Delta’s Airline 5 Forces

1. Threat of New Entry

In the air travel industry, the risk of the new entrants is minimal because becoming an

airline company is time-consuming as well a lot of industry knowledge. In addition, most

of the huge competitors of Delta were established in the 20th century and have long

history. There are not many airline companies established 21st which have more than 2

percentage of market share. For instance, the annual sales of all the cheap-ticket airline

founded in 21st century are equal to a small part of Delta’s annual sales. In the travel

industry, there might be an appearance of the commercial space travel in the 15-20 years

which can have some small threats to Delta Airline.

2. Buyer Power

In the airline industry, the customers impose a huge threat to Delta because the power of

the customer are very higher. Air travelling is very expensive with most of people, thus

the ticket prices strongly affect the decision of the customers. Additionally, the existence

of the third-party like Expedia, Google Flight, and Cheap Tickets strengthened the power

of the customers by giving the air travelers the ability to compare the price between many

airline companies. Moreover, the switching cost for customers is very low in the airline

industry thus a lot of the customers do not have the loyalty with one specific airline

company.

3. Threats of Substitution

Delta provides the flight services on both short and long trips. In term of the short trips,

like two-hour flight from Portland to Seattle, there many alternative options for air travel,

such as the train and bus options which can provide the comforts and the conveniences
 for the traveler, thus the threat from substitution in short trip are pretty high. For Delta

Airline. Regarding the long-term trip, the threat of substitution is medium, although there

are many airline companies can provide the long-distance flights like Delta such as

American Airline and United Airline, but not many airline can provide the assured

quality with the reasonable prices for the long trips like Delta.

4. Supplier Power

As a third-largest airline company in American based on its annual passengers (Statista,

2018), Delta airline have a long list of its suppliers which come from many cultures and

have been working with Delta for a long time. In the airline industry, there are a lot of

suppliers provide the similar products with no huge difference in products ‘characteristics

as well as in the costs. Moreover, becoming a supplier of large airline company like Delta

is a thing which many companies desire, because working with Delta will make the

selected suppliers be able to increase its terminal value. For instance, in 1997, Boeing did

reached a 20 years contract to become Delta’s airplane exclusive suppliers, after that

news, Boeing’ stock price increased $2 (*). Because of the power of Delta in airline

industry as well as the tremendous number of suppliers, the bargaining power is on the

hand of Delta Airline. In short, the threat from supplier power is very low with Delta

Airline.

5. Competitive Rivalry

In the domestic airline market, the threat from the existing rivals are pretty high, although

there are not many difference in the quality between big-brand airline companies like

United Airline and American Airline, the threats from cheap-flight airline companies are
remarkable. Because most of the decisions of the air travelers are strongly based on the

price, the air travelers will buy the tickets from the airline companies which can give

them better prices. In terms of the international airline market, the threats imposed on

Delta from huge international airline companies like Korean Airline and Eva Airline are

really high. Due to the fact that, at the same ticket price for long-distance trips, those

international airline can provide more comforts (comfortable seats, bigger seat space) and

better quality (tasty foods, friendly flight attendants). In sum, the threats from domestic

and international existing rivals are really high for Delta Airline and those threats will

likely to increase in the future if Delta does not have smart changes in their business

operation.
https://www.nytimes.com/1997/03/21/business/delta-to-buy-only-boeing-jets-for-20-

years.html

http://articles.latimes.com/1997-03-12/business/fi-37441_1_airbus-industrie

https://scholarworks.merrimack.edu/cgi/viewcontent.cgi?article=1031&context=honors_c

apstones