Delta Air Lines, Inc. (NYSE: DAL) operates as a major American airline for passengers and cargo traveling throughout the United States and around the world. The company is headquartered and has its largest hub at Hartsfield-Jackson Atlanta International Airport in Atlanta, Georgia. Delta is a founding member of the SkyTeam Alliance Network, offering more than 13,000 daily flights, with 326 destinations in 59 countries, partnering with the other 19 SkyTeam member airlines around the world.
The airline industry has become increasingly competitive in the past few decades. Airline carriers around the world have worked to cut costs to lower prices as a way to compete for customers. Some of Delta's major competitors are United Continental Holdings, Inc. (NYSE: UAL), Southwest Airlines Co. (NYSE: LUV) and American Airlines Group, Inc. (NASDAQ: AAL). As of July 12 2018, Delta has a market capitalization of $35.5 billion. The company reported FY 2017 revenue of 41.2 billion and a record Q2 2018 adjusted operating revenue of $11.6 billion.
1. United Continental Holdings, Inc.
United Continental Holdings, Inc. (UAL) is one of the largest airline holding companies in the world. As of July 12, 2018, the company has a market cap of $19.7 billion and reported FY 2017 revenue of $37.7 billion. 2018 Q1 revenue is up 6.48% compared to Q1 revenue in 2017. It operates internationally, as well as in the U.S., competing directly with Delta. United targets the same customer groups as Delta: the upper middle class, high-net-worth individuals (HNWIs) and frequent business travelers. Both are known as premier airlines offering high-quality service.
United is the founding member of Star Alliance, comprising 28 airlines with more than 18,800 daily departures combined, reaching 1,317 airports in more than 190 countries. Star Alliance directly competes with SkyTeam, affiliated with Delta.
2. Southwest Airlines Co.
Southwest Airlines Co. (LUV) has continued to make a major impact in the airline industry, taking market share away from thriving airlines such as Delta. As of July 12, 2018, the company has a market cap of $30.7 billion and reported FY 2017 revenue of approximately $21.2 billion. 2018 Q1 net income is up 36.58% from Q1 net income in 2017. Southwest has been successful by offering friendly customer service and cheap flights, and limiting flights to higher revenue routes. The airline also utilizes its Boeing 737 fleet for all routes, minimizing maintenance expenses. Due to its success, Southwest has forced other airlines to change routes, cut prices and reduce amenities to compete.
However, despite its recent success, Southwest is relatively new compared to Delta and targets middle-class fliers as opposed to luxury or business class travelers. In addition, Southwest is heavily dependent on the American market in comparison to Delta, which operates internationally.
3. American Airlines Group, Inc.
American Airlines Group (AAL) is a holding company for American Airlines and U.S. Airways. The airlines merged on Dec. 9, 2013, as American Airlines emerged from bankruptcy. The merger created the world’s largest airline in terms of fleet size and number of passengers. As of July 12, 2018, the company has a market cap of $18.55 billion and recorded $42.2 billion in revenue for the FY 2017. 2018 Q1 net income is down 45.29% compared to Q1 net income in 2017.
American caters to the upper middle class and frequent business travelers, the same target group as Delta. The airline is known for having the best customer loyalty program, a strong image for onboard entertainment and a strong new brand image since the merger in 2013. However, American Airlines Group's financial position is still a cause for concern as American Airlines only emerged from bankruptcy in 2013.
The Bottom Line
Delta is one of the best-performing airlines in the world. The airline, known for customer care and luxury, has maintained its upper middle class and business travel customer base. While many airlines continue to cut costs to compete with emerging low-cost airlines, Delta is continuing the serve the upper-class market where it thrives.