Delta Airlines SWOT & PESTLE Analysis

Strength

1. Expansion of products with diversified revenue streams: Through increased product offerings, diversified revenue sources, and technological investments, Delta maintains its competitive edge in the market. In order to change the commodity-like nature of air travel, they have fundamentally changed their business over the past ten years by investing in their people, product, and reliability. They provide distinctive travel experiences with clear value propositions through improved product segmentation, allowing customers to choose while also providing exceptional service onboard the aircraft. About a third of Delta's passenger revenue in 2021 came from premium offerings like Delta One®, Delta Premium Select, First Class, and Delta Comfort+®. In 2021, roughly half of their passenger revenue came from Main Cabin products, which includes Basic Economy. The remainder of Delta Airlines' passenger revenue comes from loyalty travel rewards and travel-related services. In an effort to lessen the effects of cyclicality and other reductions in demand for air travel, Delta Airlines has expanded its revenue streams in recent years beyond the simple sale of an airline ticket. They benefit from a co-brand revenue stream linked to greater consumer spending thanks to their partnership with American Express. Prior to the pandemic, their continued emphasis on premium products and customer segmentation boosted revenue growth and decreased reliance on the most price-sensitive customer segment. Additionally, they continue to operate complementary portfolio companies like their cargo business, which saw significant growth during the pandemic, and their Maintenance, Repair and Overhaul ("MRO") operation, where they are still in a strong position to grow thanks to their agreements with jet engine producers.

2. Good labor relations and loyalty: Delta Air Lines has good relationship with all of its employees which have contributed to the increased investor interest and operational success. Delta’s around 12000 mainline pilots are represented by the Airline pilots association, International and is the union’s largest pilot group. In 1982 when the airline was going through financial troubles, its employees took a voluntary pay cut and with which delta purchased its first Boeing 767 which was then called “spirit of Delta”. In 2021, the employee satisfaction at Delta was at a high with engagement scores topping 87%.

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Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Emission regulations by ICAO and United States EPA: Greenhouse gas emissions by the aviation industry have been under increasing focus over the past few years. International Civil Aviation Organization (ICAO) has adopted market-based emissions offset program known as the Carbon Offsetting and Reduction Scheme. The new aircraft certification standards applied to new fleet types in 2020 and will apply to in-production aircraft starting in 2023 but no later than 2028. In January 2021, the EPA finalized GHG emission standards for new aircraft engines designed to implement the ICAO standards on the same timeframe contemplated by ICAO. The airline industry may face additional regulation of aircraft emissions in the U.S. and abroad. These regulations will impact Delta Air Lines and the aviation industry as a whole. The company will need to plan and prepare in advance to be in compliant with the same.

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