Competition

Airline sector in the United States economy is characterized by strong competition, and competitors are taking their operations in a frequently changing market atmosphere. The airline industry was named the most competitive industry in the United States since 1990s. Although Delta had the strongest competitive advantage, the changing economic and technologic forces did not favor any individual company (Hanlon, 1996).

Southwest and American airlines are the biggest threat in the industry. Although the industry is generally characterized by high fixed cost and low operating profits, Delta established significant strategies to enable it maintain its future customers at the lowest cost. Southwest developed its e-business model few years after delta advanced in to a digital company. This saw the operating profits of Delta decrease by more than 10% in the subsequent years. Despite being successful in implementation of bookings, Brook and Dyer (1996) argue that Southwest gained much loyalty from the customers and other stakeholders in the industry than any other Airline (Hanlon, 1996).Competition in the industry varies internationally, nationally, regionally and the cargo size carried. Delta has been forming alliances with the aim of strengthening its competitive advantage through service diversification. Alliances with Virgin Atlanta and northwest airlines was one of the biggest achievement of Delta in securing a reliable competitive position in United States airline industry. These mergers and alliances created a global carrier that can compete both in domestic and international markets (Hanlon, 1996). This was a big blow to its competitors like Southwest which never formed international alliance with major airlines. Alliance is an effective way to compensate higher fuel prices. By 2008, Delta had the most stable record fuel prices in the industry. Efficiency, ability to fund operating expenses and long-term investments, and increase in international operations has ensured a secure competitive advantage in the industry.
Development of e-business increased online competition for customers through web rivalry. Airline companies developed cheap and accessible website for customer to timely purchase travelling tickets and get information on changing market trends. In addition to reliable sites, Delta established the fastest wireless network within the airport to enhance easier communication between employees in the plane and the technical team at the airport. This facilitated safety services and sustainability measures against accidents. (Hanlon, J. P. (1996). Global airlines: competition in a transnational industry. Oxford)