Delta Song Case

Executive Summary

U.S. Airlines face many issues today that ultimately will lower profits. Heightened Security in airports, less people willing to fly and a slumping economy have put the airline industry at a disadvantage. Delta Airlines has reported recently a $2 billon dollar second quarter loss. Delta has been losing ground to smaller airlines that fly the same routes that supply Delta with approximately 70% of its revenue. Delta Airlines will attempt to become the first major carrier to successfully launch a long term, low cost competitor. In the past year alone, low-cost carriers such as Jet Blue have claimed over 80% of the market share in New York to Florida flights. The new airline will be call Delta Song, and will cost $75 million The Delta Song Concept will use only one type of plane, the Boeing 757, that will be outfitted with leather seats, interactive monitors that will allow users to watch pay per view movies, play interactive games and online shopping. Song flights will fly between selected cities. Song planes will feature faster turnaround times of 50 minutes between landing and take off. Flight time is expected to be approximately 13 hours a day, which is 23% higher than the Delta main line. The goal of Delta Song is to compete with smaller airlines that will push Delta away from chapter 11 and return to profitability and future success.

Analysis

Delta will need to shift ticket sales operations away from travel agents or Delta representatives and toward the internet. Online ticket sales accounted for 13% of all sales in 2003. The average ticket purchased online can save Delta $8 to $10; due to fewer expenses on employees or call centers that are responsible for booking tickets. Creating a marketing plan to promote using Delta’s website for tickets or incentives such as in-flight