Keep Climbing:

Culture at Delta Air Lines

Andrew Litt ✈ May 2019

 Table of Contents

Introduction .............................................................................................1
About Delta ...................................................................................................................................1
Delta’s Culture: The “Delta Difference”......................................................................................2
How We Chose Delta ....................................................................................................................4
Project Aim & Methodology ......................................................................5
Applicable Organizational Design Theory to Delta Air Lines’ Culture ...6
Schein’s Model..............................................................................................................................6
Congruence Model ........................................................................................................................7
How Leaders Create Culture.........................................................................................................8
Ascertaining Delta’s Critical Tasks .........................................................8
Subcontractors do not Reflect Delta’s Brand or Culture.......................9
Issue ..............................................................................................................................................9
Diagnosis .....................................................................................................................................10
Evaluation ....................................................................................................................................11
Action Plan ..................................................................................................................................12
Gate Agents are the Weakest Customer Experience Touchpoint .............13
Issue .............................................................................................................................................13
Diagnosis .....................................................................................................................................13
Evaluation ....................................................................................................................................14
Action Plan ..................................................................................................................................14
Integration of Acquired Northwest Employees Creates Ongoing
Cultural Tensions ....................................................................................15
Issue .............................................................................................................................................15
Diagnosis .....................................................................................................................................15
Evaluation ....................................................................................................................................16
Action Plan ..................................................................................................................................16
Premium Pricing Potentially Deters Customers ......................................17
Issue .............................................................................................................................................17
Diagnosis .....................................................................................................................................18
Evaluation ....................................................................................................................................18
Action Plan..................................................................................................................................20
Limitations ...............................................................................................21
Conclusion ...............................................................................................21
Works Cited .............................................................................................22
Printed Sources ...........................................................................................................................22
Non-Print Sources .......................................................................................................................24
Appendix .....................................................................................................i
Exhibit I: Delta Air Lines’ 2007 “Flight Plan”...............................................................................i
Exhibit II: Delta Air Lines’ 2017 “Flight Plan” .............................................................................ii
Exhibit III: HVC Survey Data on SkyMiles Program Satisfaction ................................................iii
Exhibit IV: HVC Survey Data on Strength of Loyalty to Delta Air Lines .....................................iii
Exhibit V: HVC Survey Data on Reasons Driving Loyalty to Delta Air Lines ..............................iv
Exhibit VI: “Word Cloud” Illustrating HVC’s Descriptions of Delta Culture .............................iv
Exhibit VII: HVC Survey Data on Satisfaction with Front-Line Employee Interactions ...............v
Exhibit VIII: HVC Survey Data on Satisfaction with Delta Passenger Experience........................v
 Introduction

About Delta
Delta Air Lines’ history dates back to 1924; it has since grown into one of the largest

global airlines, connecting more than 180 million passengers to destinations throughout the globe

each year and operating more than 15,000 daily flights. In 2018, Delta ranked among ranked

among Fortune’s top 50 Most Admired Companies and 100 Best Companies to Work For

(Fortune, 2019). Additionally, Delta was recently named Fortune’s Most Admired Airline for the

seventh time in eight years. (Modolo, 2019). Delta has also been ranked No.1 in the Business

Travel News Annual Airline survey for seven consecutive years. (Baker, 2017). Delta, along with

its Delta Connection regional partners1, provides service to 304 destinations in 52 countries across

six continents.2 Delta is headquartered in Atlanta, has major hubs in eight US metropolitan areas,

employs over 80,000 people worldwide, and operates a mainline fleet of more than 800 aircraft.

Delta Air Lines is the founding member of the SkyTeam alliance. In addition to its

SkyTeam partners, Delta has chosen several international carriers3 with whom it entered into

global joint-venture agreements with, primarily on the basis of these carriers’ strong culture and

their home-country brand recognition. These strategic joint-venture agreements are innovative in

the aviation industry insofar as they allow Delta to have a global reach while focusing its own

flying primarily in the United States. This allows Delta to take advantage of its partners’ brand

recognition abroad while providing feed to Delta’s US flights.

1 i.e., SkyWest Airlines, Republic Airlines, Compass, GoJet, and Endeavor

2 Operational statistics retrieved from Delta Air Lines at https://news.delta.com/corporate-stats-and-facts
3e.g., TransAtlantic JVs with Air France-KLM, Virgin Atlantic and Atitalia; North American JVs with WestJet and AeroMexico;
and TransPacific JVs with Virgin Australia and Korean Airlines.

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Delta’s Culture: The “Delta Difference”
Delta Air Lines’ culture is distinctive. Delta stands out from peers4 through its industry-

leading compensation scheme, its pervasive culture and strongly-held values, its leaders’ efforts

to exemplify such principles in recent years. The effects of Delta’s culture are evident, at least to

some extent, by Delta’s excellent operational statistics in nearly every category.

The most notable aspect of Delta’s compensation scheme is its profit-sharing program.

Established in 2005, the program arose when Delta was still climbing out of bankruptcy and

wanted to align employee interests with the financial success of the company. Although Delta is

not the only airline to share profits with employees, the Delta profit-sharing program is by far the

most generous in the aviation industry. (Reed, 2018). At Delta, Valentine’s Day is dubbed

“Profit-Sharing Day”; in 2019, Delta distributed more than $1.3 billion in profit-sharing bonuses

to its front-line employees, marking the fifth consecutive year of a profit-sharing payout.

Delta’s profit-sharing program likely contributes to an aversion to outside cultural

influences, such as unions. While Delta’s pilots and flight dispatchers are unionized, Delta is the

only major U.S. carrier without unionized flight attendants, baggage handlers, reservation agents,

and other traditionally-unionized workgroups.5 Following Delta’s merger with heavily-unionized

Northwest Airlines in 2008, most of the combined workgroups voted overwhelmingly against

unionization, as part of an employee-led “Keep Delta Our Delta” campaign. (Holmes, 2009;

Roberts, 2017). This election outcome is largely the result of juxtaposing Northwest’s heavily-

entrenched union culture was juxtaposed with Delta’s higher wages, superior benefits, profit-

sharing arrangements, and family-like culture. (McDonald, 2018).

Delta has industry-leading financial and operational performance. Financially, Delta’s

profits and revenues soar above its competitors. Operationally, Delta has led the industry with

4 In particular, it’s domestic peers: United Airlines, American, Southwest, Alaska, Hawaiian, Spirit, and Frontier
5 Delta appeared in the news around May 10, 2019 due to an anti-union poster allegedly distributed by management. Given the
timelines of this report and the difficulty in timely interviewing employees and others about it, the poster incident is not discussed.

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respect to cancelled flights, flight delays, mishandled baggage reports, denied boardings, and

customer complaints.6

Delta’s leadership attributes these results to the company’s culture, which encourages

employees to approach customer and business decisions using empathy, compassion, and

common sense. (Delta, 2019). An excellent example of Delta’s culture — in particularly its

leaders’ and employees’ willingness to approach customer service with compassion — is a recent

incident in which a passenger’s wedding ring fell off in the lavatory and dropped into aircraft’s

sewage tank. The passenger notified customer service employees at the airport, who in turn asked

TechOps employees what could be done. With support from leadership, TechOps substituted the

plane out of service, dug through the contents of the aircraft’s sewage tank, and retrieved the

ring. The family was then invited to a small ring-reunion event that was attended by the TechOps

employees and airports leaders.7 Events like this in which Delta’s culture promotes going above-

and-beyond exemplify what is known internally as the “Delta Difference.”

Perhaps one of the greatest examples of Delta’s culture lies in the company’s decision to

sever ties with the National Rifle Association (“NRA”). In 2018, media outlets revealed that

Delta had offered a modest discount to NRA members when flying to their annual convention.8

NRA affiliation is very politically-charged, including within the Georgia State Legislature which

historically granted Delta a multi-million dollar jet fuel tax exemption. Delta sought to distance

itself from the NRA by revoking the discount offered to its members; the Georgia State

6 Data retrieved from annual US Department of Transportation airline performance statistics:

https://www.transportation.gov/sites/dot.gov/files/docs/resources/individuals/aviation-consumer-protection/331236/
january-2019-atcr.pdf
7A video about the lost ring, TechOps efforts to recover it, and the ring-reunion can be found here:
https://www.facebook.com/watch/?v=1700408923311616
8e.g., https://www.usatoday.com/story/news/2018/03/02/delta-reviews-all-fare-discount-programs-after-nra-dispute-costs-
georgia-tax-break/388587002/

Note that no more than 13 NRA members actually used this discount in 2018.

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Legislature responded by threatening to revoke its jet fuel tax exemption, a move that would cost

Delta over $50 million per year. (Fausset, 2018).

Delta’s leadership refused to reverse its decision to sever ties with the NRA and further

sought to distance itself from any politically-contentious organizations. In explaining the

company’s reasoning, Delta’s CEO Ed Bastian stated that Delta eliminated any implied affiliation

with the NRA to eliminate Delta from the debate. In further response to shareholder criticism of

the decision, Bastian stated that “our values are not for sale.” (Hsu, 2018).

How We Chose Delta

Delta was chosen primarily because of its reputation as an organization with an immensely

strong culture. Additionally, a member of our group (Andrew) has extensive familiarity with the

Delta – not only by way of his prior work with Delta but also due to his extensive flying with the

airline.9 Additionally, he has access to a number of resources which the potential to provide

immensely insightful data relevant to this report. This report was approached largely from an

external perspective; most data came from non-employee frequent fliers and publicly-available

archival data. Some information, however, was sourced internally, via employee interviews and

internal strategy documents. The external focus enhances our study, primarily due to the depth of

our resources (i.e., access to hundreds of Delta customers who annually fly upwards of 75

segments per year). Additionally, the external focus is justified given the importance of public

perception in evaluating the airline industry, and the role that external impressions play in

developing meaningful observations and recommendations.

9 Andrew has flown over 200 flights on Delta within the past three years alone.

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 Project Aim & Methodology

This report seeks to examine whether — and the extent to which — Delta’s culture

contributes to its organizational success. This report intentionally does not study subcultures, as

doing so would exceed the parameters of the project (i.e., length and scope) and could easily

constitute a separate report of equal depth. Focusing narrowly on the extent to which culture

influences organizational success enables us to adequately address numerous issues in full,

sparing expense to other topics that are also integral to Delta’s operation.

This report is underpinned by a multifaceted methodology encompassing interviews with

various stakeholders and survey data from over 200 “high value customers.” The report draws on

interviews with one current Delta employee who has been with the company for almost 30 years

in addition to two incoming Delta interns who recently experienced the onboarding process.

Furthermore, this report relies heavily on data collected from a group of fervently loyal

Delta frequent fliers. We had access to an independent10 and self-organized Facebook group

containing more than 5,000 current or former Delta Diamond Medallion members. Delta

Diamond Medallion status is earned by spending $15,000 per year in addition to flying either

120,000 miles or 120 segments on Delta. Delta Diamond Medallion members are not average

Delta customers; as of 2015 they accounted for less than five percent of Delta’s passengers but

generated more than 26% of its annual revenue. (Krasowski, 2019). These loyal “high value

customers” (HVCs) spend extensive time flying Delta are are thus the most knowledgeable

customer group with which we could speak. We conducted eight 20-minute interviews with these

customers, in addition to eliciting 213 survey responses within 36 hours of sharing the survey. No

compensation was offered for completing the survey; all responses were offered voluntarily. At

least ten additional interviews could have been conducted, as measured by members’ proactive

10 i.e., not created by, maintained by, or monitored by Delta Air Lines

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outreach to us in an attempt to share their thoughts about Delta’s culture after the interview

window had closed. Furthermore, the fact that 213 survey responses were gathered within 36

hours without any extrinsic incentive is by itself a strong indicator that Delta’s HVCs have strong

opinions about Delta’s culture. Lastly, our data collection involved obtaining information from

public documents (e.g., “Rules of the Road”), press releases, and published material on internal

strategy (e.g., Delta’s annual “Flight Plan”).

Applicable Organizational Design Theory to Delta Air Lines’ Culture

As set forth below and in the remainder of this report, there are numerous organizational

design, behavior, and culture theories that are applicable to Delta Air Lines. The most pertinent

theories are discussed below.

Schein’s Model
Delta’s cultural artifacts manifest themselves in at least three forms with respect to

employees. First, all new hires receive a letter that welcomes them to the Delta “family.” Delta’s

culture is promulgated through “Rules of the Road,” a booklet which outlines a set of principles

and values developed in 2007 for executives but later was given to every employee.11 “Rules of the

Road” establishes the tone for Delta’s core values and serves as a guidance to its employees’

behavior. These rules are reinforced regularly through company’s communications and through

the various training programs. Lastly, Delta’s culture is reinforced via “Velvet” events, which

enable nearly 8,000 frontline employees to meet, greet, and have one-on-one conversations with

senior executives to discuss the state of the business. “Velvet” events are held twice annually at

different Delta hubs and cities throughout the United States. These elaborate events facilitate

11 https://www.delta.com/content/dam/delta-www/pdfs/policy/delta-rules-of-the-road.pdf

6
employee interaction at all levels to learn about the current state of the business and also provides

a forum for employees to ask questions and offer suggestions about the company’s future plans.

Delta’s culture is defined by its values and operational strategy which are established and

in “Rules of the Road” and “Flight Plan”. The core values which define Delta’s culture are

honesty, integrity, respect, perseverance, and servant leadership. Delta’s culture is based on

employee inclusion in decision making, who along with leadership strive hard to bring continuous

improvement in Delta’s business. Delta culture encourages open communication between

leadership and employees, thereby empowering employees and instilling within them a sense of

ownership of Delta’s success.

The numerous underlying assumptions that define Delta’s culture include striving for

constant improvement at all levels, connecting people, and leading the US aviation sector. Delta’s

desire to set the bar within the US aviation market is particularly evident at its headquarters in

Atlanta.

Congruence Model
Delta’s HVCs voiced several common themes during our interviews and data collection.

The report utilizes congruence-based problem-solving approach to ascertain the root causes of

these issues. The Congruence Model focuses on the alignment (congruence) between strategy

and four organizational building blocks which are critical tasks, formal organizational

arrangements, people, and culture – each of which are key drivers for a company’s success

(Tushman, 2002). Any inconsistencies among these elements may be driving performance

shortfalls. This report focuses primarily on Delta’s critical tasks that are necessary to achieve

company goals, performance gaps as described by Delta’s HVCs, and analyzes these causes of

these issues, and offers actions plans for each issue diagnosed. Where appropriate, this report also

7
explores the role that people and culture play in fueling Delta’s success. For brevity, analysis of

organizational structure is not discussed.12

How Leaders Create Culture

“Rules of the Road” draws heavily from Delta founder C.E. Woolman’s philosophies on

customer service, humility, and respect for the competition. This is consistent with Schein's

(2010) notion that many cultural values are embedded through previous leadership. Delta’s

leadership is as enthusiastically involved in maintaining the culture of customer care as are its

front-line employees. Delta’s CEO Ed Bastian exemplifies this vision by spending several days a

week in the air to visit the company’s front-line workers both in the air and on the ground at

various airports. Furthermore, Delta’s executive leadership has a strong presence on social

media, in videos, and elsewhere on the internet in order to improve the sense of community and

connectivity at a company where more than a third of the workforce is always on the go.

Ascertaining Delta’s Critical Tasks

To credibly assess the extent to which culture influences Delta’s ability to achieve it’s

critical tasks, it is first necessary to ascertain what, exactly, Delta’s critical tasks are. While there

are several ways to determine an organization's critical tasks, we relied on Delta’s “Flight Plan”,

an internal document disseminated annually to all employees that sets forth the company’s goals

for that year.

“Flight Plan" began in 2007 as a detailed strategy from emerging from bankruptcy and

returning to profitability. 2007’s "Flight Plan” set forth the following goals: Secure Our Future,

Build a Profitable Network, Establish Delta as the Airline of Choice, and Fuel the Winning Spirit

12Delta’s organizational structure was analyzed for a previous assignment in this course. Additionally, analysis of structure would
considerably expand the scope of this project beyond reasonable limits.

8
of Delta.13 See Exhibit I (Delta’s 2007 “Flight Plan”). Since then, it has served as an evolving

articulation of Delta’s short- and long-term business goals.

We ascertained contemporary critical tasks from Delta’s 2017 “Flight Plan” (see Exhibit

II). Our data collection identified four primary issues which threaten the accomplishment of these

critical tasks.

Critical Tasks Issues

articulated in 2017 Flight Plan emanating from our research

Subcontractors do not Reflect Delta’s

Customer Service ‣ Build a Better Airline
Brand or Culture

Operations ‣ Be Safe, Reliable, and Gate Agents are the Weakest Customer
Customer-Focused Experience Touchpoint

Integration of Acquired Northwest

People ‣ Win Together, Work Together Employees Creates Ongoing Cultural
Tensions

Finance ‣ Deliver Industry-Leading Premium Pricing Potentially Deters

Financial Results Customers

Subcontractors do not Reflect Delta’s Brand or Culture

Issue
Competition is fierce in the US aviation market. In an effort to differentiate itself, Delta

prioritizes quality customer experience. As such, customers have particular expectations: in the

digital age, they expect to be “connected” at all times, travel with ease and efficiency from the

moment their trip begins, and have an enjoyable experience along the way, through food and

drink, comfort, and access to entertainment. Delta’s capacity to do each of these things well while

prioritizing safety and customer service is limited (because, as a high-reliability organization,

13Obtained from internal report, available here:

https://cdn.ymaws.com/www.recognition.org/resource/resmgr/imported/DeltaBestPractices.pdf

9
Delta’s first priority is safely operating jet planes), and therefore numerous customer experience

functions are contracted out to external vendors. The most noted contracted services are

provision of (1) in-flight WiFi, (2) in-flight meals/catering, and (3) wheelchair access between

jetbridges and airport terminals (either from check-in counters, to connecting gates, or to baggage

claim) for customers with mobility impairments.

When contracted services such as these are poorly, they directly impede Delta’s ability to

excel in Customer Service and achieve its critical task of “building a better airline.”

Diagnosis
While all technology is prone to error, failures are particularly prone to occur when metal

tubes in excess of 200 tons fly through the air at upwards of 500mph while simultaneously trying

to maintain connections with airborne satellites and several hundred ground towers. That in-flight

WiFi exists at all is a feat of human ingenuity, yet passengers have become increasingly

accustomed to expecting it on all flights. A current employee recalled a time when she flew 15

hours from Sydney to Atlanta in business class without functioning WiFi. (Delta Employee #1,

interview, May 12, 2019). While the employee understood that WiFi is not provided directly by

Delta, customers are often unaware. Delta, rather than its contractor (GoGo) is typically blamed

whenever inflight WiFi is inoperative.

Similarly, if a disabled passenger misses a flight because a wheelchair was not timely

available or efficiently able to assist them, Delta is likely to be blamed for the travel disruption

despite the fact that the service failure was caused by Delta’s wheelchair contractor. (HVC #1,

interview, May 12, 2019).

In the same vein, if Delta’s catering partners inadequately provision a flight with the

correct number of in-flight meals, the contractor’s error causes Delta’s passengers to become

hungry and disgruntled. This is especially true in the premium cabins, where a warm plated meal

10
is expected even on domestic flights. (Delta Employee #1, interview, May 12, 2019; HVC #4,

interview, May 12, 2019). Likewise, if the quality of the on-board food is poor, passengers are

likely to attribute this to Delta, rather than its culinary partners.

WiFi operability, wheelchair access, and catering provisions are merely three examples of

how consistency and reliability are negatively affected when Delta’s subcontractors fail to meet

Delta’s cultural and performance expectations. As Weick (1987) suggests, “people don’t often

know how many mistakes could have been made but didn’t, which means people at best only have

a crude sense of what produces reliability and how reliable they are” (118). Thus, a significant

part of Delta’s customer service is the degree to which customers are shielded from inefficiencies,

miscommunication, and mistakes. The incongruence that occurs when in-flight crew do such

“shielding” but subcontractors do not, leaves Delta open to criticism and lost revenue if

customers believe their needs will be better met by a different airline.

Evaluation
Our research suggests that Delta has made little (if any) strides in addressing performance

shortfalls involving catering or provision of wheelchair attendants. With respect to WiFi, Delta

has aggressively invested in new technology that will supposedly be more reliable and provide

faster connectivity. Delta aims to implement newer, faster access in the air. The improved WiFi

product, developed by a different contractor (i.e., not GoGo) has been rolled out to approximately

15% of Delta’s fleet. Delta intends to provide free high-speed WiFi on all flights to all passengers

in the next few years. Delta recently launched free messaging (via iMessage and Facebook

Messenger) service to all fliers. As of this writing, Delta is in the middle of a two-week trial of

offering free high-speed WiFi to all customers on 55 randomly-selected flights per day. (Modolo,

2019). Whether or not this service can be delivered reliably and effectively remains to be seen.

11
 Delta has, however, been incredibly successful in aligning some of its subcontractors’

image with that of Delta’s brand and culture. This is most evident in Delta’s partnerships with its

regional airline affiliates operating under the brand “Delta Connection”.

Delta Connection flights are flown using 50- or 76-seat regional jets operated by various

smaller airlines, and primarily connect small low-traffic airports (e.g., Ithaca) to Delta’s global

network. Delta has worked extensively with its Delta Connection partners to ensure that the

passenger experience onboard Delta Connection carriers mimics that of a Delta “mainline”

flight. Delta has succeeded in doing this by renovating the interiors of its regional jets to mirror

the interiors of its mainline fleet (e.g., by installing Delta-branded seats, Delta-themed bulkhead

tapestry, etc.). Furthermore, flight attendants employed by Delta Connection carriers are given

Delta print material about Delta’s culture (including “Rules of the Road”), even though they are

not directly employed by the airline. Likewise, scripted in-flight speeches (such as safety

demonstrations, initial and final descent notices, and post-landing/arrival announcements) are all

delivered using Delta language — using the same language that a passenger would hear if they

were flying on a mainline Delta jet.

Action Plan
Several tangible and achievable actions can be taken to better align subcontractors with

Delta’s cultural (and operational) values.

‣ Uniformly equip subcontractors with “Rules of the Road”; encourage subcontractors’ cultural
alignment with customer service through education and training

‣ Negotiate with existing subcontracting partners to offer incentives/rewards for exemplary

customer service that mirrors Delta’s values

‣ Encourage certain outsourced functions, such as catering, to brand their own product distinctively
from Delta’s, to ensure that customers are aware that the product/service being offered is not
being done so under the Delta brand.

‣ Assess core competencies to ascertain which subcontracted functions can be brought in-house

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Gate Agents are the Weakest Customer Experience Touchpoint

Issue
A common theme that emerged from both our interviews with and surveys of HVCs is

dissatisfaction with interactions with Gate Agents. While customer interactions with Delta staff

are generally regarded positively, Gate Agents are the weakest touchpoint in the customer

experience. (Delta HVC #s 2, 3, and 7, interview, May 12, 2019; Delta HVC Survey Data). This

directly impede’s Delta’s ability to excel in Operations and achieve its critical task of being “safe,

reliable and customer-focused.”

Diagnosis
During our interviews gate agents were brought up several times. Some quotes from our

interviewees describe their gate agents as “often terse or grumpy when I ask them if it’s possible

to seat my family together” (Delta HVC # 3) and “less consistent than the in-flight crews ... Once

a week, I run into someone who says ‘Not my problem’” (Delta HVC Survey Data).

Our research reveals that this phenomenon might be due to the fact that gate agents have

competing demands for their time and are often stressed. (Delta Employee #2, interview, May 11

2019). They are responsible for a number of technical tasks required to allow the plane to leave

the airport. They are also the first person a customer will go to with a pressing concern about

their flight. As compared to flight crews, which receive ongoing exposure to Delta values as they

travel and through annual training conferences, gate agents may have much less training on Delta

values. Also, in several small airports, these gate agents services are provided through sub

contractors. Some of the strongest customer impressions are formed based on how an airline

responds when they are in trouble, and a great deal of pressure is placed on gate agents to avoid

negative customer experiences and simultaneously ensure that the flight departs on time. In

general, it is our analysis that the gate agents are not given the support that they need to manage

13
the technical workload and provide excellent customer service simultaneously. This can leave

gate agents being frustrated and with a feeling of being stranded alone.

Evaluation
As far as we are aware, little is being done to actively support gate agents. A slightly

simpler computer interface called SNAPP was recently introduced to help speed up some of the

basic paperwork. There are presently too few integration opportunities and training for gate

agents to enable them to become fully immersed in (and demonstrative of ) Delta’s culture. This

is particularly true at “outstations” (non-hub airports serving fewer than 25 flights per day) that

get less attention from Delta’s headquarters and experience cultural events (e.g., Velvet) less

frequently.

Action Plan
Ensuring that gate agents’ interactions with passengers are reflective of Delta’s brand and

culture is essential — particularly because gate agents interact with customers during one of the

most anxiety-inducing phases of travel (e.g., waiting at the gate, queueing for boarding, fighting

for overhead bin space, etc.). There are several actions Delta can take to improve gate agents’

alignment with Delta culture:

‣ Provide annual or semi-annual recurrent training to gate agents, much like they do with in-flight
crew members, to reiterate the importance of “Rules of the Road” and provide training on
interacting with passengers when stressed.

‣ Enhance efforts can be made to instill Delta culture within gate agents (e.g., visits to Delta’s
Headquarters in Atlanta).

‣ Increase Gate Agent staffing (especially at hubs) to evenly distribute workload.

‣ Increasing efforts to share Delta culture with “outstation” employees.

‣ Create or modify policies to lessen gate agent workload by changing customer behavior by to lessen
gate agent workload by:

‣ Incentivizing seat requests to be addressed at check-in, rather than at the gate

‣ Dis-incentivizing ‘gate-checked’ bags

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 Integration of Acquired Northwest Employees Creates
Ongoing Cultural Tensions

Issue
Delta acquired Northwest Airlines in 2008. While Delta has a strong and storied culture,

Northwest’s culture was strong in different ways. Northwest’s culture differed from Delta’s

particularly in the areas of passenger service and labor relations; Northwest was never regarded

as an excellent customer service company and was plagued by labor disputes. Delta, by contrast,

was known for strong customer service. Labor disputes were almost non-existent, in large part

because most Delta work groups were not unionized.

Notably, both pre-merger Delta employees and pre-merger Northwest employees were

very proud to work for their respective companies. The merger, therefore, caused many

Northwest employees to become disgruntled — with resentment among pre-merger Northwest

employees continuing to exist to this day. Particularly problematic is the fact that employees at

former Northwest hubs still, 10 years after the merger, group themselves as “pre-merger Delta”

and “pre-merger Northwest.” These issues impede Delta’s ability to execute its People strategy

and achieve its critical task of “winning together and working together.”

Diagnosis
Delta took an nontraditional approach to its merger with Northwest Airlines, at least

relative to other airline mergers and acquisitions within the past two decades. Rather than having

a new, merged, culture emerge following Delta’s acquisition of Northwest, Delta insisted that

there was room for only one company’s culture: Delta’s CEO Ed Bastian described this approach

by noting that “[Delta] didn’t treat this as a merger of equals. Companies make the mistake of

wanting everyone to feel great. We were very clear about the Delta brand, while the Northwest

culture was contentious, with strikes and unrest.” (Roberts, 2017) A senior flight attendant with

15
nearly 30 years’ experience at Delta griped “there was a lot of employee tension when the merger

with Northwest happened.” (Delta Employee #1, interview, May 12 2019). Understandably, many

long-term Northwest employees were also disgruntled by Delta’s acquisition. Delta aggressively

tried to share its culture with Northwest -- an approach that effectively discarded Northwest’s

culture and imposed Delta’s culture on Northwest’s employees. Many Northwest employees

resented having a new culture imposed upon them — a problem which still manifests itself today.

Evaluation
By acquiring Northwest, Delta also inherited Northwest’s former hubs: specifically,

Detroit (DTW), Minneapolis-St. Paul (MSP), Memphis (MEM), and Tokyo–Narita (NRT).

Since 2010, two of these cities, MEM and NRT, have been “de-hubbed,” meaning that they no

longer serve as key connection points for Delta and have far fewer flights operating each day. De-

hubbing MEM and NRT had the effect of dispersing pre-merger Northwest employees elsewhere

in Delta’s system.

The DTW and MSP hubs, however, remain primarily staffed by pre-merger Northwest

employees. At these hubs, a cultural rift persists to exist between pre-merger Northwest and pre-

merger Delta employees. The continued resentment among pre-merger Northwest employees

ultimately impedes Delta’s ability to achieve its organizational goals and critical tasks at these

airports. While such resentment is to be expected with any large merger — especially one where

in which management imposed Delta’s culture on former Northwest employees — it is

problematic that it continues to be evident today.

Action Plan
Continued efforts to align pre-merger Northwest employees with Delta’s culture are

essential — particularly at legacy Northwest hubs where cultural schisms still exist between pre-

merger Delta employees and pre-merger Northwest employees. Since this problem is most

16
pronounced at Northwest’s former hubs, and specifically among Airport Customer Service

employees, leadership needs to make further strides to integrate former Northwest employees

into Delta’s culture.

‣ Relocate former Northwest employees to other airports or supplementing leadership with pre-
merger Delta employees to dilute the influence of Northwest culture.

‣ Ensure that any remaining Northwest branding is replaced with Delta branding at all worksites.

‣ Amend former Northwest airport-specific policies to reflect Delta’s current practices.

‣ Provide pre-merger Northwest employees with tours of Delta’s Operations Control Center in
Atlanta (an extremely fast-paced, vibrant environment that exudes Delta’s culture, commonly
referred to as the ‘heart’ of Delta). Such a visit would likely increase their sense of belonging to
Delta, and see how their work fits into broader organizational objectives.

Premium Pricing Potentially Deters Customers

Issue
Delta Air Lines’ prices have been increasing, particularly relative to those of its

competitors. In many markets, Delta has been charging a modest (5-10%) revenue premium

compared to its competitors flying identical routes. This pricing strategy is consistent with

Delta’s long-term strategy of translating operational reliability and customer service into revenue

enhancement.

This pricing strategy has, understandably, frustrated some customers. It has the potential

to deter customers who are price-sensitive. Similarly, it potentially causes Delta-loyal business

travelers using travel-management platforms (e.g., Concur) to spend time tweaking flight search

parameters (departure/arrival timing, nearby airports, etc.) to ensure that Delta flights appear in

search results and are bookable pursuant to corporate travel policies.

Customers, individual and corporate alike, dislike price increases. For Delta, the (literal)

million-dollar question is whether the airline will be able to maintain customer loyalty and

17
command higher prices for their culture-based service. Delta’s pricing strategy, therefore,

potentially hinders its ability to excel in finance and achieve its critical task of “delivering

industry-leading financial results.”

Diagnosis
We discovered that pricing complaints were two-fold: there is a visible difference in the

stated cash cost of a flight when comparing Delta with alternative carriers, but the greatest

amount of feedback we had from high-status, frequent customers was regarding the utility of the

‘SkyMiles’ accumulated as a part of their loyalty program. These customers complained that

SkyMiles are increasingly difficult to use for their desired dates and flights, that upgrades are

more difficult to obtain, and that award prices are irritatingly volatile. On the whole, reduced

usability and increased number of miles needed translate to a devaluation of rewards and a higher

cost of flying. (HVC #6, interview, May 12 2019; HVC Survey Data).

This strategy is particularly risky because the theory that airlines can exact a revenue

premium based on quality of service is largely considered to be false. Virgin America, for

instance, began operating in 2008 with the same business model, and failed to produce an annual

profit during its first seven years of operations. 2014 was the first year in which it was profitable,

yet its earnings over revenue paled in comparison to other key players in the US aviation market.

Virgin America was ultimately acquired by Alaska Airlines in 2016, which industry analysts

largely regard as a rebuff of the theory that an airline can charge a revenue premium for quality

service. Delta must learn and differentiate itself from Virgin America’s model if it intends on

pursuing this financial fare-pricing strategy further.

Evaluation
Customers naturally seek the highest value for their money, and, ceteris paribus, prefer

low-cost flights. However, these assumed customer preferences run directly contrary to Delta’s

18
critical financial task of delivering industry-leading financial results and exacting a revenue

premium relative to its competitors flying the same routes. Delta must find a way to balance their

desire to monetize the ‘Delta Difference’ while simultaneously convincing their customers to

continue flying Delta.

High value customers – particularly Delta Diamond Medallion members and passengers

with lucrative corporate contracts – are of particular importance to Delta. Although these

individuals constitute a very small minority of the Delta’s annual passengers, they generate a

disproportionate amount of Delta’s annual revenue. In a survey conducted amongst 213 such

customers, 43 indicated average or below-average satisfaction with the benefits of the SkyMiles

program (see Exhibit III), while qualitative comments revealed such thoughts as “Delta continues

to discount loyalty in favor of dollars”. When the same group was surveyed regarding loyalty

levels, however, 93% indicated that their level of loyalty to Delta was at an 8 out of 10 or above

(see Exhibit IV). Despite customer complaints, loyalty levels as high as these may indicate to

Delta that price increases will continue to be borne by HVCs and the increasing pricing structure

of Delta is not a truly pressing issue.

This may hold in the short term, yet Delta must consider what it will need to do in the

long-term to achieve their goals. Many of those surveyed have years of accumulated benefits with

Delta, and thus changing carrier preferences has a high switching cost, both psychologically and

materially. To inspire the next generation of top-tier Medallion status-holders, and to ensure that

the current generation does not become frustrated enough to switch despite the costs of doing so,

Delta must understand where it has brought value to customers in the past and continue to do so

in the future.

When asked why they remain loyal to Delta, status and perks were the second-largest

reason indicated in open-ended questions (for categorization of results, see Exhibit V), followed

by customer service. A word cloud of customer-generated descriptions of Delta characterizes the

19
company as “Friendly”, “Professional” and “Customer-Service Oriented” (see Exhibit VI) .

These are all qualities which apply to the employees at Delta, and the strong impression they

make on customers, even on customers who see them on a high-frequency basis. This is

confirmed quantitatively with high levels of satisfaction in interactions with front-line employees

(see Exhibit VII) and with the passenger experience as a whole (see Exhibit VIII).

Consistency of experience, and the positivity of this experience, is unlikely to have arisen

without any influence by the company - Delta’s culture has enabled and reinforced an attitude

towards customer service that translate into actions which customers appreciate. This attitude

must be present at all levels of the organization, however, to be effective. O’Reilly comments that

top management’s views in an organization are overwhelmingly received as “how things ought to

be”, while the opinions of frontline employees “define how things actually are”. In an industry

where success is based on customer preference, given the many airlines available, interactions

with frontline Delta employees become all the more important. It is notable then that the cultural

values delineated in ‘Rules of the Road’ were once intended for leadership alone but are now

found throughout the organization, and enacted consistently by employees at the lowest levels of

Delta. Living out ‘Rules of the Road’ impacts how customers feel that Delta does business

(unfortunately to a degree that is very difficult to assess quantitatively), but the value customers

currently see in this must be maintained in order to offset the value lost to price increases.

Action Plan
Delta will need to ensure that its total value proposition for customers remains seen as

worthwhile, using the intangible benefits of culture to offset the decrease in tangible benefits

caused by price increases.

‣ Monitor customer satisfaction continually, particularly that of high-status frequent fliers, through
surveys

20
 ‣ Ensure consistency of both training in Delta culture and in the lived values presented by
employees through random experience sampling

‣ Review continually the number of first-time entrants to high-status programs to be sure that this
does not decrease as prices increase

Limitations

Studying an organization as large as Delta is inherently difficult. Key limitations of this

study include the exclusion of organizational structure and subculture analysis, both of which

could provide further insight into the extent to which culture throughout the organization differs

and influences organizational objectives. Additionally, future study could be improved by

gathering survey data from a larger, more diverse customer base (i.e., not only HVCs). Lastly,

additional insight could be gained from interviewing more employees (particularly at higher

levels) along with employees who Delta “inherited” through its acquisition of Northwest.

Conclusion

At Delta, we find that culture is a large driver of organizational performance. Although we

lack the data to determine precisely the quantitative relationship, our qualitative data

demonstrates that those who know Delta are highly familiar with Delta’s culture in action. Issues

arise when deviations from Delta’s culture threaten their ability to complete the critical tasks

needed for business success. However, feedback from longtime, highly loyal customers leaves no

doubt that Delta has been performing quite well for some time now. This performance, and the

organization from which it comes is all built around the “Rules of the Road” and the broader

maxim of the “Delta Difference”. Thus, we find it highly appropriate that Delta’s motto is “Keep

Climbing” - guided by their culture, they have spent the last decade doing exactly that, and we

look forward to observing their successes in years to come.

21
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24
 Appendix

Exhibit I: Delta Air Lines’ 2007 “Flight Plan”

i
Exhibit II: Delta Air Lines’ 2017 “Flight Plan”

ii
Exhibit III: HVC Survey Data on SkyMiles Program Satisfaction

Extremely Dissatisfied Extremely Satisfied

Exhibit IV: HVC Survey Data on Strength of Loyalty to Delta Air Lines

Not Loyal at All Extremely Loyal

iii
Exhibit V: HVC Survey Data on Reasons Driving Loyalty to Delta Air Lines
Question: What is the primary reason you are loyal to Delta?
Format: Open-ended responses grouped by below categories

Exhibit VI: “Word Cloud” Illustrating HVC’s Descriptions of Delta Culture

iv
Exhibit VII: HVC Survey Data on Satisfaction with Front-Line Employee Interactions

Extremely Dissatisfied Extremely Satisfied

Exhibit VIII: HVC Survey Data on Satisfaction with Delta Passenger Experience

Extremely Dissatisfied Extremely Satisfied