Our Delta Airlines SWOT analysis examines the Strengths, Weaknesses, Opportunities, and Threats of the airline company.
Delta Airlines is a name we all have heard and known forever. It has a legacy in the airline business and is one of the major airlines in the United States today. The airline has a massive network spread across six continents, operating in 52 countries, carrying out more than 5000 flights a day. It commenced its operations in 1929 and currently has nine hubs. Today, they have a whopping number of more than 74,000 employees worldwide.
However, things were not always so shiny for Delta. The business has had its rough patches over the course of the years as well. In 2005 the company had an all-time low which led it to file for bankruptcy. But it quickly recovered in just two years and got its place back on the New York Stock Exchange; very impressive, to say the least.
Over the years, Delta Airlines has had quite a journey. Today the place it has made for it, despite the hurdles, seems quite marvelous. To get a perfect look at where the business stands, we undertake a Delta Airlines SWOT Analysis. A report like this can be highly beneficial in providing a comprehensive look at any business’ current standing.
What are some considerable strengths of Delta Airlines?
A Massive Fleet
The number of aircraft that the company possesses is enormous. Their fleet, as of the end of 2020, stands at 750 aircraft. Their inventory of certain airplanes is the largest in the world. Some of their fleet is from Boeing, and the rest is from Airbus. Many regional carriers also functionally use planes on behalf of Delta Airlines. The company is also currently planning to buy more aircraft, older ones, and put them into operation.
This is a massive strength for a company like Delta Airlines. Big fleet size is one of the most prominent shining badges that one can put over their name.
Brand Value and Image
Delta Airlines has established a prominent name for itself over the past many decades it has been operational for. They have made a place for themselves in other lists apart from Fortune 500 too.
The list of Just Companies in 2021 listed Delta in 97th place, and the Global 2000 companies list from 2020 had it on number 263. Forbes made an estimate that put the market capitalization of Delta at 30.31 billion dollars in 2020. Fortune 500 has ranked the airline 69th on its list, and it is also considered second in the list of the world’s largest airlines due to a number of factors.
Apart from numerical values, the company has also built an exemplary image for itself in customer service, employee satisfaction, and operations. It has been widely recognized as one of the most admired companies and has made it to the list of Most Innovative Companies Worldwide as well.
Delta Airlines has also been named as one of the best places for women to work. It invests a lot in CSR activities, too, which maintains its social image. They have proven to have commendable HR practices.
A strong brand image always helps a company sustain itself in the market and come at the top over other competitors.
Alliances and Acquisitions
Currently, Delta Airlines is in an alliance called SkyTeam. It also has codeshare agreements with a vast number of airlines, some of them being Czech Airlines, Korean Air, Virgin Atlantic, Virgin Australia, and many others.
Having alliances with international airlines has been a strong point for the company. This helps them expand into multiple international markets and find global customers. Being limited to the states would have been detrimental to the potential that Delta has. They have made good use of their strong suit by developing solid alliances.
They have also entered many joint ventures with other international airlines, which has also proven to be significantly beneficial for them. Over the years, Delta has acquired many other airlines such as Northeast airlines and Western airlines, among others.
Financial Situation
The Airline has taken care of its finances in an excellent way. They have multiple revenue streams which is a very sustainable way of maintaining constant cash flow. By having different revenue streams, they were successful in achieving good returns on capital expenditure.
They have also tried to maintain a safe ratio of financial debt to equity. Many rating agencies have given the ‘investment grade’ label to Delta, which really speaks of its financial abilities.
Reward Programs
Delta is also currently operating a number of reward programs aimed at different target audiences. SkyMiles is their frequent flyer program. Their airport lounges’ brand name is Delta Sky Club. And lastly, they have a program called Sky Bonus that focuses on SMEs. It provides them with a lot of air travel benefits.
Wide-ranging Routes
Any airline that offers flights to a vast number of destinations worldwide is bound to be popular within the customer base. Delta is currently offering flights to 325 destinations across the globe in a number of countries.
This number increases even more with their joint ventures and alliances, which they have strategically built to help this very cause, thereby giving the airline a considerable edge.
What can be some of the weaknesses associated with Delta Airlines?
Dependence on One Market
Although they have expanded their business to international cities, the company still majorly relies on the North American market for most of its profits. This is also where most of its hubs lie, which can be problematic in the long run.
It is always best to stabilize oneself by significantly spreading your operations over different markets in a way that they are not concentrated majorly in anyone. One market can have certain economic, social, or political risk factors that might lead to a sudden collapse in business if triggered. To avoid such situations, the airline needs to stretch out.
Attrition Rate of Workforce
Delta has a high attrition rate as compared to some other industry competitors and hence has to invest a lot in the training of their employees. The ability to retain a reliable workforce is essential for the stability of any organization.
Concerns with an Aircraft - Airbus A220
The Airbus A220 engine has stirred up quite a controversy in the industry. Problems were noticed within the engine, after which the FAA introduced new guidelines for the inspection of these planes.
Delta has a considerable number of these aircraft, and it needs to come up with strategies of subsiding the risks posed by the engine before a big disaster falls, turning this into a sore point for the company.
Gaps in the Marketing Department
The sales of the airline look good, but one can still notice specific gaps in the marketing of its products. Suppose Delta aligns itself with the right marketing strategies and properly comes up with unique selling propositions for each of its products. In that case, this can have a substantial effect on its sales and magnify them even more.
What are some of the opportunities waiting for Delta Airlines?
Expanding its Social Media Marketing
Social media marketing provides a business with many opportunities. Firstly, digital marketing works in ways that traditional marketing could never; once you develop a solid social media presence, you can really enlarge your consumer base through it.
Social media marketing allows you to actually engage with your customers and acquire helpful feedback from them that can help you improve different aspects of your business by listening to what your users have to say.
This is a huge opportunity for Delta, and once they master it, they can treat it as their most important card.
Maintenance
Delta Airlines has a division called MRO: Maintenance, Repair, and Overhaul. They have used this to lead a massive maintenance service across the globe. This benefits their own aircraft, and they can also start providing these services to other airlines.
Millennials
Studies have revealed millennials to currently be the highest spenders on airline services among all generations, and their share is only expected to increase over the next couple of years. This is the right moment for the airline to come up with specific benefits and programs catered explicitly towards millennials.
There is a lot they can do to attract millennials and hit the nail on the head. Millennial spending on travel provides a lot of profit prospects for the airline. If they succeed in exploiting this opportunity to its fullest, they are looking at a colossal money influx.
What might be some threats faced by Delta Airlines right now?
COVID-19
This is a pretty self-explanatory threat for any business right now. The pandemic that hit us all in 2019 has severely impacted businesses around the globe, and airlines are no exception to that.
The amount of air travel significantly dropped, and prices magnanimously increased, a combination that led airlines to incur huge losses. Moreover, the different travel regulations worldwide also make it hard to operate international flights.
COVID-19 is something that is still causing a lot of uncertainty, we have new variants coming in, and while some countries are doing significantly better, others are worsening at an alarming rate. These things make it hard to predict where we will stand with respect to the pandemic in the coming months. This uncertainty makes it hard to come up with contingency plans.
In a nutshell, this pandemic is one of the biggest concerns for any business right now and something that all of them are actively trying to fight against. This serves as a significant threat, especially for Delta, whose annual revenue dropped by a massive 71% after the pandemic, which has been an enormous blow.
The pandemic has also indirectly set in motion other threats which impact Delta, such as increasing costs.
Heavy Regulations
Airlines pay a large amount of taxes to the government. In addition to that, they are held up by many different regulations across the globe. This has significantly increased after the pandemic, so that has become a threat that Delta constantly has to cater to. There are also different laws and legal proceedings in various countries, which can be an obstacle.
These laws and regulations can cause an increase in the running costs of a business as well.
Competition in the Market
With any big-name also comes a ton of immense competition. Some of the biggest competitors that Delta has are American Airlines, JetBlue, United, British Airways, Republic, and SkyWest. Competition like this always keeps a brand on its toes to constantly sustain its place.
The competition has become scarier in times of a pandemic. Other airlines are competing with Delta in terms of money and other factors such as operational reliability, customer service, and marketing.
One of the most extensive tactics for warding off competition is effective marketing. However, to keep competition at bay is also a costly task, and Delta acquires many expenses. It is to deal with this competition.
Increase in Costs
The costs of fuel, labor, raw materials and other items have been rapidly increasing, and this causes financial trouble for the airline. The more money that goes into maintaining these costs, the lesser their profits get.
Delta Airlines SWOT Analysis: Summary and Conclusion
After evaluating Delta Airlines from a SWOT perspective, one can see that they have a lot of strengths that explain their dominance over the industry. The few weaknesses and threats that are facing them right now also have pretty tangible solutions that if the company starts working on, they will be able to overcome easily as well.
All in all, Delta was and continues to be a big name in the airline industry, and it does not seem that it will be losing its place anytime soon.
A SWOT Analysis is a tool that we use to evaluate the strengths, weaknesses, opportunities, and threats of a business. It can be really informative and helpful in gauging where any company stands in a particular time frame. The analysis gives us a lot of particular insight into a company’s functions and deals with both internal and external factors.
Go through the template of a SWOT Analysis and examples of other companies’ SWOT analysis; it will really help you determine how to analyze your own company through this method. We also have a detailed guide on conducting a SWOT Analysis for this purpose.
You can also summarize all your SWOT findings in the form of a table, which will really help give a concise look to the reader. We have a detailed article on making a SWOT table in case you are looking for it.
