Delta Air Line - the Launch of Song

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are not unionized. That helps the company avoid a big problem and cut cost in salary payment.

- Invitations to apply for jobs at Song went out to Delta’s flight attendants, including the 3,000 individuals who had been furloughed by Delta. This action helps Song lower cost of recruitment and training because these people already have knowledge and experiences in the field.

- Once hired, flight attendants attended a three-day training session at a Disney facility. They have learned the business model of Song, its flexible work rules, its mission and brand, and selling techniques. Flight attendants were taught how to lift luggage into overhead bins safely, and they were encouraged to help passengers with their bags. These activities contribute to increasing customers’ satisfaction and reduce cost due to speeding the boarding process.

Technology development:

- Use both agents and website to serve booking services. However, Song hopes that over 70% of tickets would be book online. This will support the company to cut costs because it helps to reduce the cost of commission payment for agents and cost of printing boarding cards and overhead cost.

- Song shares automated check-in terminals with Delta so the cost will be spread to both companies. That eventually assists to cut cost for the both.

Procurement:

Inbound Logistics:

- Aircraft maintenance was performed by Delta personnel so that both companies can reduce its cost because of economic of scale.

Operations:

- Aircraft maintenance was performed by Delta personnel so that both companies can reduce its cost because of economic of scale.- Once at the airport, customers would have a relatively traditional ground-service experience. This brings satisfaction to the customers because even they go with lower-cost carriers but they still have experience of the legacy carrier at least in this aspect. However, Song operated with only one gate agent rather than Delta’s two. That support Song to cut down their cost.

- The management team planned 50-minute turnarounds, allowing Song to have its planes in the air 13 hours per day, roughly 20% more than an average Delta mainline. Song would offer 50% more capacity, or available seat miles, on the Northeast-to-Florida routes than Delta Express had. Song hoped it would ultimately attain CASMs 20% to 30% lower than those of mainline Delta. All of these boost aircraft utilization that supports Song to cut down its costs and increase profit.

- Delta and Song also Share the system of setting the route, flight frequencies, schedules. These activities also help both lower its cost because they can utilize both machinery and labor force better.

Outbound Logistics:

Marketing and Sales:

- Prioritize online sale rather than through agencies. That helps cut cost because of less commission payment for agencies, less printing boarding card cost, and overhead cost.

- Everyday low pricing policy. That attracts more customers and builds up the company images.

- Song wants to be a lifestyle brand, not merely an airline brand. Song repeating the phrase “We are not an airline”. The company’s purpose is to set in customers’ mind that it is the differentiated low-cost carriers.

Service:

- Song provides leather seat in the all-coach cabin. The seat was equipped with a personal digital television with 24 channel and video games. Also, the seat would have 33 inches of legroom, one inch more than on JetBlue and other low-cost carriers. These things help the company to boost satisfaction from the customers and make it distinguish from others.

- In addition to complimentary beverage service, Song provides food option for customer to buy on board. Food prices were comparable to airport prices, and gross margins were 25%. This service not only increases customers’ satisfaction but also increases revenue for the company.

- Flight attendants wear new uniforms that were designed exclusively for Song by well-known designer Kate Spade. This will help to build up the company image in their targeted customers. That eventually contributes to customer’s attraction and retention.

The value change activities of Song imply that the company tailors its activities to achieve cost advantage and a little differentiation advantage. The company passed the internal consistency test.

3. Dynamic consistency:

The hub choice is to choose to target “Discount Diva” because in addition to a low-cost carrier, by selecting Diva the company has to tailor its activities to serve this targeted group. For instance, it has to tailor its advertising message, its employees’ appearance, and its aircraft’ interior.

The company performs the more value change activities before less important ones. For instance, they deal with union problem that kills some other low-cost carriers in the industry, and they rearrange the aircraft to maximize the capacity.

However, the company’s value chain activities can be imitated by other low-cost carriers such as Southwest and JetBlue. These low-cost airline firms can target the same segment of the market; they can easily to customize their aircraft, their employee’s appearance to compete directly with Song without much of trade-off.

In conclusion, although Song passed external and internal consistency test, it failed to pass dynamic consistency test. Therefore, the company does not have an effective strategy. Its strategy can bring a little bit advantage for the company in the short term, but in the long run, the strategy will not guarantee the success of the enterprise.