Delta Airlines: The Choice of Pet Travel #PetMiles by Chia Hsuan Hsieh

LEAD720 TEAM 3

Delta Airline PetMiles Project A: Choice for Pet Travel

Christina Call, Chia hsuan hsieh, Lori Erickson, YIhui Wang

LEAD720 TEAM 3

COMPANY SELECTION & CONTEXT Project A: Part one

LEAD720 TEAM 3

COMPANY OVERVIEW

Delta Air Lines, Inc. (DAL) is a global airline company that provides air transportation for passengers and cargo across 300 destinations in 50 countries on 6 continents. It provides services such as “passenger transport; cargo transport, aircraft management; professional security; training and consulting; aviation solutions, vacation packages; and maintenance, repair and overhaul” (MarketLine Company Profile). Their mission is to “connect people with communities, with experiences and with each other” and they prioritize human-centered design on multiple fronts, from investing 1% of their net profit to charitable causes worldwide, to reducing jet fuel emissions and environmental impact, to ensuring a healthy and inclusive culture among its 80,000 employees – it is the only airline on Fortune’s “Best Companies to Work For” list (Gay). Delta Air Lines is headquartered in Atlanta, Georgia, about 80 miles away from Macon, Georgia, where it was founded in 1925 by C.E. Woolman as an agricultural flying company (Gay). In 1929, it operated its first passenger flight and went on to help with war efforts during World War II by modifying over 1,000 aircraft carriers and training Army pilots and mechanics (Gay). The airline issued its first international routes in 1953 and continued to expand operations – complete with glowing safety records - until September 14, 2005 when it filed for bankruptcy. In 2008, despite a global downturn, it avoided a hostile takeover by major competitor US Airways by emerging from bankruptcy, partnering with AirFrance, and acquiring Northwest Airlines and its frequent flyer program. Rebranded as SkyMiles, the program became the world’s largest loyalty program with more than 74 million members (Gay). Though Delta Air Lines boasts a strong market position, powerful international alliances, and a competitive flyer incentive program (MarketLine Company Profile), the global pandemic and subsequent airline regulations threw a major curveball that resulted in shares dropping 31% (Crooks). The lack of demand for travel also created a negative cash flow of as much as $14 million per day for the company (Schlangenstein) and a working capital deficit of nearly $12 million (MarketLine Company Profile). Through this challenging time, safety remains a top priority. While several competitors have loosened their COVID-19 precautions, Delta Air Lines continues to block middle seats, limit capacity, and mandate masks (Bastian and Disatapundbhu). Overall, its liabilities are more than its assets, but the company has plans to leverage the growing global travel, tourism and transport industry to drive growth (MarketLine Company Profile). Company leaders express optimism around the future. Chief Executive Officer Ed Bastian anticipates a major post-vaccine rebound when people emerge from being isolated at home (Crooks).

HISTORY OF PET CARGO Before 2016, Delta Air Lines welcomed passengers with small pets (dogs, cats, and household birds) in the cabin on most flights within the United States, Canada, the Virgin Islands, and Puerto Rico. Delta Air Lines allowed passengers to bring one pet in each carrier, and the pet must fit comfortably in a carrier under the seat in front of them. The pet must be at least 16 weeks old if traveling to the USA from elsewhere, and at least 15 weeks old for European Union travel (Delta Airlines). However, due to pet death incidences, Delta Air Lines claimed that they will no longer allow customers to check their pets with their baggage after March 1, 2016, unless passengers are a member of the military with active transfer orders or require service animals. The airline recorded its highest number of pet deaths between May 2005 and September 2015, according to the U.S. Department of Transportation. On Delta flights alone, 14 pets have gone missing and 74 pets have died during that 10-year span, accounting for about 25% of all recorded airline pet deaths in the United States. However, these numbers were just a small percentage of the thousands of pets that travel on airlines each year (Burke). During these years, Delta still saw a high demand for pet cargo. They adjusted their policy and launched an innovative solution for pet travel called CarePod, the latest pet travel carrier with many industry-leading features including real-time updates for customers throughout the journey and the world's first built-in hydration system for pet travel carriers (Delta Flight Museum). Unfortunately, as the world competes against the COVID-19 pandemic and the inconvenience of changing flight schedules, Delta Cargo temporarily embargoed all PET shipments effective April 1, 2020, until further notice. The embargo applies to all live animals transported in cargo under the “PET” product code throughout the domestic and international network (Delta Airlines).

DELTA OFFERS TWO WAYS TO .TRAVEL WITH PETS. Cabin Travel Service: Small dogs, cats and household birds can travel in the cabin for a one-way fee, collected at check-in. The pet should be able to fit in a small, ventilated pet carrier that fits under the seat in front of the pet owner. The checked pet fee is $125 USD to or from US, Canada, Puerto Rico, $200 USD to or from U.S Virgin Island, International, and $75 USD to or from Brazil. 22

DELTA PET SERVICE Delta Cargo Service: Delta Cargo is committed to the safe and reliable transport of all live animals. Delta-trained ground handlers offer pets personalized care and activity track during the flight. The price of Delta Cargo service is dependent on the size of the pet carrier. CarePod: Delta cooperates with the CarePod company to launch a new standard of travel with a state-of-the-art pet travel carrier that provides real-time updates for customers

PART TWO

Innovation & Vision petMiles

LEAD720 TEAM 3

Brainstrom Delta Petmailes

1. Pet area: an area where pets can move freely without being restricted in the cage 2. Screen monitoring 3. Delta app adds some pet-related features 4. A separate cat area with windows and cat trees 5. Premium pet meal and menu options 6. Delta CarePod with screen monitors 7. Pet salon 8. Pet medical services - on-board vet 9. Sky magazine with pet topics 10. Pet products on in-flight shopping 11. In-flight pet sitter 12. App-controlled monitoring/walkie talkie feature 13. Delta doggie day: special offers in flight 14. Delta pet vacation program 15. Airline amenity kits for pet 16. Entertainment within the cage 17. Soft mat for comfort 18. Levels of CarePod (plans/package) 19. Special painted flight with special in-flight pet services 20. Pet calming kit 21. Pet experience customization (APP) 22. SleepyPod (upgrade from CarePod) 23. Flights designated solely for pet owners only 24. Pet concierge service to help with getting pet through security and onto the plane 25. A Cat Cafe in the Delta Terminal - have coffee with rescue cats up for adoption 26. Increased HEPA air filtration to help with pet allergies

27. Digitally tossed pet treats - offer treats from your seat 28. Pet entertainment systems - a screen with videos of birds/bugs to chase 29 Partnership with Animal Planet to create content for an animal audience 30. Animal/owner IG selfie station with Delta branding 31. Pup Protector blankets to cover seats and protect from hair/dirt/allergens 32. Pet seat belt safety system for in-seat flight 33. Poop bag dispensers near pet areas 34. A litter/digging room space in the terminal for cats to use the restroom 35. Cage-free space/room vs. boarding in cages 36. Sound resistant spaces to protect other passengers from barking 37. Collars with cameras for the owner to see from the pet’s perspective 38. Dog/cat “camp” at the airport to pet sit for the entire duration of travel 39. Pet music station options - soothing sounds 40. Expanding CarePod for larger pets 41. Adapting CarePod for animals other than dogs/cats 42. Therapy dog to walk around the gate for all customers to pet (a “flight ambassador” with a name tag) 43. Appointment guideline about the pet travel (policies or requirements are too complex) 44. Active noise control for pets 45. Mental healthcare for pets during the flight 46. From the international flight: stimulating daylight to adjust the time difference 47. Make a “pet relief station” like a small patch of fake grass 48. Delta “ pet’s parents chat group” app or platform on the touch-screen to let people chat during the flight 49. Partner with a pet hospital or organization to let the health certification process much easier 50. A pet passport or Pet Frequent Flyer Program

petMiles A FREQUENT FLYER PROGRAM FOR PETS

Because our animal friends deserve to fly in style, Delta now offers a frequent flyer program for cats and dogs. For the low cost of an annual membership, you can earn points whenever your pet flies. Delta PetMiles Membership includes: Access to a VIP Pet Lounge in the Delta terminal, complete with a pet relief station Priority Pre-boarding Upon boarding, receive a goodie bag of gourmet treats with coupons from partnering pet-centric stores Free download of our user-friendly, interactive PetMiles Passport app that makes pet travel easy! As an incentive, points can be exchanged for: Magazine subscriptions Personalized Delta-branded pet identification tags Fresh pet food upgrades Discounts on future pet travel Souvenir "painted" tickets and other duty-free merchandise! For every 100 points earned, Delta will make a donation to an animal rescue of your choice.

petMiles

e g n u o L

petMiles The App includes access to the following:

petMiles

p p A The

Pet Profile (unlimited profiles) Digital copy of Pet passport Bar Scan for you and your animal friend to join the TSA Pre line PetMiles tracker Redeemable rewards Pet ticket reservations Animals on the same flight Pet Service Menu Options Video footage of pet in CarePod The objective of the interactive app is to be a "one-stop" shop, allowing pet travel to be a stress-free experience.

petMiles

Animal Rescue Organizations

Pet stores

PART THREE

Ethnographic Methods petMiles

SUMMARY OF RESEARCH METHODS Our survey is designed to extract information from pet owners that will help us to identify our target customer, learn about their pain points and obstacles during their journey, develop and refine our MVP, and test our hypotheses. We plan to collect demographic details around age, gender, income, and relationship status, as this will allow us to discover commonalities among customers and tailor the pet travel experience to suit their needs. Knowing the type of pet and frequency of pet travel will shine light upon the demand for this sort of service. Learning more about current satisfaction levels will enable us to test our assumption that improved service in this realm will be embraced by customers. We also want to collect psychographic information. This includes why pet owners decide to travel with or without their pets, and their preferences and concerns around the experience. These details will determine the customer pain points throughout their journey and where we can improve. It is also critical to glean the financial threshold that customers are willing to spend on pet travel so that our MVP can be accessible. Lastly, we also plan to lightly float our ideas to see where we should prioritize focus and what elements are the most appealing. If an element does not seem to gain traction, we will scrap the idea and pivot.

HYPOTHESES AND TESTS Our assumptions include the following, with pass/fail tests to determine whether they are correct or not. We believe that pet owners experience stress around flying with their pets and would appreciate an improved experience. If at least 30% of respondents experience a stress level of 5 or more around pet travel, then our hypothesis has passed. We believe that pet owners are dissatisfied with the current pet travel options. If at least 30% of respondents describe their latest flying experience with pets as somewhat dissatisfied or less, then our hypothesis is correct. We believe that pet owners who are older (40+) with an income of over $50,000 will be more likely to travel with their pets and spend money on their pets’ travel experience. If the majority of respondents fall in this category, then our hypothesis has passed. We believe that a VIP pet lounge in the airport terminal will decrease stress levels around traveling in both pets and their owners. If the majority of respondents state that the option of a VIP pet lounge would appeal to them, then our hypothesis has passed. We believe that a frequent flyer program for pets will foster new customers and increase customer loyalty of existing customers. Our MVP will determine this later in the idea development process. This survey will help us design it. We believe that an app that serves as a central hub for pet travel arrangements will relieve customer pain points. Our MVP will determine this later in the idea development process. This survey will help us design it.

RESEARCH PLAN

The four team members will each recruit at least 7-8 pet owners to respond to the survey in order to collect at least 30 responses. This will include asking known acquaintances and posting on social media, including pet-focused groups, to solicit a broader response. Among us, we will strive to recruit respondents from a diversity of backgrounds and age groups in order to eliminate a potential bias from recruiting from our own known contacts. Our hypothesis guesses that older and wealthier customers are more likely to spend money towards these services, and so we need to ensure that our respondents include members of all demographic groups. We will use Google Forms to create and deploy our survey. We are unable to do “fly on the wall” research by observing our customers in their natural habitat but plan to conduct interviews in order to learn more. In addition to the survey, each team member will interview 1-2 pet owners to extract additional details around their experiences, including stories and examples. We will ask the subject to describe their travel experiences with pets, how the experience would be if they could “wave a magic wand” and to expound upon their pain points. This will deepen our understanding of the customer journey and may also spark ideas as we develop our prototype.

SURVEY RESULTS

DEMOGRAPHICS Pet Status

Age

Gender Prefer not to say 2.7%

above 56 5.4%

below 24 years old 29.7%

Male 32.4%

40 to 55 years old 32.4%

Female 64.9%

Yes, I am currently or have been a pet owner. 100%

25 to 40 years old 32.4%

DEMOGRAPHICS continued...

Household Income Prefer not to say 10.8%

More than $200,000 16.2%

Relationship Status Living with a significant other 10.8%

Less than $25,000 10.8%

Married 32.4% $25,000 - $50,000 21.6%

Single 48.6%

$100,000 - $200,000 18.9% $50,000 - $100,000 21.6%

Married (having two or more family members) 8.1%

PET QUESTIONNAIRE Type of Pet

Last Traveled with Pet?

Fish Dog & cat 2.7% 5.4%

Flown with a pet in the past? Once 18.9%

Never 16.2%

Past month 21.6%

Cat 10.8%

Past 3 months 2.7%

Never 51.4%

Over 2 years ago 21.6% Past year 16.2%

Dog 81.1%

Past 2 years 21.6%

More than once 29.7%

PET QUESTIONNAIRE continued...

Frequency of pet boarding/kenneling Always 2.7%

Most of the time 10.8%

Reasons you bring your pet along with you: Moving/Relocating

About half the time 2.7%

Just wanted to bring my pet(s) with me Traveling for a long period Couldn’t find a sitter at home Emotional support/Service animals Physical support/Service animals Shipped from the breeder (or previous owner)

Never 51.4%

Boarding service at home was too expensive It was an emergency

Rarely 32.4%

Boarding services available weren’t trustworthy There are no boarding services near me She is not design for fly due to short nose which she has harder to breathe. Bring to others N/A (never flied with pets) 0

15--19.5% 14--18.2% 15--19.5% 5--6.5% 4--5.2% 5--6.5% 0 5--6.5% 1--1.3% 1--1.3% 1--1.3% 2--2.6% 1--1.3% 8--10.4%

PET QUESTIONNAIRE continued...

12. Select all of the reasons that you have decided not to take your pet(s) on flights? Scared for their safety

20 12 10 9 2 2 2 2 2 1

They wouldn’t behave Cost is too high They are too old/young She is not design for fly due to short nose which she has harder to breathe Was in training process, will be able to fly with service certification Too busy on trip to spend time with pet/business/wedding or other Willing to but haven't happened yet Management upon arrival at destination Inconvenience 0

14. From the latest flying experience, if you flew with your pet in the cabin, how satisfied were you with the in-cabin pet experience? My pet flew separately in cargo 3.3% Strongly satisfied 20%

32.3% 19.4% 16.1% 14.5% 3.2% 3.2% 3.2% 3.2% 3.2% 1.6%

Somewhat dissatisfied 13.3%

Satisfied 20%

Somewhat satisfied 3.3%

Neutral 36.7%

Among our participants, only 43.3% felt satisfied with the in-cabin pet services based on their past experiences

PET QUESTIONNAIRE continued...

13. Concerns about flying with pet(s)

Animals’ anxiety 21.9%

18. If yes, what are you willing to spend to have your pet travel (domestic) with you? Not applicable 12.8%

Sounds 16.4%

I would pay up to $800 5.1% Passengers’ safety 8.8%

I would pay up to $500 12.8% Animals’ safety 16.5%

Pets occupy too much space 8.5%

I would pay up to $100 46.2%

Smells 10.5%

Pets’ shedding hair 8.6%

Allergies 8.9%

I would pay up to $300 23.1%

On average, the participants are willing to spent around $261 for pet travel (domestic).

PET QUESTIONNAIRE continued... 15. From your latest flying experience, if you flew separately from your pet, how satisfied were you with the experience?

Somewhat satisfied 6.5%

Strongly satisfied 6.5%

On a scale of 1 to 10, with 1 being not stressful at all and 10 being extremely stressful, what is your stress level with flying with your pet? (scale of 1 to 10) 15

28.2% Not applicable 41.9%

Neutral 19.4%

23.1%

12.8% 5 Somewhat dissatisfied 3.2%

7.7% 5.1%

Dissatisfied 6.5%

5.1%

5.1% 5.1% 2.6%

2.6% Strongly dissatisfied 16.1%

On those who flew separately with their pets in the flights, there were 25.8% who felt dissatisfied with the services.

Average response is 5.6 out of 10 (extremely stressful flying with their pets)

PET QUESTIONNAIRE continued... 16. Do you agree or disagree with the following statements? A. I will only use pet-friendly transportation methods.

B. I care more about my pets’ comfort than my own when traveling.

Disagree 5.1%

Disagree Neutral 2.5% 7.7% Neutral 15.4% Somewhat agree 17.9%

Strongly agree 41% Somewhat agree 5.1% Strongly agree 59.1% Agree 12.8%

77% of our participants claimed that they will only use pet-friendly transportation methods.

Agree 30.8%

Nearly 90% of our participants claimed that they care more about their pets' comfort than them while traveling.

PET QUESTIONNAIRE continued...

21. What elements would inspire you to visit a VIP pet lounge in an airport terminal? (select all that apply)

20. When waiting for your flight at the gate, would the existence of a VIP Pet Lounge area appeal to you? No 7.7%

21--12.7% 31--18.8% 10--6% 33--20% 12--7.3% 17--10.3% 12--7.3% 3--1.8% 12--7.3% 14--8.5%

Coffee station for pet owners Cageless dog run area Cat playroom with scratching posts and toys Pet relief stations with provided clean-up tools Pet spa and/or grooming salon Soothing music/sounds/visuals/smells for pets On-site veterinarian Instagram selfie station Pet-related merchandise Gourmet pet food cafe 0

VIP Pet Longe would appeal to 93% of our participants, and the top three elements in the VIP lounge are: 1.Pet relief stations with provided clean-up tools 2.Cageless dog run area 3.Coffee station for pet owners

Yes 92.3%

PET QUESTIONNAIRE continued...

19. What is most important to you when planning your pet's travel arrangements?

22. What elements of a pet travel app would appeal to you?

I need to know what is allowed and not allowed. 2.6% Convenience of my own travel arrangements 20.5%

Tracking pet travel miles to exchange for incentives such as merchandise, upgrades and discounts An easy platform for booking pet travel Shortcuts around pet documentation A video screen to see your pet in their cage, whether below your seat or in cargo Articles about pets and pet travel Gourmet menu items for pets

Price and keeping the cost down 15.4%

The safety of my pet 61.5%

An app would not be useful to me. 0

If you could wave a magic wand, what would your pet travel experienc e look like?

Amelia

Brenda

Kiran

Dog owner of "Blanche"

Owner of "Kronos" the Great Dane

Dog owner of "Adobe"

"Why can’t we have FLIGHTS FOR DOG OWNERS?! Like, ONLY dog owners would sign up. Or people who just like dogs, I guess. People would pay big money for that. Here’s how I see it: 1 dog every other seat. So, in a 6 seat row (3 on each side of the aisle), there are only 4 dogs. Unless you have dogs from the same household, adn then they can be as close together as you need. Pay more for a dog that needs its own row. (1 dog on your side of the aisle.) The whole time, your dog is at your feet. They have blankets on the floor so they don’t get cold, and small bowls for the dogs to drink from that are built into the area. This means more legroom for the dog and you to fit comfortably. Dog has to stay on leash the whole time and down at your feet. No running in the aisle, or they’re kicked off or fined or whatever. If there’s an accident, the owner has to clean it up. Or you get fined. The overall caveat is that the dogs must be well behaved and seated or laying down the whole flight, and comfortable being near other dogs (or wear a muzzle)."

"I would love to have a seat section in which I can be next to my pet and interact with it during the flight. Visualize the business class but for exclusively designed for pets and call it "pet" class. The bigger the animal is, you can choose to select a seat with more space and privacy. If the solution is not feasible, I want the cargo space to have someone there monitoring the dogs with the lights on. I want to have access to intercom in which I can monitor via video and call out to my dog as needed."

"I hope everything before flying can be EASIER! Because the documentation process took me almost a month to complete before the flight. Also, during the flight, I was stressed because my dog was at the checked luggage area. I really hope that airlines could create comfortable pet sets beside their owners' seats at least. Extra pet service, in-cabin pet area would be considerablly good..."

Christine

Cat owner of " Orange" "Why not I can hold my cat during the flight? She is so small and kind, I don't think she will be a trouble marker during the flight. So I think the pet service policy should be flexible for different pets, especially for some baby pets who need specific care."

What pain points emerged from your pet travel experienc e?

Amelia

Brenda

Kiran

Dog owner of "Blanche"

Owner of "Kronos" the Great Dane

Dog owner of "Adobe"

"I haven't actually experienced pain points, other than having to lie and get a (bad) therapist to write me a note saying I have an anxiety disorder and need my dog with me on the flight. Blanche is too big for a crate and they want the crates to fit under the seats which is impossible."

"I have never taken Kronos on a flight due to his size. He will be forced to be put in the cargo and I do not feel comfortable putting him in that stressful position. I have heard a lot of horror pet stories that forced me to sacrifice my time with him when going on a trip. I always take him on road trips for this exact reason or find him a dogsitter. It is very frustrating. "

"Due to the policy of pet cargo in Taiwanese Airline, also because Adobe was overweight, my dog only can be set as check-in package. What my big concern was that, we can only make some water in its cage, and no food was allowed. Thankfully, that was only 3-hr flight, if it's longer, I wouldn't even consider to fly with my dog again."

Christine Cat owner of "Orange"

"So far I have never taken Orange a flight. I do not trust them. She is very sensitive and suspicious, I don't want her to stay in the cargo hold alone. And I knew there are lots of tragic accidents news about pet airline cargo service. I really hope someone can shift these situations."

Customer Journey Map

Survey & Interview Outcomes We believe that pet owners experience stress around flying with their pets and would appreciate an improved experience. If at least 30% of respondents experience a stress level of 5 or more around pet travel, then our hypothesis has passed. RESULT: 71.8% of respondents rated their stress level as a 5 or higher, so this hypothesis passes. We believe that pet owners are dissatisfied with the current pet travel options. If at least 30% of respondents describe their latest flying experience with pets as somewhat dissatisfied or less, then our hypothesis is correct. RESULT: 25.8% of respondents reported feeling dissatisfied about their last pet travel experience in cargo, and 16.6% reported feeling dissatisfied about their last pet travel experience in-flight, so this hypothesis fails. We believe that pet owners who are older (40+) with an income of over $50,000 will be more likely to travel with their pets and spend money on their pets’ travel experience. If the majority of respondents fall in this category, then our hypothesis has passed. RESULT: 56.7% of the pet-owning respondents reported an income over $50,000 and 37.8% of pet-owning respondents reported their age as 40 or higher. This test PARTIALLY passes - it can be determined that age is not a factor as much as income regarding how much the customer is willing to spend on pet services. We believe that a VIP pet lounge in the airport terminal will decrease stress levels around traveling in both pets and their owners. If the majority of respondents state that the option of a VIP pet lounge would appeal to them, then our hypothesis has passed. RESULT: 92.3% of respondents reported that access to a VIP pet lounge would appeal to them so this test passes.

$4.9 Billion

$219.6 Million

Total Addressable Market (TAM)

Serviceable Addressable Market (SAM)

$38.4 Million Serviceable Obtainable Market (SOM)

TAM (Total Addressable Market) The total addressable market is anyone who owns pets and wants to travel - whether or not they decide to bring their pet is dependent on several factors, but all could potentially be customers. According to a survey by the American Pet Products Association, 67% of United States households own pets, which means that pets exist in 84.9 million homes, including 63.4 million dogs and 42.7 million cats. This same survey determined that 37% of pet owners refuse to travel without their pets, which means that people are either not traveling at all or they are investing in pet travel options. Using a top-down approach, it could be said that if the entire 37% of pet owners who “refuse to travel without their pets” opted to travel, then there is the potential for more than 39.25 million dogs and cats to join their owners on trips in the United States. If they all chose to fly with Delta using the Delta PetMiles frequent flyer benefit program, then we would have 100% of the market share. That said, this giant number of pet owners do not necessarily fly once a year with their pets, while some may fly several times a year. If every single one of these pet owners flies once a year, and Delta charges $125 per pet, then the TAM would be almost $5 billion.

TAM = $4,906,250,000

SAM (Serviceable Addressable Market) Flying, traveling, and being able to afford pets is something that requires financial stability, so we would primarily serve the segment that makes $50,000 US or more. According to Statista, that is 74.6% of U.S. households (Statista Research Department). This narrows down our market to $3.6 billion. We also would only serve those who, in reality, fly with their pets. Historical data exists around the reality of how many pet owners fly with their animals which allows us to use the value theory approach to determining the SAM. A survey reported that 6% of pets board a plane every year (“Pet Travel Statistics 2020”), which in 2019, totaled over 2 million live animals transported by commercial air in the United States, and more than 4 million worldwide (Goldstein). Delta charges $125 per pet, which means that if they were the only airline that offered pet travel services, they would have made $250 million domestically and $500 million internationally in 2019. (This is not considering the CarePod which Delta introduced in early 2020 for a price tag of $850 per pet (Courtney). While this would likely increase our TAM, the numbers and indicators of success of this option are not yet available.) Applying that percentage of pets who actually fly annually (6%) to the percentage of our TAM who makes $50,000 or more a year (74.6%), we determined our SAM.

SAM = $219,603,750

SOM (Serviceable Obtainable Market) At this point, we need to determine how much of the market Delta absorbs. An average of 2,900,000 passengers fly every day in and out of U.S. airports (“Air Traffic by the Numbers”). Delta transported 204 million customers - an average of 560,000 every single day (Ciesluk). This means that Delta absorbs 19.31% of the total passengers in the United States. Combined, Delta, American Airlines and United made up 50% of the market in 2019 (Ciesluk). In 2019, the size of the entire U.S. airline industry was $152 billion (not counting cargo and foreign airlines), though anticipated to drop due to the coronavirus pandemic (“US Airline Market Share”). Globally, Delta is part of SkyTeam alliance which absorbs 19% of the international market (“US Airline Market Share”). As depicted in the chart from T4 below, Delta’s domestic market share was 17.5% of airlines in the U.S. between February of 2019 and January 2020, just 0.1% behind American Airlines. If we continue to gain all of Delta’s share of the market, then that means we stand to gain upwards of $38 million.

SOM = $38,430,656

Competitor-Complementer Matrix We compared airline pet policies, prices of services, and animals transported on the United Stated between 2017 and 2018 to create the competitor-complementer Matrix by two values - price and customer satisfaction. According to this diagram, as we know, American Airline is our biggest competitor that has the same price products and likely customer satisfaction.

Next Steps According to previous research works Delta Pet Service should improve: Before the service: Providing a clearly, straightforward, easy to understand step-by-step guidline for customers to register the pet service on both website and app. During the service Add instruction page about the Pet Lounge on both website and app. Combining with CarePod to provide real-time monitor service during the flight via app. After the service Calculating "miles"or "points" for the pets who travel and they can be exchanged for discounts on the pet friendly seats and CarePod travel.

PART FIVE

Decision-Making petMiles

The Original Product Delta offers two ways to travel with pets: Flying in Cabin + Delta Cargo Pet Travel on Delta “Take off with your favorite friend, even if they’ve got fur. Some pets can travel with Delta as a carry-on or shipped as cargo, depending on their size.” (Delta, 2020) Original Product/Service Description Small dogs, cats, and household birds can travel with the owner in the cabin for a one-way fee. The fee is collected at the check-in desk and they must be able to fit under the seat in front of you inside a pet carrier. The traveler is also entitled to bring one personal item in addition to the kennel. The option of carrying on a pet on board with you is only valid if you are traveling anywhere except Australia, Barbados, Dakar, Dubai, Hong Kong, Iceland, Jamaica, New Zealand, Republic of Ireland, South Africa, United Kingdom, and the United Arab Emirates. Each flight has a limited number of pets on board and they are first-come, first-serve basis. If the pet doesn’t meet the size requirement, the client can resort to the Delta Cargo (CarePod) option.

The Pivot petMiles Which furry friend are y ou

trave ling w ith to day?

"Wherever you go, your pet goes." -Delta PetMiles Instead of calling the airlines to see if they have a vacancy for your pet to travel with you, the logistics can be intertwined within the app! The pet travel segment will be incorporated into the existing Delta app. The breakdown of the app includes the following: PET PROFILE You will be able to create a profile for your pet. And Delta is going to know which furry friend to be expected on-board. The app will let you know which seats are “pet-zone” and from there, you can select your seat. The pet-zone seats are prioritized for pet owners.

KRONOS

200

miles

CHEWY

10,000

ADD A PET

miles

TICKET RESERVATION Instead of calling Delta’s customer support to book pet travel, you can purchase a ticket for your pet directly from the app. You can choose to reserve the ticket either round-trip or one-way. The app will inform you of the max capacity of animals and how many other animals will be traveling on-board on the flight as well. CAREPOD VIDEO SERVICE For larger animals that are traveling in cargo, instead of depending on the flight tracker, you would also be able to monitor their safety via the offered video monitoring service through the Delta app. PETMILES With the app’s pivot in place, the traveler will be able to collect miles for their furry friends. Think Frequent Flyer program but with a twist (exclusively for pets)! The app will automatically calculate miles per pet. The miles can be exchanged for discounts on the pet-friendly seats and CarePod travel. The more miles the pet has, the more perks will be unlocked such as accessing the VIP Pet Lounge.

MARKET SIZE

$219.6 Million Serviceable Addressable Market (SAM) BECAUSE BOTH PET OWNERSHIP AND TRAVEL REQUIRE FINANCIAL MEANS, THE SAM IS ANY U.S. HOUSEHOLD THAT MAKES OVER $50K/YEAR (74.6%) WHO FLIES ANNUALLY WITH THEIR PETS (6%).

$4.9 Billion

Applying the 6% of pets who actually fly annually (Goldstein) to the percentage of our TAM who makes $50,000 or more a year (74.6%, which totals 3.6 billion people, per Statista), we determined our SAM.

Total Addressable Market (TAM) THE TAM IS ANYONE WHO OWNS PETS AND WANTS TO TRAVEL WHETHER OR NOT THEY DECIDE TO BRING THEIR PET IS DEPENDENT ON SEVERAL FACTORS, BUT ALL COULD POTENTIALLY BE CUSTOMERS. 37% of pet owners “refuse to travel without

$38.4 Million

their pets” so there is the potential for more than 39.25 million dogs and cats to join their owners on trips in the United States (American Pet Products Association).

Delta

charges $125 per pet, so we multiplied that amount by the possible number of pets that could travel.

Serviceable Obtainable Market (SOM) THE SOM IS HOW MUCH OF THE MARKET DELTA ACTUALLY ABSORBS. Delta absorbs 17.5% of the domestic market share (see T4 chart), so we calculated that percentage of our SAM.

“US Airline Market Share.” T4, 30 Jul. 2020. https://www.t4.ai/industry/us-airline-market-share. Accessed 27 Jan. 2021.

Competitor-Complementer Matrix We compared airline pet policies, prices of services, and animals transported in the United States between 2017 and 2018 to create the competitor-complementer matrix. We evaluated two values - price and customer satisfaction. According to this diagram, we determined that American Airlines is our biggest competitor that has the same price products and likely customer satisfaction.

Competitor Analysis According to the complementer Matrix's result, American Airlines is our key competitor.

5 4 3 2 1

ice Pr

irp e( a ac

Sp y rit cu Se Pe t

em pl su p Fo

at er

or t)

ty fe Sa

de la y) ht fli g

t( en

ice

Co m

rt ab

lin

Comparing with American Airlines pet service (5 good-1 bad) American Airlines and Delta Airlines have the same pet service price. American Airlines and Delta Airlines both have specific, secure pet spaces in the airport like a "dog park." American Airlines has a better step-by-step guideline for customers to register the pet service than Delta Airlines. Delta Airlines ground handlers offer pets personalized care if the flight has delayed. Delta Airlines cooperates with a third party (CarePod) to launch a specific standard of travel with a state-of-the-art pet travel carrier that provides real-time updates for customers.

American Airline

Delta Aireline

SURVEY RESULTS

PET QUESTIONNAIRE HIGHLIGHTS From the latest flying experience, if you flew with your pet in the cabin, how satisfied were you with the in-cabin pet experience?

Select all of the reasons that you have decided not to take your pet(s) on flights? Scared for their safety

20 12 10 9 2 2 2 2 2 1

My pet flew separately in cargo 3.3% Strongly satisfied 20%

32.3% 19.4% 16.1% 14.5% 3.2% 3.2% 3.2% 3.2% 3.2% 1.6%

Somewhat dissatisfied 13.3%

Satisfied 20%

Somewhat satisfied 3.3%

Neutral 36.7%

Among our participants, only 43.3% felt satisfied with the in-cabin pet services based on their past experiences

PET QUESTIONNAIRE HIGHLIGHTS continued... Do you agree or disagree with the following statements? A. I will only use pet-friendly transportation methods.

B. I care more about my pets’ comfort than my own when traveling.

Disagree 5.1%

Disagree Neutral 2.5% 7.7% Neutral 15.4% Somewhat agree 17.9%

Strongly agree 41% Somewhat agree 5.1% Strongly agree 59.1% Agree 12.8%

77% of our participants claimed that they will only use pet-friendly transportation methods.

Agree 30.8%

Nearly 90% of our participants claimed that they care more about their pets' comfort than their own while traveling.

PET QUESTIONNAIRE HIGHLIGHTS continued... From your latest flying experience, if you flew separately from your pet, how satisfied were you with the experience?

Somewhat satisfied 6.5%

Strongly satisfied 6.5%

On a scale of 1 to 10, with 1 being not stressful at all and 10 being extremely stressful, what is your stress level with flying with your pet? (scale of 1 to 10) 15

28.2% Not applicable 41.9%

Neutral 19.4%

23.1%

12.8% 5 Somewhat dissatisfied 3.2%

7.7% 5.1%

Dissatisfied 6.5%

5.1%

5.1% 5.1% 2.6%

2.6% Strongly dissatisfied 16.1%

On those who flew separately with their pets in the flights, there were 25.8% who felt dissatisfied with the services.

Average response is 5.6 out of 10 (extremely stressful flying with their pets)

Decision & Justification PROCEED WITH MVP OF A PET TRAVEL PAGE WITHIN THE EXISTING DELTA APP THAT STREAMLINES PET TRAVEL BOOKING & PERKS, AND DESIGNATES SPECIFIC SEATING AREAS FOR PET OWNERS. PRIORITIZE SAFETY & COST BY OFFERING DISCOUNTS FOR FREQUENT PET TRAVELERS AND FEATURING VIDEO ACCESS TO WATCH PETS IN CAREPOD CARRIERS IF APP PROVES SUCCESSFUL, UPGRADE EXISTING PET RELIEF AREAS IN TERMINAL TO VIP PET LOUNGES

Our survey and research showed that while the majority of pet owners have felt satisfied with their in-flight pet travel experience, a whopping 71.8% expressed high levels of stress around their experience, specifically around the booking of travel, cost and safety. This is the area that we plan to improve with our idea.

petMiles

In designing the PetMiles program, we plan to prioritize safety and cost because 32.3% of surveyed pet owners do not bring their pet on flights due to safety concerns, and 61.5% feel that safety is their top priority. The most popular app elements were a streamlined "platform for booking pet travel" and incentives such as discounts for frequent pet travelers, so that is where we will focus our MVP. We hope to absorb the portion of the market that owns pets but does not travel with their pets due to safety concerns. Because 77% of resondents will only use pet-friendly travel options, and 90% care more about their pets' comfort than their own, we will proceed with our MVP, focused on females who make over $50,000/year. If the app proves successful, we will upgrade the existing pet areas to become VIP Pet Lounges since 92.3% of respondents stated that this would appeal to them.

Next Steps

DURING THE SERVICE

petMiles

Designate a few "pet friendly" seats for pet owners to have space to have pets on board.

BASED ON COLLECTED DATA, DELTA CAN IMPROVE PET SERVICES BY DOING THE FOLLOWING:

BEFORE THE SERVICE

Provide a clear, straightforward, easy to understand step-by-step guideline for customers to register for pet benefits and upgrades on both website and app.

Add details about the Pet Lounge on both website and app.

+ Fluffy

PET

Collaborate with CarePod to provide real-time video monitor services via the flight via app.

AFTER THE SERVICE

Calculate "miles"or "points" for the pets who travel which can be exchanged for discounts on the pet friendly seats and CarePod travel.

Delta Airlines pet Miles Project B: Financial Research

Christina Call, Chia Hsuan Hsieh, Lori Erickson, YIhui Wang

PART ONE

Income Statement Pro Forma petMiles

BRAINSTORM THREE REVENUE MODELS REVENUE MODELS

Model 1 (RM1)

Model 2 (RM2)

Model 3 (RM3)

Revenue Model Names

Pet passenger ticket sales & CarePod ticket sales

Inflight pet services

Inflight Advertisements

Direct Labor & Material Categories

Cabin crews, Pilots, IT labors/ Fuel, SG&A expense, CarePod and Video Camera Purchases

Inflight pet supplies

IT labors/ SG&A expense

EXECUTIVE SUMMARY The three logical revenue streams for PetMiles consist of asset sales – both pet passenger tickets and inflight pet services – and advertising via inflight commercials and Sky Magazine, which up until the pandemic was produced monthly for over 5 million monthly readers (Delta News Hub). According to public TSA data, the number of passengers per day during the pandemic is 25% of what it was over the past two years, so in order to account for the pandemic, we figure that Y1 is 25% of our overall findings and then increased revenue annually in a post-pandemic fashion up to 115% in Y3. Knowing that Delta boasted 75,611 pet passengers in 2018 (United States Department of Transportation), and that they charge an average of $133 per pet passenger, we estimated that they made $10,056,263 from pet tickets in a non-pandemic year and slotted 25% of that into Y1 and the full amount into Y2 with the hope that the market will return to the status quo. There is no available data around CarePod sales to determine revenue, however, we figure that $850 is quite expensive and so Delta would sell these items at about 1/3 of the rate of regular pet ticket fees. To estimate revenue from advertising, we averaged the prices of 20 to 45-second commercial spots and in-flight magazine advertisements from other airlines (Wilson). In order estimate the revenue from advertising, we guessed that we can have 1-2 commercials at any given time and 5 ads per monthly magazinet (“Inflight Advertising Costs”). When estimating costs, we found an incredible resource in a management consultant report by Oliver Wyman that broke down what the costs are for airlines of Delta’s caliber. We learned that fuel is 19%, SG&A is 3%, crew is 25%, pilot is 15%, IT is 5% and inflight supplies are 0.3% (Stalnaker). We used these percentages to determine our costs across the board. We decided that we would offer a $25 discount for pets who accumulate 5,000 points (or miles), so we incorporated that into our costs, as well. Lastly, a partnership with Ring would enable our camera upgrade at a price tag of $30 per camera annually, which we distributed between the number of CarePods available at the 8 airports that offer CarePod services. We guessed that a CarePod costs $250 to purchase wholesale, and then estimated that each of the 8 airports that offer it carry about 826 carriers in inventory at any given time. We figure they would need that many since there are 920 Delta flights out of Atlanta per day (Delta News Hub). From our income statement pro forma, we learned that our PetMiles idea proves to be financially viable across all revenue models, with the CarePod sales in RM1 generating the most profit, and inflight pet services in RM2 generating the most consistent profit. Considering that Delta’s income statements report $6 billion in losses from 2020 (“Delta Air Lines, Inc. Income Statement”), it seems that the CarePod and pet ticket sales could help make a significant $22 million increase in profit over three years.

Three Revenue Models of the Income Statement 3 Year Projections Model 1 (RM1)

Model 2 (RM2)

Model 3 (RM3)

According to the Income Statement Pro Forma of three models, we found that Model 1 (RM1) has the highest growth rate of profit. And Model 2 (RM2) has a stable three-year income statement. However, the Model 3 has a potential risk of the income statement for longterm development.

PART TWO

Cost-Volume-Profit Analysis petMiles

Part 2: Cost-Volume-Profit Analysis

SCENARIO 1 (Best Case - High Sales, Lowest Costs)

How did we get there... CAREPOD COLLABORATION At this time, only 7 airport hubs offer CarePod services and, based on the number of Delta flights from each airport, we determined that Delta offers 1,943 flights per day. We used this number to determine that if there is an average of 1.5 CarePods per flight, that we would need an inventory of 2,915 Carepod carriers to maintain our Delta "pet mail" service. Additionally, we assume that we should set aside some maintenance expenses for the carriers. With that being planned, we anticipate repairs on up to 10% of the CarePods annually, at a cost of about $50. With the prediction that a CarePod costs $250 to purchase set in place, we multiplied that by 2,195 to determine the cost to purchase our inventory on Y1. The objective of the purchase is to be sufficient for the next three years. CUSTOMER EXPERIENCE/ENGAGEMENT The research has shown that the average cost for website maintenance is $41,000. As a trusted airline, we want to pay on the higher end of that to be competitive to plan for a strong customer acquisition along with customer retention. MARKETING PROMOTION We have learned that Delta spent less than $100 million USD in 2020 for advertising alone. With the data, we assume that Delta spent more in Y1 and reduce the spendings for Y2, Y3 as their brand increases more trust.

Part 2: Cost-Volume-Profit Analysis

SCENARIO 2 (Worst Case - Low Sales, Increased Costs)

How did we get there...

CAREPOD SALES We divided the original sales numbers used in Scenario 1 by 2 to calculate the possible worst-case scenario. Comparing with the other two scenarios, we found that this scenario to be the least profitable model. According to the calculations, the third year shows that the profit was only about half of that of other models in the same period. However, it still proved profitable. CAREPOD COLLABORATION For fuel costs, we applied the same price point of a one-way trip for a human passenger to a CarePod carrier. We also accounted for maintenance costs with the assumption that we'll need to prepare to repair 10% of the CarePods annually at a cost of about $50. To account for the case in which the CarePod ends up costing more, we put down $350 as the production cost of a CarePod carrier and multiplied that by 2,195 to determine the cost to purchase our inventory on Y1 with the same prediction of it being a one-time purchase. MARKETING PROMOTION Research shows that Delta spent less than $100M in 2020 for advertising, we would assume that they spent more in Y1 rather than Y2, Y3. In the worst-case scenario, we'll have to spend more in this area to help increase sales.

Part 2: Cost-Volume-Profit Analysis

SCENARIO 3 (Most Realistic)

How did we get there...

CAREPOD COLLABORATION We felt that our calcuations for a best case scenario is also applicable for most realistic with the difference in production cost for CarePods by $50 more per carrier. The price point of a one-way trip for a pet passenger on a CarePod is $850. One year of a Ring camera costs $30, which we multiplied by our stock of 2,195 CarePods. The inclusion of this extra security measure is our main pivot, based on our survey results showing a demand for increased safety to decrease stress. CUSTOMER EXPERIENCE/ENGAGEMENT The research has shown that the average cost for website maintenance is $41,000. As a trusted airline, we want to pay on the higher end of that to be competitive to plan for a strong customer acquisition along with customer retention. MARKETING PROMOTION We have learned that Delta spent less than $100 million USD in 2020 for advertising alone. With the data, we assume that Delta spent more in Y1 and reduce the spendings for Y2, Y3 as their brand increases more trust.

Cost-Volume-Profit Analysis Compare time node of achieving the break-even point Comparing the cost-volume-profit for all three scenarios, we found that Scenario 3 ( the most realistic) could be the fastest one to achieve the profit balance. The Scenario 2 and Scenario 1 are comparable when it comes to the timing of achieving the break-even point.

$800,000

Compare the Profit during three years period

$600,000

Comparing the cost-volume-profit for all three scenarios, we found that the Scenario 3 and Scenario 1 are very similar in terms of profit, and then Scenario 2 has the worst expectation because the profit is only half of the other two models.

$400,000

$200,000

Year1

Year2

Year 3

Part 2: Cost-Volume-Profit Analysis

And here's our take... We felt that our calculation for Scenario 1 (best case) is also applicable to Scenario (most realistic). The biggest difference between both scenarios is the production cost for the CarePods by $50. Our assumption that the cost has a lot to do with the number of carriers are being ordered in a bulk at a time. It would be best to order many carriers at once for the exact reason and let the sales grow as each year goes by as the demand increases. We also learned that our pivot - to incorporate a partnership with Ring cameras to increase safety and decrease stress during CarePod use - would not negatively impact the bottom line.

PART THREE

Budgeting petMiles

Part 3: Budgeting

TOTAL EXPENSES

We relied on the "Most Realistic" scenario from our Cost-VolumeProfit analysis to create a quarterly budget for Delta Airlines across three years. To determine the revenue for our budget, we pulled data from Delta's quarterly income statement and then calculated the percentage of operating revenue per quarter.

Part 3: Budgeting

Executive Summary

According to our calculations, Delta's net income increases 204.5% in Y2 and 156.5% in Y3. If Delta meets these CarePod sales targets and expenses, it would certainly help with the financial sting of the pandemic. According to Reuters, Delta anticipates a burn rate of $14 million per day and overall revenue could decrease 30% from its 2019 Q4 earnings of $11.44 billion. Our three year projections estimate that the CarePod revenue alone would bring in $1.8 billion - an average of $153 million per quarter and $1.6 million per day. From this, we can determine that the CarePod service likely won't slow the burn rate much, but it will contribute to more than 11% of it. Our idea would be an independent investment, so this budget should be compared to other project budgets before deciding where funds should be spent. However, the added camera on CarePod units would be such a relatively minor expense that would likely spark a positive impact on sales, especially if the cameras make customers feel more secure about their pets traveling in cargo.

PART FOUR

Key Performance Indicators and Balanced Scorecard petMiles

Part 4: Balanced Scorecard

Key Performance Indicators

Customer Acquisition Cost

Customer Lifetime Value Customer Churn Monthly Cash Burn Net Promoter Score Based on our CVP analysis, we have assumed that Delta spends 70 to 80 million a year on marketing. We found that classic billboards would be $250-$14,000 per month and digital billboards - $1,200-$15,000 per month. We added up these four numbers to be divided by 4 and multiplied by 12 (months) to get around 91K (billboards yearly cost). The rest amount for these 3 items we divided into 50% (for marketing expenditures), 33% (for Google Adwords), and 17% (for sales + marketing salaries) for this CAS estimation.

PetMiles Customer Acquisition Cost Marketing Expenditures Sales + Marketing Salaries Billboards Google Adwords

$35,000K to 40,000K $11,815 to 13,500K $91K $23,100K to 26,400K

Total New Customers: 100,000 annually

CAC: $700 to $800

Part 4: Balanced Scorecard

Key Performance Indicators 1,063,975 (Unit sold)

Customer Lifetime Value

Customer Churn Monthly Cash Burn Net Promoter Score For calculating CLV, based on the unit sold in our CVP analysis, we assumed our customer would purchase on avg. once a year over five years to get the number for $2655 in Y1. In Y2, it will be higher as Delta gradually improves the overall service for pet travel. So the number based on the customer would make on avg. of 1.5 times a year for six years. The number in Y3 is based on an avg. of 1.7 times purchase a year for 8 years. (To be noted that the CarePod is sold at the price of $850.)

No. of Customers/ Units sold

Customer Acquisition Cost

730,000 (Unit sold) $7222/ per customer 365,000 (Unit sold) $4779/ per customer $2655/ per customer

Time (year)

Part 4: Balanced Scorecard

Customer Acquisition Cost

Customer Lifetime Value Customer Churn

Monthly Cash Burn Net Promoter Score

Key Performance Indicators As of June 2020, Delta flew over 180 million passengers annually. With that number in place, the airline carried 700 service/support animals daily totaling up to 250,000 animals in a year alone. We assume that the numbers continue to grow as each year goes by although there may be a churn rate of 10%. Delta is committed to customer retention by being the only airline with CarePod services. Our pivot is going to reinforce that by offering customers a reason to come back with the petMiles in place. Our team predicts that the pivot is going to bring down the churn rate to 6%.

Customer Acquisition Cost

Customer Lifetime Value Customer Churn

Key Performance Indicators According to Delta's CEO, Ed Bastian, the airline is currently burning approximately 60 million in cash on a daily basis which brings a total of $1,800,000,000 cash-burning monthly. We predict that the peak is between June and August as that is when the demand is at its highest.

Monthly Cash Burn

2.5

Net Promoter Score

2 1.5 1 JAN

FEB

MAR APR MAY

JUN

JUL

AUG

SEPT OCT

NOV

DEC

in billions

Part 4: Balanced Scorecard

Key Performance Indicators Competitive Performance: Relationship Drivers

Customer Acquisition Cost

Customer Lifetime Value Customer Churn Monthly Cash Burn Net Promoter Score

Online Experience Ease of Doing Business Buying/Sign−up Experience Company Reputation Customer Service Experience Treats customers fairly Product or Service Reliability Product or Service Features Overall Value for Money

The score is based on the Net Promoter Industry Report-Airlines 2014 by Satmetrix.com. Delta’s average satisfaction score is represented as a red dot, while the Sector average, best, and worst scores in the benchmark is represented in gray.

7.0

7.5

8.0

Mean Satisfaction Score

8.5

Part 4: Balanced Scorecard

Key Performance Indicators Competitive Performance: Industry Drivers

Customer Acquisition Cost

Customer Lifetime Value

Attitude & Friendliness of Cabin Staff Efficiency & Attention of Cabin Staff Check In Process

Customer Churn

Ease of Booking Baggage and Extras

Monthly Cash Burn

Food & Drink Quality

Net Promoter Score

In Flight Entertainment Quality Seat Comfort

Delta Score

Worse in Sector

Sector Avg

Best in Sector

6.5

7.0

7.5

8.0

Mean Satisfaction Score

8.5

Part 4: Balanced Scorecard

Key Performance Indicators

Net Promoter Score

Competitive Performance: Relationship Drivers

Product or Service Features

Company Reputation

Treats customers fairly

Product or Service Reliability

Ease of Doing Business

Customer Service Experience

Overall Value for Money

Online Experience

Buying/Sign−up Experience

)r( dnemmoceR ot doohilekiL htiw noitalerroC

A 75%

Prioritize C

70%

65% 60%

B Leverage

Improve

Maintain I

55%

7.4

7.5

7.6

7.7

7.8

7.9

Mean Satisfaction Score

8.0

8.1

Part 4: Balanced Scorecard

Key Performance Indicators

Net Promoter Score

Competitive Performance: Industry Drivers

In Flight Entertainment Quality Food & Drink Quality

Ease of Booking Baggage and Extras

Seat Comfort

Efficiency & Attention of Cabin Staff

Attitude & Friendliness of Cabin Staff

Check In Process

)r( dnemmoceR ot doohilekiL htiw noitalerroC

A 52%

Prioritize

50%

Leverage B

48% 46%

Improve

Maintain G

44%

6.5

7.0

7.5

8.0

Mean Satisfaction Score

8.5

Part 4: Balanced Scorecard

Executive Summary In order to measure the success of our idea and its impact on the ongoing health of Delta, we must rely on several key performance indicators. Because our goal is to improve the travel experience for pet owners, we plan to lean primarily into metrics that gauge the customer perspective. The purpose of a frequent flier program is to increase customer loyalty, so measuring customer lifetime value (CLV) will enable us to evaluate whether our idea is retaining customers in a profitable way - we want customers to return again and again thanks to our incentives. Customer churn will allow us to track the rate that we are losing customers so that we can pivot and reevaluate the competitive market, if need be. Right now, it is at 6% which is ideal, but we recommend implementing pet travel improvements to decrease the rate. Customer acquisition cost (CAC) will allow us to determine if our marketing strategy proves successful - it is more costly to acquire new customers than retain existing ones, so hopefully the current CAC of $800 decreases over time. The Net Promoter Score helps us determine whether customers would recommend the CarePod services and Delta as the preferred airline for pet travel. These surveys will provide insight into specifics around where we can continue to adapt and improve our service. For example, if safety concerns continue after the launch of the camera upgrade, we could launch a program that trains crew members in pet handling and care. Based on the current Net Promoter Score, we recommend that services such as PetMiles and seat comfort should be prioritized. This would also possibly help improve the response to the value received for the money. Net cash burn will allow us to identify negative cash flow in order to ensure we do not run out of money. Of course, the global pandemic has resulted in a high monthly cash burn for Delta overall, but we can track the impact of this new service on our operating costs. Fortunately, this idea requires very little cash investment in order to create an ongoing revenue stream.

Works Referenced "Airline Fuel Costs - How Much Does It Cost For Me To Fly?" Aardy.com, 2017. https://www.aardy.com/blog/airline-fuel-costs-ticket-price/. Accessed 20 Feb. 2021. "Airline Operating Costs and Productivity." International Civic Aviation Organization, 23 Feb. 2017. https://www.icao.int/mid/documents/2017/aviation%20data%20and%20analysis%20seminar/ppt3%20-%20airlines%20operating%20costs%20and%20productivity.pdf. Accessed 18 Feb. 2021. American Pet Products Association. “Pet Industry Market Size & Ownership.” APPA, https://www.americanpetproducts.org/press_industrytrends.asp. Accessed 27 Jan. 2021. Bastian, Ed and Polrit Disatapundhu. “Delta Q&A: Future of air travel will be defined by the trust we build today.” Delta News Hub, 12 Aug. 2020. https://news.delta.com/delta-qa-future-air-travel-will-be-defined-trust-we-build-today. Accessed 5 Jan. 2020. Berman, Brad and Jennifer Pattison Tuohy. "Ring Home Security System Review 2021." U.S. News, 22 Oct. 2020. https://www.usnews.com/360-reviews/home-security/ring-alarm. Accessed 19 Feb. 2021. Burke, Kathleen. “After 74 Deaths in a Decade, Delta Bans Pets from Being Checked like Luggage.” MarketWatch, November 18, 2015. https://www.marketwatch.com/story/delta-will-no-longer-allow-pets-to-travel-with-checked-luggage-2015-11-17. Ciesluk, Karol. “Is Delta the Leading US Airline? These States Would Say So.” SimpleFlying.com, 9 Feb. 2020. https://simpleflying.com/2019-us-airlines-performance/. Accessed 27 Jan 2021. Ciesluk, Karol. “Lower Fuel Costs Lead to Record-Breaking Year for Delta.” SimpleFlying.com, 15 Jan. 2020. https://simpleflying.com/lower-fuel-costs-lead-to-record-breaking-year-for-delta/. Accessed 27 Jan. 2021. Crooks, Nathan. “Delta Air CEO Reiterates Cash Flow Target in ‘Year of Recovery.’” Bloomberg.com, 1 Jan. 2021. P. N.PAG. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=buh&AN=147873783&site=bsi-live. Delta Airlines. "Safer Travel.” Delta Pet Policy: Flying with Dogs, Cats & More. Delta Air Lines. https://www.delta.com/us/en/pet-travel/overview. Accessed 7 Jan. 2021. Delta Air Lines, Inc. (DAL) Income Statement.” Yahoo Finance, 12 Feb. 2021. https://finance.yahoo.com/quote/DAL/financials/. Accessed 13 Feb. 2021. Delta Flight Museum. “History.” https://www.deltamuseum.org/exhibits/delta-history/first-in-the-air. Accessed 7 Jan. 2021. Delta Air Lines. (n.d.). Retrieved February 18, 2021, from https://advertisers.mediaradar.com/delta-air-lines-advertising-profile Delta Air Lines (n.d) Retrieved February 18, 2021, from https://www.glassdoor.com/Salary/Delta-Air-Lines-Airline-Pilot-Salaries-E197_D_KO16,29.htm "Financials: Quarterly Results." Delta Investor Relations. https://ir.delta.com/financials/default.aspx. Accessed 24 Feb. 2021. Gay, Charles. “Delta’s history: From dusting crops to connecting the world.” Delta News Hub, 23 Apr. 2019. https://news.delta.com/deltas-history-dusting-crops-connecting-world. Accessed 5 Jan. 2021. Gay, Charles. “A mission-driven brand: Global impact in Delta’s Corporate Responsibility Report.” Delta News Hub, 31 Jul. 2020. https://news.delta.com/mission-driven-brand-global-impact-deltas-corporate-responsibility-report. Accessed 5 Jan. 2021. Goldstein, Michael. “Americans Spending Billions on Pet Travel and Boarding.” Forbes, 22 Feb. 2019. https://www.forbes.com/sites/michaelgoldstein/2019/02/22/americans-spending-billions-on-pet-travel-and-boarding/?sh=4ea075b224f7. Accessed 27 Jan. 2021.

Works Referenced “Inflight Advertising Costs.” IMM International, 24 Jan. 2013. https://www.imm-international.com/inflight-advertising-costs/. Accessed 12 Feb. 2021. “MarketLine Company Profile: Delta Air Lines, Inc.” MarketLine Company Profile, 28 Aug. 2020, pp. 1-71. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=buh&AN=146009710&site=bsi-live. Painter, K. L. “Delta rolls out safer pet carriers, hoping more passengers will put animals in cargo.” The Seattle Times, 22 Jan 2020. https://www.seattletimes.com/business/delta-rolls-out-safer-pet-carriers-hoping-more-passengers-will-put-animals-in-cargo/. Accessed 7 Jan 2020. Schlangenstein, Mary. “Delta Air Lines Sees Cash Losses Mounting as Virus Slows Travel.” Bloomberg.com, 3 Dec. 2020. p. N.PAG. EBSCOhost, search.ebscohost.com/login.aspx?direct-true&db-buh&AN=147358128&site-bsi-live. Staff Writer. "Delta Adds New Service to Atlanta from Three U.S. Destinations." Delta News Hub, 28 Jan. 2013. https://news.delta.com/delta-adds-new-service-atlanta-three-us-destinations. Accessed 13 Feb. 2021. Staff Writer. “Delta Sky Magazine tops 5 million monthly readers.” Delta News Hub, 7 June 2012. https://news.delta.com/delta-sky-magazine-tops-5-million-monthly-readers. Accessed 13 Feb. 2021. Stalnaker, Tom, et al. “Airline Economic Analysis.” Oliver Wyman, 2018. https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2018/January/Airline_Economic_Analysis_AEA_2017-18_web_FF.pdf. Accessed 13 Feb. 2021. Statista Research Department. “Percentage distribution of household income in the U.S. in 2019. ” Statista, 20 Jan. 2021. https://www.statista.com/statistics/203183/percentage-distribution-of-household-income-in-the-us/. Accessed 29 Jan. 2021. Shivdas, Sanjana. "Delta Air Expects Daily Cash Burn of up to $14 million in Fourth Quarter." Reuters, 3 Dec. 2020. https://www.reuters.com/article/us-delta-air-outlook/delta-air-expects-daily-cash-burn-of-up-to-14-million-in-fourth-quarter-idUSKBN28D26C. Accessed 25 Feb. 2021. "Topic No. 751 Social Security and Medicare Withholding Rates." Internal Revenue Service. (n.d.) https://www.irs.gov/taxtopics/tc751. Accessed 17 Feb. 2021. ““TSA Checkpoint Numbers (Current Year(s) Versus Prior Years/Same Weekday).” Transportation Security Administration, 12 Feb. 2021. https://www.tsa.gov/coronavirus/passenger-throughput. Accessed 12 Feb. 2021. "Website Maintenance Salary." ZipRecruiter, 14 Feb. 2021. https://www.ziprecruiter.com/Salaries/Website-Maintenance-Salary. Accessed 18 Feb. 2021. White, J. "How Much Money Do Flight Attendants Make?" The Street, 22 Nov. 2019. https://www.thestreet.com/personal-finance/how-much-do-flight-attendants-make-15177175#:~:text=According to the Bureau of,10% earning more than $80,000. Accessed 19 Feb.2021. United States Department of Transportation. “Air Travel Consumer Report.” Feb. 2020. https://www.courthousenews.com/wp-content/uploads/2020/02/dot-airlines-2020.pdf. Accessed 13 Feb. 2021. “US Airline Market Share.” T4, 30 Jul. 2020. https://www.t4.ai/industry/us-airline-market-share. Accessed 27 Jan. 2021. Wilson, Benet J. "Airline Inflight Magazines Are Being Pulled. Will They Return After the Pandemic?" The Points Guy, 3 Apr. 2020. https://thepointsguy.com/news/airline-inflight-magazines-are-being-pulled-will-they-return-after-the-pandemic/. Accessed 11 Feb. 2021. Yamanouchi, Kelly. “Delta Launches New Airline Pet Travel Option, Feds Float Restrictions.” ajc. The Atlanta Journal-Constitution, January 22, 2020. https://www.ajc.com/news/breaking-news/delta-launches-new-airline-pet-travel-option-feds-floatrestrictions/FaLUjFqiTJ3PMB5FbLyB0J/.