American Airlines Executive Summary

According to MBASkool (2015), a SWOT analysis has been completed to show some of the opportunities and threats that American Airlines faces. They are listed as follows:

American airlines is a corporation that exhibits all of the characteristics of a firm in an industry where good tactical management is the key to success. This company and its regional airline partner American eagle serve almost 250 cities around the world and operate more than 3600 daily flights. Its goal is to provide safe, dependable and friendly air transportation along with related services, making a great effort to transform any experience into a positive one. All of the services that this company has and the image that they are trying to keep in every day activities make each day an inevitable challenge for its employees.

Delta Airlines is the largest airline carrier on the Atlantic Coast. In terms of scheduled passengers carried they were world’s largest airline with 277.6 billion in 2013. Also the second largest

American Airlines continuously strive to make a positive impact in the lives of customers, employees and shareholders, and in the communities and environments where they live, work and play.

American airline industry is steadily growing at an extremely strong rate. This growth comes with a number economic and social advantage. This contributes a great deal to the international inventory. The US airline industry is a major economic aspect in both the outcome on other related industries like tourism and manufacturing of aircraft and its own terms of operation. The airline industry is receiving massive media attention unlike other industries through participating and making of government policies. As Hoffman and Bateson (2011) show the major competitors include Southwest Airlines, Delta Airline, and United Airline.

American Airlines is looking to expand its market to more wealthy consumers by offering an excusive line of aircraft consisting mostly of first class and business type seating. This new model will be labeled under the title “Elite” and would market routes to and from major city hubs during heavy business traveling hours. American Airlines will position this service as the, “Black Jet” since that would be the standout feature of the aircraft. American can take advantage of its existing market base along with its frequent fliers to sell the experience of a flight experience beyond maximizing passengers. The target motto would be a “flight redefined.” American Airlines Elite would target business, first class, and frequent flying travelers.

After watching the CNBC special about American Airlines and a week inside their business I noticed several interesting things. Though it was dated few years ago many of the issues are still the same. They had several Revenue drivers; Cargo income, excess baggage fees, last minute departure fees, Postal cartage, and miscellaneous charges for meals, drinks, and accessories. These are not needed but sometimes are needed on certain longer flights. They provide an extra income that may just keep a transcontinental flight from losing money.

The domestic US airline industry has been intensely competitive since it was deregulated in 1978. In a regulated environment, most of the cost increases were passed along to consumers under a fixed rate-of-return based pricing scheme. This allowed labor unions to acquire a lot of power and workers at the major incumbent carriers were overpaid. After deregulation, the incumbent carriers felt the most pain, and the floodgates had opened for newer more nimble carriers with lower cost structures to compete head-on with the established airlines. There were several bankruptcies followed by a wave of consolidation with the fittest carriers surviving and the rest being

American Airlines (American) made four fundamental changes to its rates. First, it moved to a four-tier rate structure; American offered first-class rates and three tiers of coach: full-fare, 21-day advance purchase and 7-day advance purchase. Overall, it expected to reduce coach fares by 38% and first-class fares by 20% to 50%. Though full fare coach prices dropped by about 38%, advance-purchase fares dropped by 6% when compared to the advance purchase tickets already being offered. Through this fare structure, American also eliminated deep discount tickets. Second, American eliminated the negotiated discount contracts of many large

7. Current Competitors: “The Company faces competing service from at least one, and sometimes more than one, domestic airline including: Alaska Airlines (Alaska), Delta Air Lines (Delta), Frontier Airlines, JetBlue Airways (JetBlue), Hawaiian Airlines, Southwest Airlines (Southwest) and AirTran Airways (Air Tran)”

American Airlines is one of the major airways in U.S, with its headquarters located in Fort Worth, Texas. It was founded in 1930 and began operating in 1934 as American Airways. It has been conducting extensive domestic and international scheduled flights to Europe, Asia, the Caribbean, South America, and North America. This airline has five main network centers located in airports of key cities. These include, Miami, New York City, Los Angeles, Chicago, and its main base Dallas. The actual CEO of the company is Doug Parker, the chairman is Tom Horton, and the president is Scott Kirby. In the past years, American Airlines faced a downfall in its profits which caused serious injuries to the company.

In April 1992, American Airlines launched "Value Pricing" -- a radical simplification of the complex pricing structure that had evolved over more than a decade following deregulation of the U.S. domestic airline industry. American expected that the new pricing structure would benefit consumers and restore profitability to both American and the industry as a whole. The critical issue raised is: Would American's bold initiative work?

The leading airlines in the industry are Southwest Airline and British Airways. Quality management and innovation is where they both place the heaviest emphasis. Southwest airlines is a domestic airline that is based in the

Although there are pros to ‘value pricing’, their are many cons as well. For American Airlines, the price sensitive customers will be highly discontented by the new ‘value pricing’ and they will be encouraged to switch to low cost airlines. American Airlines will no longer benefit from the business travelers that were typically price insensitive but time sensitive and so prepared to pay the higher costs. This will have effects on yield and profitability as the high fixed costs of airlines previously depended on business travelers to buy higher priced tickets. For air travel demand, which in turn creates the lack of customer brand loyalty to airlines, a 38% reduction in American Airline prices in theory would cause customers to switch to American Airlines. However, American Airlines has failed to consider competitors reaction in their value pricing, therefore competitor 's reactions will prevent American Airlines from reaching their estimated revenue for 1992. Lowering the prices to match American Airline prices to guarantee the consumer the lowest

Transportation aircraft would be considered the biggest segment of the aircraft industry. These aircrafts vary in size and in function and are responsible for transporting people and freight all over the world. The airline industry plays a pivotal role in the success of aerospace products, with NASA and the Department of Defense being the largest United States customers of aerospace technology and products.