Strategic Report on Delta Airlines

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Introduction

The airline of our group research is Delta Airlines which is one of the most famous international airlines in the world. And this article is going to discuss the comparison and contrast with another famous airline, Singapore Airlines. Besides, it will also evaluate how they will get today business scale through analysis their growth strategy.

Comparison and Contrast

According to the web page of Delta Newsroom, Delta Airlines was a dusting services organization, which named Huff Daland Dusters, in U.S. in 1924. One of the Delta partners, C. E. Woolman bought it in 1928 and changed it to provide the air mail services and its name Delta Air Services. Moreover, after Woolman took over the company, it started to services the passenger in 1929 which just serviced 5 passengers with only one route from Dellas, Texas to Jackson, Mississippi (Delta Newsroom). In 1945, Delta was officially changed its name to be Delta Airlines (Delta Newsroom). Its services hub had become from 1 to around 11 and flying over 119 countries with 606 destinations in nowadays. Moreover, its annual passenger is around165 million with around 5400 daily flights (Delta Newsroom). Besides, its net profit is around US$10.54 billion in 2013 (Karp 2014). Delta Airlines has become to be today business scale which was mainly depend on its growth strategy of mergers and acquisition in pass few decades (Ireland, Hoskisson & Hitt 2008).

Comparing with Singapore Airlines, it also is one of the famous Airlines in the world. According to the web page Singapore Airlines, It was found in 1947 that cooperated with Malaysia Airlines firstly. Its original name was Malaysia-Singapore Airline. However, in 1972 Singapore Airlines suspended to cooperate with Malaysia Airlines and established its hub in Singapore. When it started the business it already has around 18 destinations with 20 airports that including the international flights of Europe, the Middle East and Australia etc and around 6200 staff which already have the related industry experience (Chua n.d.). Until 2014, Singapore Airlines expand to be over 30 destinations with more than 60 airports (Singapore Airlines website). And in 2013-2014 fiscal year, Singapore Airlines got US$ 288 million net profit (Torr, 2014). That is far different from Delta Airlines when Singapore Airlines officially started its business as the business of Singapore Airlines has already tending to be mature. However the business scale of Singapore Airlines is less than Delta Airlines nowadays.

On the other hand, the first passenger service flight of Delta Airlines is the domestic flight from Texas to Mississippi. And the Singapore Airlines doesn’t have any domestic flight, it just operate international flight. Moreover, Singapore Airlines has Singapore government support. Such as the Singapore government signed a lot of agreement with other countries to support the developing of Singapore Airlines (Chua n.d.). Besides, the Singapore government owned company, Temasak Holding (Pte) Ltd, is one of the shareholders of Singapore Airlines which holds around 56.15% stake of Singapore Airlines (Singapore Airlines website). Meanwhile, Singapore Airlines is mainly utilizing an organic growth strategy to develop its business (Roll 2005). All of these are also different from Delta Airlines.

Although Delta Airlines and Singapore Airlines have a lot of difference of starting the business and its growth strategy, they also utilize the alliance strategy, Delta Airline is Sky Team and Singapore Airlines is Star Alliance, to enlarge its business network (Sky Team website and Star Alliance website). Moreover, Singapore Airlines has mergers and acquisition with 49% stake of Virgin Atlantic such as Delta Airlines, however it sold the 49% stake to Delta Airlines in 2012 (Singapore Airlines website).Besides, they also seem to face a similar macro environment. According to our research portfolio in Chapter 2, PESTEL and Porter’s Five Forces analysis that can refer to appendix 2 and 3 for simply analysis, they need to be threat by higher level of bargaining power of suppliers such as fuel and aircraft suppliers and rivalry competitive in the industry with other airlines. Moreover, they also need to face the impact of deregulation that causes the price war with other competitors.

Evaluation of growth strategy

According to the above discussion, it related that Delta Airlines is utilizing the strategy of mergers and acquisition to grow its business to become today position. And its first Mergers and Acquisition was starting from 1953, Delta bought Chicago and Southern Air lines and its first international flight in Caribbean and Caracas region had been developed. Then in the later few decades, Delta had another merger and acquisition actions. Through the merger and acquisition strategy, Delta Airlines earned a lot of equity, routes and facilities from those airlines. Therefore, the company scale had been become even bigger and its merger and acquisition time liner such as below table:

C:\Users\user\Desktop\Pic\Delta M and A Timeliner.png

Table 1

Besides, Delta Airline also use the differentiation strategy to make it different from its competitors to grow its business such as it is first to utilize radio frequency identification (RFID) Tag to check the baggage location through internet. That can help Delta Airlines to save the cost around US$100 million a year to avoid losing the baggage (Rosencrance 2014). Besides, it develops “Skymile” to the customers to earn the mile for rewarding the free travel to attract more passengers (Delta Airlines website). Moreover, it also utilizes the technology such as twitter and facebook to interact with the passenger, thus it also got an award of Top Tech-Friendly U.S. Airline in 2012 (Delta Newsroom).

Meanwhile Delta Airlines establish Delta TechOps to maintain its own fleet and to provide maintenances services to other company (Delta TechOps website). And it has reduce the threat by supplier and cut its operation cost as well. All of these strategies led Delta Airlines to reach today business scale.

And Singapore Airlines, it is mainly based on the organic growth strategy to develop its business. Singapore Airlines develop a lot of different new routes as the Singapore government signed the agreement with the government of New Zealand, Indonesia and Japan etc. before (Chua n.d.).Besides, the Singapore Airlines utilizes the differentiation strategy as well to enlarge its business scale such as it is first to provide free choice of meal and free drink in an economy class in 1970s (Singapore Airlines website). Singapore Airlines seems to be become an industry dominator to provide a lot of services to its passenger for attracting more passengers. It desires to build up a good branding of Singapore Airlines as well. Therefore, it also creates its branding through well training its staff such as providing four month training to its carbine crews that is longer than regular two months training of western airlines (Marquardt 2012). It creates a good image of its carbine crew which name Singapore girls that represent always elegant images as an ambassador of Singapore Airlines to attract the customer (Singapore Airlines website). Therefore, it also got one of the World’s Top Airlines award in 2014 (World Airlines Awards website).

On the other hand, Singapore Airlines use the modern and new fleet of aircraft (Chua n.d.). The new and modern aircraft of Singapore Airlines build a good perspective to the customer for enhancing its profits sales. Besides, the new aircraft seems to reduce the maintenance time that can also decline the maintenance cost as well. Singapore Airlines is utilizing all of these strategies to develop its business to reach today position.

Conclusion

In conclude that, a different strategy has a different result and that also affect the development of its business scale such as Delta Airlines and Singapore Airlines. Delta Airlines utilize the mergers and acquisition strategy and Singapore Airlines utilize organic growth strategy. Therefore, their business scale has significantly different from each other. Meanwhile it found that effective growth strategy should also coordinate with other kind of strategies to attract more customers for enhancing the company growth such as Delta Airlines and Singapore Airlines which also coordinate with the differentiation strategy to enlarge its profits sales. One more important thing that, choosing the different growth strategy also depends on its sources such as Singapore Airlines which has Singapore government’s financial support, in contrast with Delta Airlines, it has even enough source to be organic growth.

Appendix 1 Delta’s M & A timeline

C:\Users\user\Desktop\Pic\Delta M and A Timeliner.png

Appendix 2 PESTEL Analysis

C:\Users\user\Desktop\Pic\SCM2-PESTEL.png

Appendix 3 Porters Five Forces Analysis

C:\Users\user\Desktop\Pic\SCM2-Porter Five.png

Reference

Chua, A n.d., Singapore Airlines (SIA). Accessed on 8 Nov 2014

http://eresources.nlb.gov.sg/infopedia/articles/SIP_1705_2010-08-10.html

Delta-Newsroom. Accessed on 25 Sep 2014

http://news.delta.com/History

Delta TechOps websirte. Accessed on 8 Nov 2014

http://www.deltatechops.com/

Ireland, RD, Hoskisson, R & Hitt, M 2008, Understanding Business Strategy: Concepts and cases, Cengage Learning.

Karp, A 2014, Delta Air Lines earns $10.5 billion 2013 net profit. Accessed on 8 Nov 2014

http://atwonline.com/finance-amp-data/delta-air-lines-earns-105-billion-2013-net-profit

Marquardt, M 2012, Global Leaders for the Twenty-First Century, SUNY Press.

Roll, M 2005, Asian Brand Strategy: How Asia Builds Strong Brands, Palgrave Macmillan.

Rosencrance, L 2004, Delta to use RFID tags to tack luggage. Accessed on 8 Nov 2014

http://www.computerworld.com/article/2564693/mobile-wireless/delta-to-use-rfid-tags-to-track-luggage.html

Singapore Airlines website. Accessed on 8 Nov 2014

http://www.singaporeair.com/en_UK/about-us/sia-history/

Sky Team website. Accessed on 8 Nov 2014

https//www.skyteam.com/en/

Star Alliance website. Accessed on 8 Nov 2014

http://www.staralliance.com/en/

Torr, J 2014, Singapore Airlines annual net profit down 5%, operating profit up 13%. Accessed on 8 Nov 2014

http://atwonline.com/finance-data/singapore-airlines-annual-net-profit-down-5-operating-profit-13

World Airline Awards website. Accessed on 8 Nov 2014

http://www.worldairlineawards.com/Awards_2014/Airline2014_top20.htm

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