DELTA Airlines PESTEL/PESTLE Analysis

| Updated: March 9, 2018 |

Delta Airlines PESTEL Analysis

 

Every year Delta Airlines serves more than 180 million customers.  Apart from being named the most admired airlines Delta was also mentioned in Fortune’s top 50 most Admired companies. Delta is known for its industry leading global network. The carriers of Delta and Delta connections offer service to 323 destinations across six continents in 59 countries.  Today the company employs more than 80,000 people worldwide. Its mainline fleet has more than 800 aircraft. The company has also invested billions of dollars in airport facilities as well as global products and services. With its alliance Delta offers more than 1500 daily flights connecting key hubs across the globe. It has invested a lot in making the customers’ experience on the ground as well as in the air better. Here is a PESTEL analysis explaining how the various factors in the macro-environment of Delta Airlines affect its business and profitability.

Political:

Political forces can have a deep impact on the airlines business.  Delta’s business spans several countries and as such the government and the political environment of these countries can have a direct and deep impact on the business of Delta airlines.  In US with the deregulation of 1978, several major hindrances were eliminated which reduced the barriers before the airlines industry. This has boosted business and revenue of eth airlines industry in US. However, the situation differs from nation to nation and market to market. Several markets are still highly regulated and restrictive in terms of business. In such markets the hurdles to profitable business are bigger. A large number of governments have partnered with airlines companies to create extraordinary value. They have eased the regulatory environment in the favour of airlines companies which is good for companies like Delta airlines. There are economic benefits of airlines for countries. Several governments have notes this factor and therefore eased the government regulations to make the environment more suitable for airlines business. However, several nations and their governments are still to open up their market to the airlines companies.

Economic:

Another important influence on the airlines industry are the economic forces. Economic downturns can have a severe effect on the airlines industry and their business. After the 1930s the recent downturn had affected the airlines business most deeply. Not just the business class economy fliers too saw a downward slide in business. Both the passengers and the airlines companies were forced to cut down costs. Recession influenced the profits of the businesses and the level of employment in the global economy. Both of these things influenced the customers’ purchasing ability. The pressure was felt by all the airlines companies. The performance of the airline brands depends a lot on the global economic scenario. As the condition of the economy, so will be the profits and revenue of the airlines brands. Now, the recession is over and the condition of employment has improved which means increased business for the airlines industry.  A rising middle class is also good news for airlines brands like Delta. More and more people are using air travel for tours as well as business travel. So, overall these economic changes are going to mean increased demand of air-travel.

Social:

Social factors are also an important factor behind the demand for air travel. The demographic changes are an important factor that will affect the air travel industry.  Air travel is preferred means of transport for the millennial generation. Behind the rising demand for air travel, the most important factor is the increase in the population of the millennial generation. The social capital generated by the airlines industry is also an important factor behind the rising popularity of the airlines industry. The airlines industry is a large employer globally. Delta airlines alone employs more than 80,000 people. The entire society including businesses and people are benefitted by the wide network of flights globally. This network has added speed to business and common life both. There are so many sociocultural factors that affect the airlines industry and there is a mutually beneficial relationship between the  society and the airlines industry.

Technological:

Technology is now more important for businesses than ever. In case of the airlines industry, from fuel efficiency to range and convenience, technology is important in all these regards. Better and more fuel efficient aircrafts are the need of the time. Such aircrafts are in higher demand. Information technology has also changed several things. From booking to managing operations, IT plays a very important role at several points.  Moreover, the use of mobile devices has grown across the world. Airline companies are making use of digital technology to promote their brands and market their services.  Technology has added pace to people’s lives who can check and book tickets using their cell-phones.

Environmental:

The airlines industry is responsible for around 2% of the entire emissions globally. Sustainability is an important concern for the airlines companies just like the other businesses across the world. However, the airlines companies have focused on reducing the emissions and cut down their CO2 emissions up to half since 1990. Delta also takes its environmental responsibility seriously and has made improvements across its operations both on the ground and in the air.  Delta has started several initiatives across its operations to cut down on its CO2 emissions. This all shows how important the environmental issues are in the 21st century. Sustainability initiatives are not just important for compliance or to manage operations better but also to manage a better reputation. Such brands that have managed their environmental impact better have achieved higher customer loyalty and also grown a larger customer base compared to rivals. Investing in environmental intiatives has its own benefits and it is why Delta’s is focusing seriously on this area.

Legal:

Even after the deregulation in 1978, there is a large web of laws that affects airlines companies domestically and internationally. From laws related to labor, passenger security and environmental effect to those related to financial issues and business there are several laws that affect the airlines industry. Overall, there are several legal risks and the airlines have to do their best to remain compliant. In 2017, Delta signed a settlement agreement with OSHA to protect workers that  operate baggage handling vehicles. These settlement agreements are considered highly effective tools used to ensure that  the companies  address the hazards that can kill the workers.

Sources:

http://ir.delta.com/news-and-events/news/news-release-details/2017/Delta-Reports-Financial-and-Operating-Performance-for-April-2017/default.aspx

http://news.delta.com/driving-environmental-sustainability-ground-air

https://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=NEWS_RELEASES&p_id=22173

Abhijeet Pratap

I am Abhijeet Pratap, editor of notesmatic. I am an MBA with marketing (major). Apart from writing on various topics in business management, marketing and English literature, I like to read and write about technology.

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