li>Customer Service </li></ul></ul><ul><ul><li>Eliminates airline choice; lack of competition, increase prices, </li></ul></ul><ul><ul><li>flight delays, lost baggage, lack of amenities </li></ul></ul>
  15. 15. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Government </li></ul><ul><ul><li>Mergers face tough antitrust review </li></ul></ul><ul><ul><li>Main concern for market share </li></ul></ul><ul><ul><li>Lawmakers worrying about the impact on airline service </li></ul></ul><ul><ul><li>to their districts, jobs, and ticket prices </li></ul></ul>
  16. 16. Recommendations Fuel Weather Mergers Competitors Customer Service <ul><li>Identify strengths and weaknesses in logistical operations as soon </li></ul><ul><li>as possible </li></ul><ul><li>- integrate systems seamlessly </li></ul><ul><li>Tackle labor union issues </li></ul><ul><li>- create a fair and equitable integration of &quot;seniority lists&quot; </li></ul><ul><li>Customer Service </li></ul><ul><li>- poor logistical and unresolved labor issues </li></ul>
  17. 17. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>International </li></ul><ul><ul><li>Weakened dollar </li></ul></ul><ul><ul><li> 1 = 1.44950 Euros </li></ul></ul><ul><ul><li> $ 5000 = 7247.50 Euros </li></ul></ul><ul><ul><li>- $ 3000 …….. airfare </li></ul></ul><ul><ul><li>= $ 2000 = 2899 Euros …….spending money </li></ul></ul>
  18. 18. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Domestic </li></ul><ul><ul><li>Parallel circumstances among airlines </li></ul></ul><ul><ul><li>Cost of fuel driving plane ticket prices up </li></ul></ul><ul><ul><li>Supply vs. Demand of air travel </li></ul></ul><ul><ul><li>Business traveler bouy </li></ul></ul><ul><ul><ul><li>22% vs. Leisure traveler 4% </li></ul></ul></ul><ul><ul><ul><li>Account for 18% of domestic travel - 32% air </li></ul></ul></ul>
  19. 19. Industry Trends Fuel Weather Mergers Competitors Customer Service Alternatives
  20. 20. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Efficiency </li></ul><ul><ul><li>Boeing 737 = $105/min on the ground at $2/gallon </li></ul></ul><ul><ul><li>In 1955 Amtrak passenger miles was 28.7 million </li></ul></ul><ul><ul><li>In 2000, it was 6 million </li></ul></ul><ul><ul><li>Passenger Miles/gallon </li></ul></ul><ul><ul><ul><li>Train 83 - renewable electricity </li></ul></ul></ul><ul><ul><ul><li>Air 38 </li></ul></ul></ul><ul><ul><ul><li>Auto 20-120 </li></ul></ul></ul>
  21. 21. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Trade-offs </li></ul><ul><ul><li>Booking time & price </li></ul></ul><ul><ul><li>Travel time & accessibility to & from departure station </li></ul></ul><ul><ul><li>Ease of boarding </li></ul></ul><ul><ul><li>Arrival mandates </li></ul></ul><ul><ul><li>Delays </li></ul></ul><ul><ul><li>Phone & internet </li></ul></ul><ul><ul><li>Food </li></ul></ul><ul><ul><li>Smokers </li></ul></ul><ul><ul><li>Benefits of more space </li></ul></ul><ul><ul><li>Efficiency </li></ul></ul>
  22. 22. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><li>Responses </li></ul><ul><ul><li>Infrastructure, maintenance, added trains </li></ul></ul><ul><ul><li>High-speed rail & renewable energy </li></ul></ul><ul><ul><li>Lobbying for federal cap match for investment </li></ul></ul><ul><ul><li>Increasing comfort </li></ul></ul><ul><ul><li>Partnering - Motorcoach </li></ul></ul><ul><ul><li>Minimizing emissions </li></ul></ul>
  23. 23. Recommendations Fuel Weather Mergers Competitors Customer Service <ul><li>Partnerships with alternatives </li></ul><ul><li>Opportunities for transfer/substitution tickets </li></ul><ul><li>Utilize strengths to gain competitive advantage against </li></ul><ul><li>other airlines </li></ul><ul><li>Beware of Continental/United potential </li></ul><ul><li>Consider entry into rail service market </li></ul><ul><li>Increase discounts (low-commitment, every trip) </li></ul>
  24. 24. Industry Trends Fuel Weather Mergers Competitors Customer Service <ul><ul><li>Frequent Flyer Miles - </li></ul></ul><ul><ul><li>“ I’m not loyal…I’m just a hostage.” James T. Kane </li></ul></ul><ul><ul><li>U.S. Department of Transportation’s Air Travel </li></ul></ul><ul><ul><li>Consumer Report </li></ul></ul><ul><ul><li>Delta ranked the second highest in customer satisfaction among </li></ul></ul><ul><ul><li>traditional network carriers in North America in the J.D. Power and </li></ul></ul><ul><ul><li>Associates 2007 Airline Satisfaction Index Study </li></ul></ul>
  25. 25. Wrapping It Up Fuel Weather Mergers Competitors Customer Service <ul><li>Delta, like other airlines, has been affected drastically by changes </li></ul><ul><li>in global economic, environmental, and social conditions. </li></ul><ul><li>As: </li></ul><ul><ul><li>Fuel prices continue to soar </li></ul></ul><ul><ul><li>Varying climate conditions affect reliability </li></ul></ul><ul><ul><li>Competitor strengths and weaknesses shift </li></ul></ul><ul><ul><li>Mergers present strategic advantages </li></ul></ul><ul><ul><li>Customers demand quality and traveling lifestyle changes </li></ul></ul><ul><ul><li>Government regulations structure traveling business practices </li></ul></ul><ul><li>Delta must move forward with more than just survival in mind. </li></ul><ul><li>They must conduct business as if every decision is the leadership </li></ul><ul><li>model framework for the entire airline industry . </li></ul>
  26. 26. Sherri Bell, Ashley Bellavia, Tiffany Feeney, & Danielle Penn Thank you

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