IDENTIFY COMPETITIVE OPPORTUNITIES – #75
No sooner did I write BLOG #68 addressing the Customer Service fixes starting to be recognized by the Airline Alliances as a profit opportunity, an industry that has had no new innovative Marketing ideas in the last 20 years. I can see a major change coming as Delta announces the linking of far-flung markets on their own as they feel, that they will be able to do a better job than their – Alliance – Sky Team has been doing for the past years.
The management message has to be as follows:
- Identify areas in which new business can generate revenues and profits. Its amazing that the Alliances were not targeted during this twenty-year period.
- Once Delta recognized the opportunity, they are acting immediately, and recognizing the risks associated with the Venture. Delta has identified the risk to be $2.3 Billion – if their new and innovative approach to alliances result in increased revenue and profitability, Delta will force competition to react, and change their investment strategies as well as redirect revenues in a wide variety of ways. Therefore, they will take years to figure out Delta’s strategies – while being on the defensive side.
Try to stay ahead of the competition who has to be consistently watched to assure that they don’t come-up with a product or pricing strategy that can put you on the defensive rather than a growth oriented offensive. Delta airlines just purchased 20% of Latam Airline a Chilean airline represents rounding out to ownership of ten major airlines that will be joining the Delta Alliance with hundreds of frequent flyer miles that should increase revenues. Delta paid 78% above market value for Latam in order to gain in a move that will bolster its position abroad in strong markets. They are quitting the purely local markets by selling their 8% stake in Gol a short-haul Brazilian airline. Delta’s focus is clearly on long-haul international routes which have been a, serious drag, way behind its Domestic competitors United and American who currently are embroiled in competitive strategies involved with profitability and domestic expansion. Add-in strategies for Global alliances and you can be assured that they will be totally involved with these three strategies.
The basic problem in current technologies represents the challenges that are being faced by Delta, therefore, they are willing to take this giant step that is very risky. Please review this BLOG with your management and try to stay ahead of your competition. We wish Delta great success in implementing the strategy, and we will keep you posted as we receive inputs on the subject.