What is Delta Airlines weakness?

Delta Airlines' Weaknesses

Delta Airlines is a leading airline based in the United States with a carrying capacity of over 200 million passengers per year and a daily flight capacity of over 5,000 with destinations in 52 countries and over 325 destinations. Yet, for a company as large and influential as Delta, it is possible to identify certain drawbacks in the running of operations and general business plans. It is thus important for analysts and stakeholders to gain an appreciation of these imperfections to appreciate the risks and as well as opportunities that are inherent for Delta and generally in the airline business.

Lack of Low-Cost Leadership

This has set Delta apart from other LCCs that have aspired to become ULCCs in a bid to cut costs further. Average ticket prices can be higher by 20-60% than such WO/ LCC competitors as Spirit or Frontier for similar flights. However, given that Delta provides noticeably better services and facilities compared to low-cost competitors, essential for many a leisure traveler, is the cost of tickets. It is noted that Delta tends to lose a certain proportion of this particular and is highly sensitive to the price factor customer group due to its inability to implement the low-cost strategy. This may help the company appeal to price-sensitive customers and thus increase its customer appeal as a full-service low-cost airline.

Commodity Business Model

Air travel has evolved into a mass product industry in the recent past. While customers use search engines to compare ticket prices of the various airlines, there is little branding loyalty today. More than 80% of airline customers use ticket prices as a basis for booking flights rather than choosing the airline. Delta invests billions in advertising and customer loyalty programs and yet the company struggles to build a strong brand boundary from its rivals within a highly competitive and mature airline industry. However, its strategic positioning in the airline industry means that Delta has fewer weapons to counter rivalry since it does not have a strong competitive advantage in areas such as price.

High Fixed Costs

Every major airline, including Delta, faces fairly significant fixed operating costs, which include assets such as planes, buildings, employees, and fuel. These are fixed costs that do not change with the level of demand within consumers or the capabilities of flight. Again, during periods of economic downturns, the Delta organization cannot easily adapt to the costs strategic move – a situation that can lead to extreme pressure on the company’s financial position. As a result, if Delta can decrease the portion of fixed operating costs, it will be able to better manage recessions and unexpected fluctuations in demand.

Environmental Impact Concerns

However, currently, many stakeholders focus on the firm’s sustainability concerns, and Delta has faced criticism over its environmental impact. Pre-COVID-19, aviation was responsible for two to three percent of global CO2 emissions and Delta is among the ten largest airline emitters of these gases. The social attitude towards the airline industry as a primary culprit towards climate change can be detrimental to Delta’s brand personality. Another criticism has been made that Delta has not been as forthcoming with investments in cleaner technologies such as sustainable aviation fuel as its peers. It is important to increase sustainability practices for Delta to ensure it has a social permit to operate.

Labor Relations Challenges

Delta has had turbulent industrial relations and labor disputes with many employee unions comprising pilots, flight attendants, mechanics, ground workers, and others over issues to do with wage increases, employee privileges, and conditions of service. Employers grant wage hikes or other concessions to avoid service disruptions or slow-downs, which labor unions stage periodically during contract negotiations for bargaining power. These labor disputes are not only detrimental to Delta Air Lines but also hurt its clients. Therefore, if Delta cannot cultivate better labor relations, it stands to suffer more losses due to employee unrest arising from high unionization among the company’s employees at almost all organizational levels.

The route networks are restricted to the limited international routes outside the United States.

Although Delta currently operates in more than 50 international destinations, the carrier has a very dense network beyond North America in only Western Europe. Among the discussed airlines, Delta company occupies a weaker position in high-growth markets such as China, India, and South East Asia. This limits Delta in terms of being able to capitalize on the increased international air travel demand, unlike other competitors with a much wider network around the globe. Expanding Delta’s presence on the global market, particularly in Asia, would help to make its revenue streams more varied and let the company tap into new markets for travel.

Reliance on Partnerships

Consequently, it is evident that to support a broad number of far-reaching global routes, Delta leverages code-share arrangements and equity alliances with foreign carriers to strengthen its presence in in-flight networks. For instance, Delta relies on partners like Virgin Atlantic for important airport slots and traffic rights in the core European market. As much as partnership helps Delta stretch competition to the global market, it equally implies dependence that brings about susceptibility. This is a problem because if a key partner for example went bankrupt or changed an alliance it would negatively affect Delta’s international network and would require a massive amount of time to realign.

In essence, Delta Airlines is significantly exposed to threats such as; high fixed cost intensity that can be detrimental for an airline company, environmental criticisms that can harm the company’s operations, future strikes by workers that disrupt operations, restricted operation in the emerging markets, dependence on some business partners and inability to adequately differentiate its product in a highly commoditized market place by price alone. Mitigating these weaknesses where possible can strengthen Delta’s strategic standing in the international aviation industry in the future while stabilizing the business’s profitability and environmental footprint. Exploiting competitive strengths relating to service quality, operation reliability, and improved customer experience may also assist Delta in managing threats of structural business models prevalent in its industry.

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