Delta Case Study

Abstract

This paper reviews the service industry, Delta Airlines, Inc. A service industry is defined as an industry that creates services rather than tangible objects. It is the fastest growing type of industry and offers a higher return on time invested compared to any other industry group. Delta Airlines is one of the leading service industries in the market. They are the world’s largest airline, aiding 160 million travelers reach their destination each year. Furthermore, they have been given many awards and recognized for their achievements. Our group examines different aspects of the company and then provides recommendations on ways to improve it. The examinations are over their financial information, both history and of today, an interview with an employee, their strategic vision and organizational structure, and more details of the company’s infrastructure and operations. Delta Airlines is a good example of what service industry should strive to be; even if they are not perfect. The company does a good job in allocating each aspect of business to be both efficient and effective.

Recent and Historical Financial Data

Most individuals start their own business for one main reason, to make money. Delta Airlines influences thousands and thousands of people across the globe each and every day. The airline business has some of the toughest competition of any industry. However, Delta has found numerous ways to separates its self from other airlines. “The Huff Daland Dusters crop-dusting operation, which formed the roots for Delta, founded in Macon, Ga. This was the first commercial agricultural flying company in existence” (Delta). This was way back in 1924. By 1930 the company began service in Atlanta, but; due to lack of mail contract the airline had to suspend passenger service. It was not until 1934 the organization not only resumed passenger service but also changed its name to Delta Airlines. “Delta's net income for 2010 was $1.4 billion, excluding special items. Including $851 million in special items, Delta's net income for 2010 was $593 million” (Delta). Although 2010 was one of Delta’s best years, these numbers are still impressive. Most recently, “This year, Delta was named the 2014 Airline of the Year by Air Transport World magazine and was named to FORTUNE magazine's 50 Most Admired Companies, in addition to being named the most admired airline for the third time in four years” (Yahoo Finance). Delta has and always will be one of the most respected organizations. Although they have gone through some scrutiny in the past, they continue to separate themselves and turn impressive profits year after year.

Strategic Vision

A strategic vision is defined as the ideas for the direction and activities of business development. Generally included in a document or statement so all company managers can share the same vision for the company and make decisions according to the shared principles and company mission. Delta Airlines has many plans for the future as their financial situation had begun to improve. NASDAQ has reported that Delta has been wise with their capital spending. They have plans to continue on this upward cycle by improving their current programs (i.e. SkyMiles) and balancing the reduction of old planes with the purchase of new planes. If they continue in this path then their company has a bright future.

Mission and Goals

Mission Statement:

"We—Delta's employees, customers, and community partners—together form a force for positive local and global change, dedicated to bettering standards of living and the environment where we and our customers live and work. We are Delta's Force for Global Good."- Mission statement of Delta (Farfan, 2014).

2014 Goals: (Howes, 2013)

Environment Goals-

• Achieve 1.5% fuel efficiency improvement

• Reduce electricity consumption at selected Atlanta facilities by 10%

• Set and achieve a water reduction goal for Atlanta Tech Ops

• Meet Environmental Goals for Notices of Violations, Non-Compliance/Permit Exceedances, and Spills

• Reduce greenhouse gas emissions below 2013 levels

Employee Goals-

• Pay profit sharing at or above target

• Earn 21 or more Shared Reward payments

• Invest $1.5 billion in retirement plans (pension and 401K)

• Provide a safe work environment for employees

Customer Goals-

• Earn J.D. Power award for customer service among network carriers

• Win Business Travel News survey

• Increase “net promoter” score in select categories by 10%

• Be industry leader in D0 (on-time departure) and taxi times

Financial Goals-

• Quarterly dividends of approximately $200 million a year

• Produce at least $300 million of value through the Monroe Trainer Refinery

• Improve ancillary revenue to $670 million and improve digital channel customer satisfaction to industry-leading levels

Brief History and Where it is Today

C.E. Woolman founded what would be Delta Airlines in 1924 as a response to the boll weevil crisis; beginning as an aerial spraying and dusting of crops service (Lewis & Newton, 23). This service was the first of its kind, beginning their history as a first-mover. This service was followed by the need for airmail. In 1929, Woolman saw the demand for passenger routes and travel. The first flights were from Dallas, TX to Jackson, MS (Lewis & Newton, 41). However, the Great Depression hit in 1930 and suspended some travel. To many, it was surprising to see the airlines survive, but they did due to its “enduring characteristics and traditions that played a vital role… many of them shaped by Woolman’s evolving managerial style.” (Lewis & Newton, , 30). These characteristics that kept them afloat throughout the Great Depression kept them afloat all these years.

In 1945, Delta became Delta Airlines Inc. officially.