E-BUSINESS AT DELTA AIR LINES: EXTRACTING VALUE FROM A MULTIFACETED APPROACH

In this report, a critical analysis is carried out on the ebusiness strategy of US airline DELTA Air Lines. Delta Airlines was the third largest carrier in the United States for years. It has accrued hidden asset over the years that did not appear on its balance sheet. They included a large customer based and an immense purchasing power. In the year 2000, its CEO at the time embarked on the epic programme of e-business. He saw e-business as the way forward for the development of Delta Airlines (Ross, 2001). According to Ross (2001), Delta Airlines was actually lured into e-business through the dot.com business Priceline. Priceline at the time was engaged in the selling of excess seats to customer who could not afford the regular prices. Although those from its marketing department did not embrace the idea originally,

it reluctantly accepted www.priceline.com and when the value appreciated on its 10%, the Airline banked $750 million. Before its involvement with Priceline, Delta Airlines had developed its information technology infrastructure and position itself as a high-tech company (Ross, 2001). This agrees with Cisco Systems Inc (2005) which argues that when technology is deplored and used to the maximum effect, it changes the outlook of a company and facilitates the incorporation of e-business into its entire business plan easily. Information and communication technology improvement and training lead to employee productivity, retailer collaboration, supplier integration among others. By ensure that its ICT infrastructure was of the highest standards, Delta Airlines was preparing not just for it ebusiness challenges, but efficiency and others. Evaluating Delta Airlines E-business Strategy

Delta Airlines E-business principles were built on three principles including ICT infrastructural development; the three types of e-business including business to business, business to commerce, and business to enterprise, and establishing the necessary funding to ensure the team responsible functions properly (Ross, 2001). It can be seen that although the Delta Airlines process is in only three parts it agrees with Earl (2000) who proposed a sixstage process in the development of e-business. These processes include external communications, internal communications, e-commerce, e-business, e-enterprise and transformation (Earl, 2000, pp. 33 - 37). By following this process, Delta position itself to be a strong player in the e-business market. This was not a short term thinking process; it was strategy in every sense of the word to give Delta a long term future in the ebusiness process. By developing the various e-business platforms, Delta was ensuring that it maximise the benefit

accrue from such investment. In fact what is different about Delta's e-business strategy compare to Earl (2000) proposed evolutionary process is the fact that money was set aside for the team responsible for the development of the e-business process (Ross, 2001 In seeking to change its technological base, Delta Airlines chose a vendor that knew the process in addition to sharing Delta' vision on improvement of technology and what it means to a firm. This process overlap with what Earl (2000) refers to as the business to Enterprise process. According to Rockart et al (1996), given the current situation, some businesses are aware of the need to change and to redesign their processes. By changing its technological based, Delta was positioning itself to be able to track it various activities. With regards to the stages of the evolutionary process of e-business development, it is important to know that the first two stages were already in place because Delta

already had an ICT infrastructure and platform that it rebuilt before embracing e-business in a buying into Priceline (Ross, 2001). Delta took the business to commerce initiatives by changing most of the way its tickets were bought. It was mostly travel agent-based at 85% in 1997 and by 2000 it had shrank to 60%. The cost to Delta of selling tickets online was around $2.00 while tickets bought at travel agent cost Delta $34.00. This is seventeen times that of the online. By forming relationships with various websites through the business to commerce process, Delta provided opportunities for its customers to decide on which website to use in book their flights (Ross, 2001). By doing so Delta had expanded its e-business activities beyond its offices. Also with regards to Earl (2001) stages of e-business development, Delta also took the initiatives into the business to business as well as the business to enterprise processes. Because of the competition that had developed

during the period, the business to business stage was very challenging. Despite the challenges, Delta management pressed on knowing that the future of the business depended on the individual customers being able to buy tickets online at Delta's own website. The business to enterprise initiative focused on ensuring the productivity of Delta employees. Using the intranet, employees on the move in aeroplane could keep in touch with what was happening on the ground (Ross, 2001). In addition to this Delta changed the process of the organisation of its ebusiness process.