Delta Air Lines (A): The Low-Cost Carrier Threat Harvard Case Solution & Analysis

Question 4

The Delta Airlines have created Delta Express in order to respond to the growing competition from the LLCs (Low Cost Carriers) particularly in Florida. If the Delta Airlines continue to respond to the Low-cost airlines in the similar way as it did in the past, then there is a greater possibility of the significant financial losses. In the past, Delta Express used to operate older Boeings as well as provide less in-freight services so; if the Delta Airlines adopted the similar approach then it will have to bear the economic losses. The continuation with the status quo will adversely impact the growth and the financial performance.

However, in the past all the decisions of the low cost subsidiary related to the operations of the Delta Express were centrally made as the part of the mainline Delta. As well, in the past the ground services were shared between the Delta Express and mainline Delta indicated another mistake made by Delta that generated losses for the company.

In the end, it is concluded that if Delta Airline wants to continue with their past approach towards low-cost subsidiaries in order to compete with strong competitors such as JetBlue and Southwest Airline. Hence, without cost advantage and differentiation in the services then it will be very difficult for Delta Airlines to maintain its position in the Low-cost subsidiary. If it continues, then Delta Airlines will have to match the lower fare of JetBlue in order to defend the market shares that result in huge financial losses.

Question 5

There are three strategic options that are available to the cross-functional team that Mark Balloun Co-leads. These are:

  • The first strategic option includes the modifications in the Delta Express.
  • The second strategic option is to reintegrate with the primary Delta brand.
  • The third strategic option is to launch a new low cost subsidiary that requires tens of millions of dollars for the setup cost and the explanation to the shareholders as well as to the industry analysts.

Firstly, the team should analyze the cost and resources that are required in order to implement each of the available strategic options. This would help the team determine the cost and resources against the benefits.

Secondly, it is also important for Delta Airlines to gather information about the activities of the competitors in the industry by analyzing their services offerings and actions.

Thirdly, the company should determine the factors that are essential in order to overcome the existing problems. The time required for the implementation of each of the three strategic options. Fourthly, it must be aligned with the objectives of the company. Lastly, the team should analyze the needs and wants of the customer in order to meet the expectation of the customers. These all steps will help the team to select the best options to overcome the problems.

However, it is recommended that the company should need to evaluate both the internal and external factors that are important to identify the best strategic option. The board of the company should select the strategic option that is the best fit with the culture of the Delta Airlines.

Question 6

Based on the information, it is suggested to the board of Delta Airlines to make some changes in the Delta Express. In addition to this, they should try and build strong relationship with unions as well as lower the labor cost. The company should also strengthen the association between the marketing and sales department along with differentiating the services than those of the competitors.

It is important for the company to have a cost advantage as well as a differentiation strategy in order to overcome the increasing threat of the low cost competitor. The company can introduce holiday package along with the facilities to its loyal customers and can also provide the online special discount offers. Delta Airlines needs to focus continuously on the innovation and enhance the customer service to compete with the growing competition from the low cost carriers.

It is also recommended that the board of Delta Airlines needs to develop attractive promotion programs for the customers that may include promotion related to the frequent flyer and membership card long with the special facilities. However, these recommendations will allow the company to maintain its position in the airline industry and to evaluate the opportunities that will help the Delta Airlines to cope up with the increasing low cost competition in the airline industry................................

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