Delta Air lines

Delta Air lines

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Davis, Sidney F. Peachtree Publishers, Ltd., 1989
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Delta Air Lines, which originated in Louisiana, has been based in Atlanta, Georgia for almost 50 of its 60 years. As the South has prospered, so has the company, gaining a reputation for hospitality and pride-the cornerstones of Southern tradition.The death, in 1966, of founder and patriarch, C. E. Woolman, saw the beginning of the end of the era of Delta graciousness and service. Tom Beebe's ascension to the chairmanship of the board in 1970, and the Airline Deregulation Act of 1978, caused the company to further slip from its position of leadership in the industry.In order to make the airline industry more competitive and cost efficient, deregulation was proposed in 1977 as a way to provide free or automatic entry into markets, which had been dominated by one or two carriers. It was assumed that the industry would react with prudence and not commit assets and resources in markets where sufficient service already existed. It was also assumed that fares would be priced to provide a larger profit margin. Unfortunately, deregulation has resulted in reduced service and unprofitable fares that are higher than they would have been under regulation. From 1978 to 1982 (the first four years of deregulation), sharp increases in the price of fuel, a major economic recession, and the air traffic controllers' strike prevented the major trunk lines from taking full advantage of deregulation. The smaller carriers substantially cut into the market shares of the larger airlines. Many of them were under-capitalized, and by 1984 a substantial number were forced out of business. Delta's approach to innovation is usually reactive, honoring tradition rather than change. For example, the company was three years behind the other airlines in introducing a computerized reservations system, and then refused to offer buyout assistance to travel agents using other systems. Delta has made some rather large blunders regarding fares: (1) competing with travel agents (the biggest supplier of airline reservations) and offering substantial discounts directly to volume customers, (2) creating a discount fare that was higher than prevailing rates, and then offering a refund of half the fare if the passenger canceled, (3) announcing a triple mileage bonus program that the rest of the industry sees as a monumental mistake that will cost every airline. As for the Delta sales force, it is considered to be short on technical skill, customer support, accommodation, and authority to offer incentives, and lacking in clear purpose and direction.