Airline Regulations & Ideas

Delta Airlines The author of this report has been asked to review companies that are on either the good or bad end of financial soundness. The author will focus on the bad end and the company that shall be the focus is Delta Airlines. The questions that will be answered as they relate to Delta will include an identification of the company, their "domestic environment," a summary of the company's industry, how long they have been in business, and the attribute that they are least admired for.

Further, there will be the identification of a business theorist and the theory that they offer that would or should apply to Delta. The final few points will be how domestic government regulations have affected Delta, what can be done to overcome these regulations, an incorporation of the prior-mentioned theory into that execution and an over offering of critical thought on the matter. Questions Answered As noted in the introduction, Delta is in the airline industry.

This would involve the transportation of people from place to place and, to a lesser extent, the cargo of passengers or others. They were founded in Macon, Georgia back in 1924 and their current domestic hub is at Hartsfield-Jackson Airport in Atlanta, Georgia. They also maintain hubs in cities like Los Angeles, Seattle, JFK Airport in New York and in some foreign locals like Amsterdam and Paris, France (Delta, 2015). As noted above, Delta has been around since 1924 so they have been in business for nearly a century.

Delta, also as noted before, operates in the airline industry and competes with other giants in the industry such as Frontier Airlines, United Airlines, American Airlines and Southwest. Those four just mentioned are the top four and Delta is the second highest in terms of volume. Delta's overall performance has actually been fairly good lately as compared to the past. However, their propensity to bump people off flights due to overbooking is fairly pronounced and thus drags them down rating-wise (NY Post, 2014).

As for a theory that is relative to the airline industry, a screaming example would be the broader principle of profit maximization. Indeed, this concept and that of marginal cost came into full effect after the deregulation of the airlines in the 1970's and 1980's. Two theorists that have worked with the associated theory behind profit maximization and the utilization of marginal cost as a metric include Frederick Harris and Robert Emrich.

They cite a number of involved factors when it comes to price management and profit maximization including determinants of demand, price/cost margin, service frequency and the capacity allocated to a given airline route (Harris & Emrich, 2007). Before deregulation, airlines were heavily regulated and were not able to act as dynamically and in real-time like they wished. Many saw the deregulation of the airlines as a boon to the airlines as they were able to maximize profit, give customers the routes they wanted and so forth.

However, there have been some things the airlines have been doing (or failing to do) that have led to problems. The aforementioned practice of Delta bumping passengers is often condemned but airlines are trying to minimize loss of revenue when a person no-shows for a flight for which a ticket was purchased. There have also been penalties for things like stranding people on the tarmac for more than a certain amount of time and so forth.

When it comes to those items, Delta and other airlines need to make sure that they do overbook so as to protect their profits but not in an excessive fashion. They also need to make sure that there are sufficient routes and alternatives for the passenger. They are potentially doing a lot of this already but they are clearly being excessive when it comes to overbooking and they need to back off a tad.

It would put Delta in a good light overall given that their other metrics seem to be in pretty good shape at this time. Conclusion The airline industry is full of stories about bad service and derision in general. Delta seems to be dodging that, at least for now. However, their practice of over-booking.