Delta Airlines Plays Catch-Up

1. Delta Airlines Plays Catch-Up Thomas Phelps 3/12/2009 Pg. 51

2. Lagging Behind • American Airlines known as a leader using IT • United Airlines known as a fast follower • Delta Airlines known as a slow follower

3. How Did We Get Here??? • American • Sabre reservation system • United • Apollo reservation system • Programs designed to sell and manage availible seats to upcoming flights

4. 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

5. Adding Insult to Injury • Soon after their reservation system they developed frequent flyer programs to attract repeat customers • Buisness travelers bought in

6. 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

7. 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

8. 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

9. Looking For Change • Recently devoted $1.5 Billion to technology • Automating Process • Gate and boarding passes • Baggage handleing • Inventory control • Revenue accounting

10. 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

11. 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

12. We’re Going Down!

13. 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?

14. 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?

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

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

17. 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

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

19. The End Any Questions?