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Delta Airlines (DAL)<\/p>\n
Delta Airlines is a US based commercial airliner, operating more than 15,000 flights globally every day, 180 million customers each year, through its own branded business and network of global operating partners1<\/sup>.\u00a0 In conducting business, the company operates a fleet of aircraft ranging which consume fuel, and emit harmful greenhouse gases impacting the environment: CO2, H2O, NOx, CO, SOx, and other volatile organic compounds 2<\/sup>.\u00a0 Worldwide during 2015, commercial aviation contributed 781 million tons of CO2 to the atmosphere.\u00a0 To regulate, US and international environmental agencies have regulated airline emissions through equipment certification standards \u2013 over 60 as of 2005 \u2013 fuel venting requirements, and Exhaust emissions requirements 2<\/sup>.\u00a0 These regulations are imposed via taxes by some international nations, but surprisingly the not US.\u00a0 In the US, airlines are only exposed to taxation via fuel tax surcharges, like those in consumer gasoline and trucking businesses.\u00a0 The EU has recently notably imposed Emissions Trading Scheme, to be enforced April 2017, which is a cap\/trade system to limit emissions allocated based on credits issued and regulated by the International Civil Aviation Organization (IACO), 6<\/sup>.<\/p>\n To react to these fuel tax surcharges and other regulations, Delta has passed on these taxes to its customers, and is now required by the FAA to detail these on each ticket price in order to provide transparency.\u00a0 To comply with regulatory equipment standards, it has invested in more money in maintenance of existing equipment as well as updating its fleet to raise fuel efficiency and remain in compliance, as market analysts are predicting as of April \u201916 4<\/sup>.\u00a0 For example, cutting edge aircraft \u2013 Airbus A380, Boeing 787, and Bombardier CSeries use less than 3 liters of jet fuel per 100 passenger kM\u2019s, which is approximately the same efficiency as modern compact cars 3<\/sup>.\u00a0 Delta has traditionally operated an older fleet of McDonald Douglas aircraft to avoid heavy CapEx investment, particularly during economic downturn: 2011, 2008-2009, etc.\u00a0 Additionally, Delta has implemented inflight and on the ground fuel efficiency measures to reduce total environmental impact, for example, only fueling the plane with the necessary fuel tank for the upcoming flight, rather than completely FULL by default 6<\/sup>.<\/p>\n Adjusting operating procedures to save fuel is a reactive means to mitigating environmental impacts, but can be deemed effective as it has overall reduced the total amount of fuel consumed on comparable, increasing customer demand.\u00a0 Alternatively, investing in innovative, efficiency improved technology for engines and aircraft equipment is a more proactive measure, and will have long lasting benefits into the future, despite the heavy capex in the near term \u2013 i.e., list price for a Boeing 787 can range from $120-180MM.\u00a0 This investment is to only have increasing benefit with the (arguably eventual) rise in crude oil prices.\u00a0 Along with improved efficiency and reduced variable costs, newer equipment can yield both branding and service benefits, as the new models offer improved customer experiences, such as the 787, being quieter and less pressurized within the customer cabin 5<\/sup>.<\/p>\n These steps to improvement are admirable; however, Delta could be doing more.\u00a0 Although at an acknowledged impact to customer service, Delta could substantially improve efficiency on a per customer-mile basis by reducing or even eliminating low customer volume routes, flying only routes which maximize equipment utilization \u2013 i.e., flights with full passengers. On a per customer basis, this would ensure that whatever aircraft was being used would optimize to utilize fuel in the most efficient way per service rendered \u2013 in this case travel \u2013 and potentially lessen its carbon footprint for comparable demand.\u00a0 Delta could also establish joint ventures with both equipment manufacturers and fuel producers to innovate on equipment and alternative fuel technology, for example, biomass fuel and solar.\u00a0 For carriers to work collaboratively with the manufactures could align incentives more that would support innovation by eliminating links in the value chain, which would be more analogous to the US auto industry, which has innovated on both engines and fuel (e85 ethanol) to improve efficiencies to comply with CAF\u00c9 standards by 2025.<\/p>\n Threats to any of these practices could be decreased customer service levels by reducing the total available routes in the network.\u00a0 Also, the risk of a huge capital investment will require potential debt and\/or reduction in cash reserves, putting Delta at much higher risk during volatile market conditions (e.g., bankruptcy during 2005), or labor dispute issues such as the numerous pilot strikes over the years.<\/p>\n Given this constantly changing market environment and resulting regulations internationally, Delta has an opportunity to differentiate itself as a market leader in terms of environmental sustain practices, which will both impact its customers price, its bottom line, and the overarching brand reputation.<\/p>\n <\/p>\n Citations<\/u><\/strong><\/p>\n 1<\/sup> Delta Airlines, \u201cCorporate Stats and Facts\u201d, http:\/\/news.delta.com\/corporate-stats-and-facts<\/a>, accessed November 2016<\/p>\n 2<\/sup> Federal Aviation Administration Office of Environment and Energy, \u201cAviation and Emissions: A Primer\u201d,\u00a0 https:\/\/www.faa.gov\/regulations_policies\/policy_guidance\/envir_policy\/media\/aeprimer.pdf<\/a> , accessed November 2016<\/p>\n