Porter’s Five Forces Analysis of Delta Air Lines
|Name||Delta Air Lines|
|Founded||1925,1928 Officially Launched|
|Headquarters||Atlanta, Georgia Aquarium|
|Revenues||US$ 50.6Billion(GAAP)/45.6 Billion (Adjusted) as of Dec 202(Unaudited),
US$ 29.9 Billion (GAAP) as of Dec 2021 (Audited)
|Profit||US$ 3.7Billion (GAAP)/3.6 Billion (Adjusted),as of Dec 202(Unaudited),
US$ 0.28 Billion as of December 2021
|Competitors||United Airlines, Southwest Airlines, American Airlines|
Delta Airlines is one of the leading airlines in USA, headquartered in Atlanta, Georgia, United States of America. Huff Daland Dusters in founded in 1925 became Delta Airlines is founded in 1928 by C.E. Woolman. Delta Airlines gave a record recovery revenue after COVID -19 impact of US$ 50.6 Billion, with a Net Profit of 3.7 Billion Profit, with net assets of US$ 72 Billion in Financial Year ending December 31, 2022.Delta ranked on 23rd by Fortune Magazine in the category of World’s Most Admired Airline and 113th ranked 500 by Fortune 500, also ranked 6h by Aviationpros in the category of Most Punctual Airlines, as of January, 2023.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis, defined by Professor Michael E. Porter in 1979,at Harvard Business School is one of the most widely used tool for taking better strategic decisions.The analysis guides to take decisions in the directions which will be less exposed to competition and will provide better profits.
Delta Air Lines Rivalry among Existing Competitor
- Delta Operations: Delta “Cirium Platinum” award winning airline for most on-time airline in North America is operating in more than 275 destinations in 50 countries.
- Delta Business Revenue Segmentation: Delta is offering passenger travel services and cargo services. Delta gave a record revenue of 50.5 Billion comprising of Passenger Revenue US$ 40.2 Billion which is 80% of the total revenue, Cargo Revenue US$ 1.0 Billion which is 2% of the total revenue and Other Revenues US$ 9.3 Billion which is 18.5% of the total revenue, as of FY Dec 2022.
- Delta Other Revenues : Delta other revenues comprising of Refinery Sales generated US$ 4.9 Billion, Loyalty Programs generated US$ 2.5 Billion, Ancillary Business US$ 0.84 and Miscellaneous US$ 0.89 Billion in the FY ending Dec 31,2022
- Delta Business Performance Analysis FY 2019 –FY 2022 : Delta gave a record recover revenue of US$ 29.89 Billion in FY 2021, while US$ 17.09 Billion in FY 2020 and US$ 47 Billion in 2019.So the revenue recovery rate in 2022 after COVID-19 impact is positive by 8% in comparison of 2019.
- DeltaBusiness Revenue Segmentation Product Wise: Delta Airline offers Ticket-Main Cabin generated US$ 20.39 Billion which is 50% of the total revenue, Ticket-Premium Products generated US$ 15.23 Billion which is 37% of the total revenue, Loyalty Travel Awards generated US$ 2.89 Billion which is 7% of the total revenue and Travel related services generated US$ 1.6 Billion, which is 3.9% of the total revenue for the FY ending December 2022.
- United Airlines: United Airlines gave a record recovery revenue ofUS$ 24.6 Billion in FY 2021 with an increase of 60.4% compared to previous year.
- American Airlines: AmericanAirlines gave a record recovery revenue of US$ 29.9 Billion with total net assets of US$ 66.5 Billionin FY 2021, while operating in 55 countries.
- Competitive Rivalry: Both United Airlines and American Airlines are giving very tough and close competition to Delta Airlines. In terms of revenues, operations, destination and pool of customers all are same which is creating a more industry saturated situation.
Delta Air Lines Threat of New Entrants
- Established Brand, Excellent Customer Satisfaction with Dynamic Approach : Harvard Business Review not only acknowledge also exemplified Delta Airlines resilient perform in handling COVID-19 impact and appreciated these 9 factors of success including purpose, direction, connection, capacity, choreography, scaling, development, action and flexibiuy. In such competitive scenario threat from existing or any new entrant is minimal.
- Brand Value (Delta Airlines, United Airlines and American Airlines) : Delta Airline possess a brand value of above US$ 7.3 billion declared by Statista as of 2022 in competition with United Airlines and American Airlines which possess a brand value of above US$ 5 Billion.
Delta Air Lines Bargaining Power of Suppliers
- Various Supplies (Supplier Diversity Pool): Delta is supplier’s industry influencer and leader continuously educating, issuing code of conduct, e-sourcing and diversifying the supplier pool mentioned by CEO Ed Bastian by selecting woman-owned business and minorities, also expressing their business growth core model.
- Established Supply Chain – Monroe Energy LLC: Delta Airlines established Monroe Energy and MIPC LLC to have control on its Supply Chain and able to purchase 185,000 barrels of oil refinery daily. Monroe is providing 80% of the Fuel’s requirement of Delta Airiness.
Delta Air Lines Bargaining Power of Buyers
- Brand Awareness Competition (Delta Airlines, United Airlines, American Airlines and Southwest Airlines): Delta Airlines is facing a tough competition from American Airlines which holds 83% of brand awareness in U.S. market, while Delta Airlines and United Airlines holds 81% brand awareness. The Southwest Airlines holds 75% brand awareness in U.S. travel market.
- Customer Satisfaction Competition (Delta Airlines, United Airlines, Southwest Airlines and American Airlines): The American Airlines competed all other Airlines by scoring 79 in a customer satisfaction survey, while Delta, Southwest and United Airlines were only able to score 77 points, as of 2022.
- Competitive Rivalry Bargain Power with Buyers: In such close competitive rivalry the buyers have the bargain power or provided a bargain power by the decisions and offers made by other suppliers.
Delta Air Lines Threat of Substitute Products or Services
- Identical Services: As the Air Line Industry is offering same service so substitution seems difficult. While due to changes happening in the life style patterns especially after COVID-19, excessive use of social media and digital mediums etc are some of the important substitutions of Air travel.Due to COVID-19 travel industry experienced a loss of 50% in global air passenger traffic in 2021, which were only above 2.2 billion passengers.
- COVID 19 & Economic Impacts: The current economic recession and Russia-Ukraine war also impacted Delta Airlines operations, Delta Airline also cancelled some contracts due to Russian invasion in Ukraine. The number of global flight dropped to 16.9 million in 2020 from 38.9 million in 2019 due to COVID-19 impact .So largely businesses are affecting which may result in drop in spending patterns by corporations and individuals.
- Forbes, Profile, Delta Airlines, Available at Forbes
- Delta Air Lines Announces December Quarter and Full Year 2022 Profit, Available at Delta
- Statista (March 17,2022) Delta Air Lines Inc’s operating revenue from FY 2008 to FY 2021 (in million U.S dollars).Available at Statista
- Delta, Imprint,Available at Delta
- Delta, (April 26,2019) Fact Sheet, History, Rural Roots: Crop Dusting To Passenger Service, Available at Delta
- Statista,(March 17,2022) Delta Air Lines Inc.’s net income or loss from FY 2008 to FY 2021 (in million U.S. dollars).Available at Statista
- Fortune 500,Delta Air Lines Available at Delta
- Delta, News Hub, Fortune 500, Available at Delta
- Delta, About Delta ,Available at Delta
- Aviationpros,(January 11,2023)Airlines, Delta Air Lines Ranks as the Most Punctual Airline in the U.S.in the OAG’s Punctuality League 2023,Available at Aviationpros
- Statista (August 25,2022)American customer satisfaction index scores for airlines in the United States from 1995 to 2022*.Available at Statista
- Delta, News Hub ,Delta’s “change power” was a key attribute in how the airline successfully navigated the COVID-19 pandemic and makes it poised for growth in the future, according to the Harvard Business Review. Available at Delta
- Statista (January 3,2023)Leading airline brands ranked by brand awareness. Available atStatista
- Statista (October 30,2022)Number of schedule passengers boarded by the global airline industry from 2004 to 2022 (in millions). Available at Statista
- Statista (October 29, 2022) Number of flights performed by the global airline industry from 2004 to 2022 (in millions).Available atStatista
- Why Monroe Energy. Available at Monroe Energy
- Supplier Diversity, Available at Supplier Diversity
- United Airlines-Statistics and Facts (Oct 29, 2022).Available at Statista
- American Airlines-Statistics and Facts (September 7, 2022).Available at Statista