Delta Air Lines recently announced it’s buying an oil refinery in an attempt to save hundreds of millions of dollars off its annual fuel bill.
Talk about a new model!
Pundits are calling it an innovative move to manage the business – especially with fuel comprising upwards of 40% of an airlines costs. The strategy is being seen as the first wave of new business approaches by companies looking to better compete in an uncertain, constantly changing world. Rather than be a passive spectator as fueol costs continue to rise, the company is making a defensive investment.
While the purchase isn’t risk free, it certainly reshuffles the deck competitively and places other airlines in a potential cathc-up mode.
The beauty of this action is that even a staid, conservative industry can push itself to a new place and in so doing generate new value.