E-BUSINESS AT DELTA AIR LINES:

EXTRACTING VALUE FROM A MULTI-FACETED APPROACH

In this report, a critical analysis is carried out on the e-

business 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 e-

business 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 six-

stage 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 e-

business 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 e-

business process.