10k Analysis American Airlines

American Airlines currently has a solid network foundation within the United States, however there are growth opportunities available to the company that could have a positive effect on its long-term investment.

3) Domination on international routes: The Government of India has restricted the usage of traffic rights when flying international routes to Air India. This prevents other private carries from attaining competitive advantage in global market (Bhatia et. al 2003).

* Contracts with competition. Their maintenance facility in Tulsa has started receiving other company’s planes for contracted repair. This is an opportunity to increase and build another addition onto American Airlines family.

There is no guarantee of customer loyalty with such high competition. Other competitive threats are the fixed rates that airlines have to endure. The fixed costs of purchasing airplanes and keeping up with their maintenance are very expensive. Due to investment in equipment and fixed assets is so high, the industry has high exit barriers. Southwest

Most agreements permit airlines to fly from their home country to designated airports in the other country: some also extend the freedom to provide continuing service to a third country, or to another destination in the other country while carrying passengers from overseas.

This comparison between American Airlines (AA) and US Airways (AWE) starts from the year ending report in 2008 after AWE finally completed embedding America West into their operations in October, a process begun in 2005. Neither has taken part in any mergers or takeovers since then and, despite AWE briefly flirting with the idea of taking over United Airlines in 2008, merger and acquisition plans for both had been subordinate to recovering from the Global Financial Crisis (GFC).

1. Threat of Foreign Carriers – Many large foreign airlines are expanding their reach to new market segments that are likely to encroach on Virgin’s market share. Emirates air, Cathay Pacific, and Qatar airlines have all been successful at stealing market share from their US competitors on domestic and international routes (Mayerowitz, 2008).

“…big airlines have sought to seize control of our nation’s air traffic control (ATC) system so they can effectively determine where and when general aviation operators can fly. These airlines want the ability to control where investments in our aviation system are made which represents a significant threat to general aviation.” (The Bait and Switch, 2017).

US Airways completed a merger in December 2013 . This merger provided much needed cash infusion into American Airlines, enabling it to emergency from

The threat of new entrants in the airline industry is very low for Virgin Atlantic, this is because the barrier for both high entry and exit barrier is very high. These barriers can stop new airlines not to enter into the industry. The entry and exit can be difficult for Virgin because there are a number of regulatory factors. For new airlines to enter, there must be large capital investment human resources that are skilled

In an attempt to generally identify the airlines and travel industry this analysis will examine the "key players" in these industries. Whenever we think of the airline industry by definition the key players in this industry include commercial/private airline companies, employees, aircraft manufacturers, customers/consumers of flight service, travel agencies and government entities responsible for regulation of the industry.

‘A barrier to entry is an advantage of established sellers in an industry over potential entrant sellers’ (Bain, 2008). When observing the American airline market it is clear that there are substantial barriers

Government decisions as there are some specific routes, landing rights and ownership which affect the operations of the airlines.

To mitigate the issue surround low cost carriers Delta have created a valuable proposal that would differentiate it from its competitors. Airlines have encountered difficulty in nourishing and maintaining their financial viability, thus opportunities to reconstruct their business model has presented itself through alliances, merger and acquisition. Delta Airlines’ key competitors are United Continental Holdings, Inc., Southwest Airlines Co. and American Airlines Group, Inc. By acquiring American Airlines Delta will not only eliminate one competitor but also improve its market share. Delta will potentially realize more financial gains with the merger along with an increase market presence and the focus point for Delta would be

It is interesting to note that in commercial airlines, scheduled traffic are comprehensively regulated while the non-scheduled traffic is only required to meet occasional transport requirements. The United National Convention on International Civil Aviation (hereinafter, “Chicago Convention”) lays down detailed regulations to govern scheduled air traffic while Article 5 of the Convention provides that the non-scheduled traffic is completely dependent on the country granting commercial traffic rights unilaterally. However, Article 5(2) provides that any state can impose “such regulations, conditions or limitations” upon this exchange “as it may consider desirable.” Given this power, all the states have imposed requirements for obtaining prior permission for commercial charter services.