Research Paper On Delta Airlines

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Managerial Economics Project Product Evaluation Danielle Johnson Based on the fact that I do a fair amount of business travel I picked Delta Airlines as my company to explore. Delta Airlines has a long history that began with a single crop dusting plane and has evolved over the years to become one of the world’s largest airlines. This transition has been due to many company mergers and the ability of Delta Airlines to surge ahead of its competitors with their forward thinking. Delta currently has ten domestic hubs and three international hubs and employs almost 80,000 people. Delta Airlines has a fleet of over 700 aircrafts and throughout its history has implemented strategies to operate and expand this fleet as efficiently and economically…show more content…
Delta airlines has the largest fleet of Boeing 797 and Airbus A330 planes vs any other airline operated in the United States. The addition of the Airbus aircrafts was due to a merger with Northwest Airlines in 2008. Delta Airlines has taken a different stance then the rest of their competitors when it comes to how they handle their fleet. Delta has implemented a strategy that uses older aircrafts more often than purchasing new. They have also created a MRO (maintenance, repair and overhaul) organization, called TechOps, to support them these older airplanes. Delta purchases older airplanes as a source for spare parts, which is much more cost efficient than purchasing an entire new airplane. While Delta refurbishes used airplanes they also supplement with new airplanes when needed which allows them to lower their overall operating costs. Delta Airline’s fleet has an average age of 17 years old compared to one of its major competitors whose fleet’s average age is 10 years old. Delta’s fleet of airplanes services both domestic and international clients offering service to more than 325 destinations in over 60 countries on six…show more content…
By definition an oligopoly is a market with a small number of sellers who behave strategically. This seems to explain the airline industry perfectly. Airlines offer similar products with a defining factor being brand recognition, destinations or loyalty. A consumer may decide that due to points already earned in an airlines frequent flyer program that they would prefer not to fly with another airline if it avoidable. A consumer may also want to fly with the airline whose hub is near their home location and/or has the best availability of flights they utilize frequently. Airlines are largely able to affect the market price and can anticipate how each of their individual acts will affect their competitors. A price increase or decrease of one airline will most likely cause others to follow suit as well since oligopolies are highly competitive. One of the other major reasons this is the relevant market structure for Delta is due to the high costs to enter this industry which act as a barrier for many. The cost of a single aircraft is substantial and to be a competitor in the industry you must be able to obtain a fleet of airplanes to satisfy the needs of the consumers. Established airlines are also able to fund advertising campaigns which may not be economically feasible for a new company trying to enter the market as those funds would not be

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