DELTA AIRLINES PLAYS CATCH-UP

Thomas Phelps3/12/2009

Pg. 51

Lagging Behind American Airlines known as a

leader using IT United Airlines known as a fast

follower Delta Airlines known as a slow

follower

How Did We Get Here??? American

Sabre reservation system

United Apollo reservation system

Programs designed to sell and manage availible seats to upcoming flights

Advantage Competition

Sell other airlines the right to use their systems

Gave American and United vast amounts of customer information from competitors

Exsample adding flights

Adding Insult to Injury

Soon after their reservation system they developed frequent flyer programs to attract repeat customers

Buisness travelers bought in

Yield Management

American and United also developed yield management programs

Allows the price of seats to vary depending on demand

Plane is not full the price drops

Program generates max revenues per flight

Continuing to Prosper

American’s CIO Max Hopper sold the yield system to competition

Recoup some development costs

Can do this because by the time Delta learns the system American will have reached the next platue of IT information

Delta Fights Back (Kind OF)

1997 CIO Charlie Feld created Delta’s gate and boarding application

Delta still remained relectant to spend large amounts on IT

Looking For Change

Recently devoted $1.5 Billion to technology

Automating Process Gate and boarding passes Baggage handleing Inventory control Revenue accounting

Too little, Too Late

Delta went bankrupt in 2003 Unorganization and constantly late flights

Exited bankruptcy in 2006

GE helped this process by lessing Delta aircraft

Hoping to survive as a stand-alone company

Current Information

Still known for its consistanly late departures and arrivles

Trying to innovate First airline to offer internet during flight

$9 for a 3 hour flight $12 for a 6 hour flight

Cutting 10% of international flights

We’re Going Down!

Questions

1. What business risks would Delta be taking if it decided not to catch up with industry leaders in using IT to gain a competitive advantage?

Questions

2. What competitive advantages can a company reap if it is the fisrt-mover in introducng an innovative IT system? What are the pros and cons of being a fast follower?

Questions

3. What other industries could potentially benefit from the use of yield management systems?

Questions

4. Explain how American and United used customer information to gain a competitive advantage and how the competitive advantage affected their value chains.

Questions

6. Delta’s board of directors questioned the need to spend additional funds on IT when the airline was under great pressure to reduce costs. Determine a strategy for how the CEO, CIO, CTO, CPO, CSO< and CKO can work together to ensure IT projects are supported by both the business and IT departments

Questions

7. Explain how an airline can use information technology to ensure the security of its airplanes.

The End

Any Questions?