Healthy Competition

Healthy Competition

Delta Airlines

Delta Airlines is an American budget carrier that has survived the intensely competitive airline industry. The airline has experienced lows, such as bankruptcy in 2005, and eventually emerged as an industry leader (Delta, 2019). The main competitive aspects that have led to its successful performance include cost-cutting strategies, exemplary customer service, and high employee job satisfaction.

Delta Airlines is one of the few carriers that purchase used aircraft to cut down on costs. This strategy increases the maintenance cost significantly while lowering the acquisition cost. However, it enables the carrier to retain flexibility in the prices, making it possible to offer low fares and still make reasonable margins. As the volume of travelers fluctuates, the airline is able to vary its prices to suit the market demand (Delta, 2019). The other strategy that the airline uses is souring jet fuel from its refinery, which reduces its fuel cost and substitutes the cost of managing used aircraft, which may not be as fuel-efficient as the new ones.

Delta Airlines is known for its exemplary customer care, which is part of the carrier’s organizational culture. This strategy is intended to improve the entire customer experience and appeal to business travelers. Training programs that cost millions of dollars are sufficient evidence of the carrier’s commitment to good customer service. Most importantly, the airline prioritizes the needs of its workforce, leading to significantly low turnover. The airline’s workforce is responsible for ensuring that the clients receive services that exceed their expectations. The lack of unionization of the workforce makes the payroll cost low. However, the company offers profit-sharing plans. It also has offered 15 recent equity ownership of the airline to its staff and has an effective employee involvement program (Delta Airlines – Management and Organizational Issues, 2015). These aspects ensure that the airline’s employees remain loyal even during hard economic times.

South West Airlines

South West Airlines’ mission is to offer its clients outstanding services at a low price. Its business strategy is the first success factor that the airline employs. The airline advocates for “keep it cheap, keep it simple, and focus your energy” (Manuela, Rhoades, & Curtis, 2016). South West Airlines uses simple operating techniques to deliver much-needed travel services. One of the operation techniques includes flying from secondary airports, thus avoiding its competitors and leading to easy access to cheaper entries. The airline also lacks a hub-spoke operation system. Instead, it makes flights from point to point. Planning shorter flights that take an average of 11 hours allows the carrier to maximize demand and spread the fixed costs over more plane seats. Therefore, the carrier only needs a 55 percent loading factor to achieve break even (Manuela, Rhoades, & Curtis, 2016).

In addition, the carrier lacks overwhelming services such as food, beverages, seat allocation, and transfer of baggage. Besides reducing costs, the airline is also able to achieve quicker turnaround periods by avoiding unnecessary delays resulting from such service frills. Most importantly, the airline has a common brand of aircraft; Boeing 737s. These are more fuel-efficient in comparison to larger aircraft. In addition, the cost of training pilots and engineers/mechanics is drastically reduced, while the carrier maintains a slim spare parts inventory, thus holding fewer financial resources (Manuela, Rhoades, & Curtis, 2016).

Secondly, the airline is also lauded for its low employee turnover. The human resource strategies at South West Airlines are designed to ensure that employees operate in a family-like environment. To facilitate this, the HR relies on referrals from other employees who refer their friends or relatives for open job positions. The work culture advocates for obtaining skills, knowledge, and delivering these in a lively manner (Dan & Xinde, 2014). Thus, employees are often tested on their ability to operate in such environments or create such surroundings, especially when interacting with clients.

Table 1: Comparison of Competitive Points

Delta Airlines	South West Airlines
Cost-cutting strategies
·       Purchases old airplanes ·       Owns an oil refinery leading to low fuel costs-fuel hedging	·       Purchases one brand of aircraft –Boeing 737s-more fuel-efficient ·       Stocks of common spare parts as inventory ·       Does not offer food, beverages, baggage transfer, or allocate seats ·       Operates from point to point ·       Experiences fewer delays and quick turnaround times ·       Has short flights-11 hours ·       Has a low cost of training due to the single airplane brand
Customer Service
·       Invested $2 billion in a program to improve products and services ·       Replaced nuts with quality snacks ·       Offers inflight Wi-Fi, beverages, and meals ·       Has different cabin classes to cater to different segments ·       Rewards clients with miles	·       Encourages employees to incorporate humor in service delivery ·       Trains employees ensuring delivery of service in a systemic manner ·       Offers the most necessary services to clients ·       Allows clients to choose their seats ·       Avoids delays by the quick turnaround times
Job Satisfaction
·       Invests substantial amounts in training programs ·       Has a comprehensive employee Involvement program ·       Includes employees in the profit-sharing plan ·       Has devoted partial ownership (15 percent) of the airline to employees ·       Has low payroll and costs due to minimal unionization of employees ·       Ensures that employees are happy ·       Recognizes employees for daily work procedures that lead to goal achievement	·       Ensures the work environment feels like home ·       Encourages referrals to fill open job positions ·       Prioritizes the need for humor during work processes ·       Transferred partial ownership of the airline (11 percent) ·       Systemized efficient work procedures

Summary

Of the two companies, Delta Airlines has a more stable competitive base than Southwest Airlines. This decision is informed by the tangible aspects that the airline includes in its operations. For instance, a clear motivation program that enhances employee engagement ensures that this aspect gains ground and is incorporated into the organization’s culture. In addition, the airline substitutes its low payroll averages with the profit-sharing plan. Employees receive a month’s worth of salary through the profit-sharing plan. This eliminates any imbalances that may occur between Delta’s airlines and the other players in the industry, increasing loyalty. In addition, the employees also receive dividend payouts from the equity ownership. Furthermore, Delta Airlines’ investment in training employees shows its commitment to improving their skills and knowledge. Most importantly, Delta Airlines offers more comfort at similar rates as South West Airlines, making it preferable than its counterpart does. Its investment in the improvement of services and products offered to clients also confirms its commitment to improving the entire service experience. To improve its current competitiveness, the airline could adopt the purchase of a single brand of airlines to reduce the costs of training, standardize the fuel costs, and stock common spare parts reducing the financial resources held in inventory. Delta Airlines is recognized as a market leader due to its people orientation, which sets it apart from other players, and its commitment to offering quality services at an affordable cost.

References

Dan, Y., & Xinde, C. (2014). Innovation Research of Enterprise Human Resource Selection—-The Selection of Southwest Airlines. International Journal of Business and Social Science, 5(7), 234-241.

Delta. (2019). Notice of the Annual Meeting of Shareholders. New York. Retrieved 2020, from https://s2.q4cdn.com/181345880/files/doc_downloads/2019/04/Delta_2019_Proxy_Statement_Bookmarked.pdf

Delta Airlines – Management and Organizational Issues. (2015).

Manuela, W. S., Rhoades, D. L., & Curtis, T. (2016). An Analysis of Delta Air Lines’ Oil Refinery Acquisition. Research in Transportation Economics, 56. Retrieved from https://commons.erau.edu/cgi/viewcontent.cgi?article=1457&context=publication

ORDER A PLAGIARISM-FREE PAPER HERE

We’ll write everything from scratch

---

Healthy Competition

This week you learned about competition and strategy. A little healthy competition is good for an organization, however, from time-to-time, it can lead to failure. Using what you have learned this week, choose two organizations that you feel are in solid competition with one another and discuss why you feel these organizations are good competitors.

Your work should include the following:

• Outline the competitive points of the organization.
• Develop a diagram that compares the two organizations.
• Your diagram should be creative and should be thorough in documenting the competition.
• Summarize which company you feel has the stronger outlook.
• Your paper must be a minimum of 2 written pages single spaced (not including the title and reference pages).
• Your work must include a minimum of 3 scholarly resources to support your thoughts.