Delta Airlines Case Study
Q1
Ans:
Following are the reasons why Southwest Airlines earned an evitable revenue despite the bad
industry environment:
1. Southwest Airlines worked on an expansion plan when no other airline planned.
2. Southwest Airlines expanded its intrastate services within Texas first to southwest
states and California and then to the East Coast.
3. Limited itself to a low but sustainable growth of 10-15%.
4. Its operations were designed for simplicity that included all coach cabins with no
frills, absence of meals etc to reduce the fares.
5. Facilitated its employees by setting flexible work rules that made the employees work
enthusiastically and resulted in high aircraft utility.
6. Southwest set its prices low to compete with the cost of auto travel rather than other
airlines’ fares and load factors are high.
7. “The Southwest Effect”: A combination of low fares and a 1,000% increase in the
traffic to the cities that Southwest planned to target.
8. Transparency of pricing structures to the passengers.
9. Few classes of fares and few fare restrictions.
Following are the reasons why JetBlue earned an evitable revenue despite the bad industry
environment:
1. JetBlue’s goal of “Bring humanity back to the air travel” and a combination of low
fares, new technology and strong brand.
2. $130Mn of capital venture funding that allowed them to buy, instead of leasing, a
whole fleet of Airbus A320 jets.
3. Flights flew from point to point with an average flight distance of 985 miles focusing
on airports that were less travelled but were not obscure.
4. Online interaction with the customers where 60% of the seats were booked online.
5. High tech jets with coach-class seats and personal video monitors to facilitate the
passengers and providing them a good experience on-board.
6. Neeleman, the founder of JetBlue, would often fly himself in his airline plying
passengers for suggestions.
Q2
Ans:
Following recommendations should be made to Delta Airlines:
1. Start with small distance point to point flights as Southwest Airline did.
2. Use less traffic airport like JetBlue did to cut the prices.
3. Maintain good relations with employees using a mix of what Southwest and
JetBlue Airlines did i.e. onboarding employees from outside the unions and
devising flexible work rules.
4. Start taking feedbacks from the passengers and fly with them to make them trust
the Airline especially after the 9/11 events.
5. Should try to reduce CASM for each flight by using a mix of low fares and
passenger benefits.
Q3
Ans:
Same as Question above. No more suggestions from my side.
