Delta Airlines 2015 Annual Report Download - page 10
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Wearetransformingdistributiontoamoreretailorientedmerchandisedapproachbyintroducingwell-definedanddifferentiatedproductsavailabletoour
customers.Wewillofferfivedistincttravelexperiences,whichincludepremiumamenitiesandservicesinDeltaOneTM,FirstClassandDeltaComfort+TMwhile
MainCabinandBasicEconomyoptionsallowcustomerstomatchthelevelofservicewiththeirpreferences.Weexpectthatthesemerchandisinginitiatives,
implementedacrossallofDelta’sdistributionchannels,willallowcustomerstobetterunderstandourproductofferings,makeiteasiertobuytheproductsthey
desireandincreasecustomersatisfaction.ThismerchandisingeffortisbestexperiencedonDelta’sdigitalchannelswherecustomerscancompareallproduct
optionsinasingle,easytounderstanddisplay.
Competition
Theairlineindustryishighlycompetitive,markedbysignificantcompetitionwithrespecttoroutes,fares,schedules(bothtimingandfrequency),services,
products,customerserviceandfrequentflyerprograms.Theindustryisgoingthroughaperiodoftransformationthroughconsolidation,bothdomesticallyand
internationally,andchangesininternationalalliances.Consolidationintheairlineindustry,theriseofwell-fundedgovernmentsponsoredinternationalcarriers,
changesininternationalalliancesandthecreationofimmunizedjointventureshavealtered,andwillcontinuetoalter,thecompetitivelandscapeintheindustry,
resultingintheformationofairlinesandallianceswithincreasedfinancialresources,moreextensiveglobalnetworksandcompetitivecoststructures.
Domestic
Ourdomesticoperationsaresubjecttocompetitionfromtraditionalnetworkcarriers,includingAmericanAirlinesandUnitedAirlines,nationalpoint-to-point
carriers,includingAlaskaAirlines,JetBlueAirwaysandSouthwestAirlines,anddiscountcarriers,someofwhichmayhavelowercoststhanwedoandprovide
serviceatlowfarestodestinationsservedbyus.Point-to-point,discountandultralow-costcarriers,includingSpiritAirlinesandAllegiantAir,placesignificant
competitivepressureonnetworkcarriersinthedomesticmarket.Inparticular,wefacesignificantcompetitionatourdomestichubandgatewayairportseither
directlyatthoseairportsoratthehubsofotherairlinesthatarelocatedincloseproximitytoourhubsandgateways.Wealsofacecompetitioninsmallerto
medium-sizedmarketsfromregionaljetoperationsofothercarriers.
International
Ourinternationaloperationsaresubjecttocompetitionfrombothforeignanddomesticcarriers.Competitionisincreasingfromgovernmentownedandfunded
carriersintheGulfregion,includingEmirates,EtihadAirwaysandQatarAirways.Thesecarriershavelargenumbersofinternationalwidebodyaircraftonorder
andareincreasingservicetotheU.S.fromtheirhubsintheMiddleEast.Severalofthesecarriers,alongwithcarriersfromChina,IndiaandSoutheastAsia,are
governmentsubsidized,whichhasallowedthemtogrowquickly,reinvestintheirproductandexpandtheirglobalpresenceattheexpenseofU.S.airlines.
Throughallianceandothermarketingandcodesharingagreementswithforeigncarriers,U.S.carriershaveincreasedtheirabilitytosellinternational
transportation,suchasservicestoandbeyondtraditionalEuropeanandAsiangatewaycities.Similarly,foreigncarriershaveobtainedincreasedaccesstointerior
U.S.passengertrafficbeyondtraditionalU.S.gatewaycitiesthroughtheserelationships.Inparticular,alliancesformedbydomesticandforeigncarriers,including
SkyTeam,theStarAlliance(amongUnitedAirlines,LufthansaGermanAirlines,AirCanadaandothers)andtheoneworldalliance(amongAmericanAirlines,
BritishAirways,Qantasandothers)havealteredcompetitionininternationalmarkets.
Inaddition,severaljointventuresamongU.S.andforeigncarriers,includingourtransatlanticandtranspacificjointventures,havereceivedgrantsofantitrust
immunityallowingtheparticipatingcarrierstocoordinateschedules,pricing,salesandinventory.Otherjointventuresthathavereceivedantitrustimmunity
includeatransatlanticallianceamongUnitedAirlines,AirCanadaandLufthansaGermanAirlines,atranspacificjointventurebetweenUnitedAirlinesandAll
NipponAirways,atransatlanticjointventureamongAmericanAirlines,BritishAirwaysandIberiaandatranspacificjointventurebetweenAmericanAirlinesand
JapanAirLines.
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