Case Interview Question #00143: Your client Delta Air Lines (NYSE: DAL) is a large commercial airline headquartered in Atlanta, Georgia, United States. It is the world’s largest airline in terms of passenger traffic, fleet size and destinations served after merging with Northwest Airlines in 2008. The airline operates an extensive domestic and international network serving all continents except Antarctica, flying over 4,000 flights every day.
Delta has hired you as an outside consultant because it is in the process of evaluating the merits of its frequent flyer program SkyMiles. How would you determine the value of this program?
The value of Delta’s SkyMiles frequent flyer program is the additional revenue minus the costs: Profit = Revenue – Cost.