Delta memo

Delta memo - To: From: Date: Subject: Isin Gueler,...

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To: Isin Gueler, Assistant Professor of Organizational Behavior and Strategy From: John T. Lilly Date: September 24, 2008 Subject: Delta Airline Case Government regulation of interstate airline competition until the 1970’s kept airlines from having to keep costs low. The federal regulations coupled high profit routes with low profit routes for each carrier to keep all carriers afloat. Due to government controlling price of fares as a “cost plus” system airlines easily gave in to union demands. Airlines tried to differentiate themselves from competitors in ways such as services offered and number of flights available per day, since they were unable to compete on price. This history set the airlines up for low returns after the deregulation of airlines in 1978. The deregulation of airlines led airlines into fare wars where carriers who previously were unable to fly routes in different areas now were allowed and were not hampered by the high committed costs (to labor) as the national airline chains. Southwest is a success because it kept costs very low.
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Delta memo - To: From: Date: Subject: Isin Gueler,...

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