...Delta 1. (a) Fuel cost drives the airline industry. Fuel cost average anywhere from 30% to 50% of total operating costs in the airline industry and crude oil and jet fuel costs had been on the rise. (b) The refining industry in the US is defined regionally by petroleum administration for Defense Districts (PADD), a system put in place during the Second World War. 2. Rising fuel cost is truly a problem for Delta. In 2011 Delta was hit hard by rising fuel cost. Deltas total fuel cost had risen by nearly $3 billion in 2011. Delta was already a company on the rebound. It closed in 2011 with $35 billion in revenue, up 10 percent from 2010, with profits up 40% to $854 million. Delta was driving profitability by flying fewer planes fewer miles with fuller seats. It had 80,000 employees worldwide and $3.6 billion in cash. Delta was the world’s largest airline in terms of both fleet size and scheduled passenger traffic and jet fuel costs were killing it. 3. Rising fuel costs were the result of growing supplies of domestic oil in the US and its inability to gain access to major refining centers like the US, East Coast and Gulf Coast districts. The rapid development and production of shale oil from domestic sources was landlocked. Pipelines were at capacity and oil was stockpiling. Transportation alternatives like railroads were costly 4. Refineries on the East coast were closing because they were suffering the highest crude acquisition cost. Although East Coast refineries...
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...Title of essay: Exploring Marketing with Delta Airlines as a Case Study Tedlow, Richard S. believes that the history of consumer product marketing in the United States can be divided into three phrases.1 The history of marketing will aid us in understanding the business world today and is thus useful in this essay to explore this in brief before embarking on studying Delta Airlines as a case study to approach the topic of marketing, in the context of the U.S Airline Industry. Phrase 1 is that of fragmentation and this is purely due to logistics reasons, rather than the result of any marketing strategy. This results in transportation of bulky goods from one region to another being relatively expensive and for a consumer product to achieve national distribution, a favorable ratio of weight and bulk to value is required. This phrase happened before the 1880s and the market size is restricted due to a lack of information, and it is characterized by a high margin and low volume. The second phrase of unification is the rise of mass marketing, with high volume and a low margin, which is the direct opposite of the first phrase of fragmentation. The development of this phrase is possible due to firstly, the development of the railroad and the telegraph and secondly, innovations in manufacturing technology. All the above innovations led to a more effective transportation and communication network that lowered the cost of mass marketing products by significant percentages. There is a rise...
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...Case 27 Delta Air Lines (2012): Navigating an Uncertain Environment FOF #1: Differentiation In order to compete in a pricesensitive industry, Delta Air Lines needs to focus on differentiating itself from competitors. By doing this, Delta is creating sustainability through customer retention and loyalty. To set itself apart from competitors like United Airlines and American Airlines, Delta needs to implement a program to improve customer service. Because of Delta’s poor service reputation, I believe that the company needs to primarily concentrate on offering superior customer service as a way to gain a competitive advantage. After Delta’s merger with Northwest, customer complaints increased significantly. In 2009 Delta’s customer complaints doubled the industry average, and only two years later accounted for a third of all complaints. Additionally, results from a survey done in 2011 showed that Delta had the lowest customer satisfaction rating out of Southwest, Continental, American, US Airways, and United Airways at a staggering 56%. A rating as low as that is alarming, and can easily persuade consumers to ultimately choose competing airlines. In an attempt to counter diminishing brand loyalty and reputation, Delta needs to focus on the following three issues: 1. Improving comfort This includes designing seats that accommodate passengers of all sizes for trips of all durations. Legroom should be expanded. Additionally, the airline ...
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...Singapore Airline & Delta Airline Introduction Property, Plant, and Equipment (PP&E) is a significant asset category of most airline companies. PP&E usually contains more than 50% of the total assets of an airline. The depreciation of these assets is a major operating expense. The proper depreciation of PP&E in companies, such as airline with PP&E being a significant part of their assets, plays an important role in their accounting strategies. The large variation in the way of determining the depreciation expenses affects a company’s financial results and tax consequence largely. Applying reasonable yet favorable depreciation methods and assumptions is essential to a sound accounting practice. In the below comparison of the depreciation methods and assumptions used by Delta Airline and Singapore Airline, one can see the means of making different assumptions for the best interest of each business. Annual depreciation expense (1) The two airlines Delta and Singapore use significantly different methods when accounting for the depreciation of their aircraft. Delta Airlines now uses a 20 year straight line depreciation method down to a 5% salvage value. This will spread out the expense of plane ownership over a longer time, lessening pressures on the balance sheet. The 5% salvage value represents what the airline can reasonably expect to liquidate the planes for. Singapore Airlines, on the other hand, uses a 10 year straight line depreciating method to account...
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...ACCOUNTANCY COLLEGE OF BUSINESS BKAL 3063 INTEGRATED CASE STUDY SECOND SEMESTER FEBRUARY 2015/2016 (A152) GROUP: B (5) WRITTEN REPORT CASE ANALYSIS CASE : Depreciation at Delta Air Lines: The “Fresh Start” PREPARED FOR: PROF. DR. MOHAMAD ALI B ABDUL HAMID PREPARED BY: NAME | MATRIC NO | AHMAD SHABIRIN BIN BAHRIN | 221521 | YELMI MARIANI BINTI ZULKIFLI | 221792 | LEONG SIAO ZHUEN | 230190 | NIWASHINI A/P SUBRAMANIAM | 230293 | ANG HUI QIN | 230294 | EXECUTIVE SUMMARY Delta Airline began 2008 with more worldwide destination of 321 destinations in 58 countries. In 2008 merged with Northwest Airlines, become the largest airline in the world. In May 1st 2007, Delta adopted policies regarding estimated lives & residual values for aircraft, but its was far from the 1st time it had changed its estimates. PPE (flight, ground property) are often more than half of the total asset. Depreciation of those asset is a major operating expenses and is not an attempt to measure the current value of assets. The amount of depreciation estimated by an airline company for each operating period is based in the cost of asset, estimates of asset lives, and assumptions about residual values at the end of the asset lives. These estimates & assumptions have changed through the years for almost all airlines. Depreciation practices had been change several time. CAUSE AND STATEMTN OF PROBLEM Delta, has changed assumptions of economic life of aircraft...
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...CASE STUDY: Delta Airlines Inc. by Benjamin Godman Delta Air Lines is a major American airline and one of the world’s largest air carriers by traffic serving over 330 destinations in over 60 countries on six continents. Originally starting out operating crop dusters and delivery mail in Louisiana, Delta now utilizes over 700 aircraft and subsequent support activities like maintenance and operations. Delta airlines services over 165 million customers worldwide every year by averaging over 5000 flights daily. Delta Air Lines is now the oldest airline operating in the United States and is the result of multitude of airline mergers over the past 80 years that included Pan American World Airways and Western Airlines just to name a few. Its most recent merger with Northwest Airlines in 2010 was its largest in its history and in 2013 finished with $5.7 billion in unrestricted liquidity, generated $4.5 billion in cash from operating activities, reduced debt by $1.4 billion and funded capital expenditures of $2.6 billion and returned $350 million to shareholders. Delta’s 2013 pre-tax profits were up 147% in comparison with 2012. In recent years, Delta was a founding member of the Sky Team Alliance, created Delta One which is an Elite business cabin, introduced flatbed seats for international travel, Delta Comfort+ for increased comfort in the main cabin seating and other amenities to ensure its competitiveness with other airlines such as American Airlines Group Inc., Southwest...
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...the airline industry: The AIR FRANCE- KLM/DELTA AIR LINES JOINT VENTURE In less than twenty years, the global industry has gone through tremendous change. Several airlines had gone out of business that had been on top of the industry for years. One of the remarkable changes had been airline alliances. The case focuses on the airline industry and how airlines are forming alliances and joint ventures. It then introduces the partner firms Air France KLM , and Delta . Air France KLM had over 25 collaborative agreements with other carriers and was a founding member of Skyteam, one of the leading airline groups. Air France KLM and Delta Airlines formed revenue and cost sharing joint ventures that include all transatlantic routes of the two airlines. The alliance formed sales over 12 billion euros, and accounted for about 30% of all North Atlantic passenger business. The case also provides information on joint ventures, and how alliances are used strategically to enhance revenues and reduce cost. The case also discuss how collaboration can be structured and governed to achieve outcomes, and how strategic decisions by one alliance partner can affect the stability of the alliance. The issue of the case is if whether Air France KLM should reconsider their alliance with Delta Airlines, due to some of the independent decisions made within the alliance. Some of the external factors that affected the company had been regulations set on the industry, which restricted some airlines from...
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...Human Resource Management Delta Case Study: Improving Delta’s Profit Margin Written by Filiz McNamara, Ogochukwu Udekwe and Vicki Troftgruben February 21, 2011 Table of Contents Page Introduction 3 External Environment 3 Internal Environment 18 Systems and Stakeholder Analysis 32 Conclusion 34 Problem Identification 36 Generation and Evaluation of Alternatives 37 Recommendation 38 Decision Implementation 39 References 40 Introduction Delta Airlines was founded by C.E. Woolman, an agriculture extension agent (Anthony, Kacmar, & Perrewe, 2010). C.E Woolman was not a banker, venture capitalist or war pilot, as many of the competing airlines were. He didn’t have the aggressive military style that many of the other airline founders had. What C.E. Woolman instilled within the employees at all levels of the organization is that people matter and should be treated fairly and equitably. This philosophy led Delta Airlines to be the leader in customer service from the company’s inception through the many mergers over the years. Through the difficult financial times when other airlines were laying off employees and filing for bankruptcy, Delta continued to pay their people well and keep them employed. There was an exception during the Ronald Allen CEO era of 1987 thru 1997. Human relations took a significant down turn during his tenure as CEO, especially during 1993 and 1994, but Delta decided to part ways with Allen and began repairing...
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...Running head: INFORMATION SYSTEMS Information Systems for Decision-Making: CIS500 Patricia Peele Professor Eve Yeates, BS, MBA Strayer University October 13, 2011 Abstract Case study of “Revving Up Sales at Harley-Davidson”, pages 75-76 and “Delta Air Lines plays Catch-Up”, pages 77-79. This paper combines both case studies in one document, depicting business driven information systems used and strategic decision making from both well known businesses. Case Study 1 Chapter 2, Closing Case Two (Revving Up Sales at Harley-Davidson), pages 75-76 1. How does Talon help Harley-Davidson employees improve their decision-making capabilities? Talon is the information system that Harley-Davidson uses. It handles the inventory, vehicle registration, warranties and point-of-sale transactions for all Harley-Davidson dealerships. “The system checks dealers’ inventory, generates parts orders, and analyzes global organization information” (Phillips, 2009). Talon has been one of Harley-Davidson most successful informational systems used. Talon has provided Harley-Davidson employee the information needed to earn more revenue. Harley-Davidsons’ $50 million is more than 2 percent of its revenue and far above the manufacting industry average. “Talon gives Harley-Davidson managers’ a 360-degree view into enterprisewide information that supports strategic goal setting and decision making throughout all levels of the organization” (Phillips...
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...Running head: SW Airlines Case Study Case Study Southwest Airlines Cardinal Stritch University Advanced Marketing Management CMB 508 September 3, 2013 Scott A. Braucht, MBA Professor In the 1940s travel via airplane was a privilege. Men wore a suit and tie and women wore dresses with a hat and gloves. Parents would endure a 27 hour flight from the middle of the country to Hawaii to see their soldier son at Pearle Harbor. Air travel was a luxury. Customers expected the best in treatment. Chef prepared meals were served on white china with glassware and silverware. A lot has changed since that time. There are a number of discount airlines today. They come and go, but Southwest Airlines has managed to stay in the business since 1971. Their success is due in part to the successful identification of their market and the needs of their customers. Southwest Airlines primary marketing strategy included bright red heart logos and catchy phrases for its peanuts (meals) and their drinks. As it grew, Southwest Airlines became known as the airline with cheap fares, on-time service and, most recently, not charging for luggage when other airlines started to do so. Passengers flying on Southwest Airlines are entertained by the pilots and flight attendants who tell jokes, describe funny facts of the areas as they fly over, and even burst into song. The flights are shorter than other airlines and the planes are turned around on the ground faster than the industry average...
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...Title of essay: Exploring Marketing with Delta Airlines as a Case Study Tedlow, Richard S. believes that the history of consumer product marketing in the United States can be divided into three phrases.1 The history of marketing will aid us in understanding the business world today and is thus useful in this essay to explore this in brief before embarking on studying Delta Airlines as a case study to approach the topic of marketing, in the context of the U.S Airline Industry. Phrase 1 is that of fragmentation and this is purely due to logistics reasons, rather than the result of any marketing strategy. This results in transportation of bulky goods from one region to another being relatively expensive and for a consumer product to achieve national distribution, a favorable ratio of weight and bulk to value is required. This phrase happened before the 1880s and the market size is restricted due to a lack of information, and it is characterized by a high margin and low volume. The second phrase of unification is the rise of mass marketing, with high volume and a low margin, which is the direct opposite of the first phrase of fragmentation. The development of this phrase is possible due to firstly, the development of the railroad and the telegraph and secondly, innovations in manufacturing technology. All the above innovations led to a more effective transportation and communication network that lowered the cost of mass marketing products by significant percentages. There is a rise...
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...Case Study #2 Wireless and Mobile Technologies CIS 500: Information Systems for Decision-Making Wireless and Mobile Technologies Wireless technologies make use of radio waves, to connect with other devices or networks in order, to transmit/receive data. A wireless technology can be as simple as using a garage door opener or as complex running applications on Enterprise Resource Planning software. Wireless technologies make use of various types of hardware, from Bluetooth™ capable devices (printers, keyboards, earpieces, etc.) to offsite data warehouses to satellites, all of which communicate through networks, via radio waves. Wireless technologies are used by fixed/stationary items such as a desktop computer, as well as various mobile devices, tablets, cell/smart phones, laptops, GPS and others. Mobile technologies are, as the name implies, mobile. These devices are portable and can be used in route, from one place to the next, by accessing and using wireless networks. Mobile technologies are not just hardware but include special platforms in which these devices and the users interface. The combination of the wireless and mobile technologies has opened new methods for businesses to improve productivity. Wireless and Mobile technologies allow staff members to have real-time communication with the business and operations, from relatively anywhere in the world. Wireless and Mobile technologies provide a faster connectivity to vendors and customers by...
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...Delta Airlines and the Trainer Refinery American Public University Strategic Management 05 July 2015 By Jon Kaercher Abstract The airline industry is a highly competitive service industry that operates on thin profit margins the airlines have to be flexible and adjust quickly to changes in customer’s preferences, increased fuel costs, and changes in the economy that can have a direct impact on profitability. The airlines look for solutions such as adding services, offering discounted ticket pricing and receiving subsides from the government to ensure they remain solvent This requires each airline constantly monitor its business strategy to ensure that it exploits every opportunity to provide their customers with the best possible flying experience. 1) What drive the basic economies of the airline industry? The refining industry. The airline industry operates as a service industry in which it provides the transportation of its customers and their personal belonging from one destination to another for a fee. To provide this service the airlines require a large amount of capital to purchase and maintain expensive equipment and facilities. Their cash flow is generated from profits and the depreciation of their airplanes, this cash flow is used to repay debts and buy new aircraft. The airline industry is very labor intensive because it’s in the service industry and its customers require personal attention, this can be very expensive for the airline. Over one...
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...measure, and mange relationships with each of those customers individually. A forward thinking company must focus on the preserving and increasing the value of that customer base. Organizations like airlines must mange their customer relationships effectively in order to remain competitive. In this case analysis, I will identify and explain key external factors that affect the passenger airline industry. This analysis will then turn towards explaining what the major airline market segments are, by applying segmentation, targeting, and positioning. Finally at the end of this analysis I will contrast two specific airlines United and Delta Airlines and describe each of the company’s target market and positioning by giving some examples of how these strategies are implemented for each company. Key External Factors Companies, like the airline industry, are forced to alter their business models, pricing, revenue, and cost structures to suit their customers’ changing needs in different economic conditions. The airline industry has experienced several modifications in terms of marketing and strategic planning in recent years due to an increase in airline competitiveness. (Gursoy, D., Chen, M-H, & Kim, H. J. 2005.) There are several key external factors that affect the airline industry, which can be broken down into four main categories. The four categories are political and legal factors, economic factors, demographic factors and finally technological and environmental factors...
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...Case Study 2: Wireless and Mobile Technologies Name CIS 500 March 16, 2015 Dr. Wireless and Mobile Technologies Wireless technology is defined as a technology, for example, PDAs, that uses radio waves to transmit and get information. It is utilized increasingly for information transmission. This definition is a bit excessively restricted as it recommends that wireless technology is empowered just by radio waves. Yet radio is stand out little, however imperative piece of the vitality that we can and do utilization to convey information that empowers electronic items to speak and interact with one another by exchanging information. Electronic items and frameworks that interact by using electromagnetic vitality to convey information between them so they can correspond with one another. The expression "wireless" alludes, in the most essential and evident sense, to interchanges sent without wires or links. It is a wide term that includes a wide range of wireless technologies and gadgets, including cell interchanges, networking between PCs with wireless connectors, and wireless PC extras. Wireless interchanges go over the air through electromagnetic waves (radio frequencies, infrared, satellite, and so on). (Pinola, 2015) Mobile technology is the technology utilized for cell correspondence. Mobile code division various access (CDMA) technology has developed quickly over the recent years. Mobile technology gadgets are a combination of equipment, operating frameworks, networking...
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