American Airlines Swot Summary Essay

The United States carries over one third of the globe’s total traffic, where Over 1.5 billion passengers fly annually. Over the past 20 years, air travel has grown at an average of about 5% per year, the reason for annual change is usually differences in economic growth, and of course other environmental factors, such as the current war. As a rule, the annual growth in air travel has been about twice the annual growth in GDP. Deregulation, liberalization, and competition have essentially altered the management strategies and practices of airlines. Productivity improvements and cost management have been two of the greatest concerns for US airlines for the past twenty years. As a whole, the airline industry must continue to improve their specialization in terms of fleet utilization, pricing and revenue management, and schedule optimization.

At the time of the article, American had several competitive advantages. First, because they were a larger airline, their brand is preferred by consumers when all other factors (price, availability of flights, volume) remain equal. Also because of their size, many travelers have incentive to use them because of reward programs such as frequent flyer miles. American was also a major carrier hub at many cities around the country. Because of their hub status they were able to offer a larger volume of flights giving consumers more selection. Travel agents seemed to prefer American as well.

* Oil price increase every years which is one of the major cost of the company

Anna Zhou E Period Linsdell AP Economics: Predatory Pricing and American Airlines This semester in AP Economics, we learned about different pricing strategies, both legal and illegal, that companies use. One in particular, is predatory pricing. Predatory pricing is a strategy businesses use to target competitors and drive them out of the market, along with creating barriers to entry for new businesses. In America, engaging in predatory pricing can lead to antitrust claims against a business; however, it would have to be proven that the business is lowering prices with an ulterior motive of establishing a monopoly and driving competitors out of the market.

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.

During the post 9/11 era the company voued to keep the current schedule, not cutting service and not cut one employee (Freiberg, Freiberg, 1996). This initiative was completed. Employees even gave a percentage of their salary to keep the company profitable. The culture stayed strong and continues to be a big success. They currently have 718 aircraft traversing the American skys daily and serve destinations in almost every

Value Proposition: American Airlines provides value to its customers by being one of the top United States travel transporters both domestically and internationally. Offering great destinations to visit for their customers, and offering a loyalty program. American Airlines providing new upgraded and improved flight service for all customers to enjoy (Thomson, 2014). Additionally, American Airlines have over 3,500 flights that depart daily to ensure travels have the best schedule available to reach their destination. Therefore, American Airlines ensures that they uphold their character and reputation, customer service, system of worldwide and domestic amenities,

fares to establish profitability and loyalty. However, they are not always the cheapest, so their

The airline industry has always been a fiercely competitive sector. Since the invention of low-cost carriers, also known as no-frills or

On the other hand close attention to costs produced its competitive advantage of having the nation’s lowest fares, and created a phenomenon in this industry known as “Southwest effect.”

During the time of airline regulations, (prior to the late 1970’s), most airlines were operating on a point to point routing system. In other words, the plane would leave from point A and land at point B. This system, driven by regulation, created inefficiency as many of the airplanes were not full. With regulations in place, the government, not the market, told the airlines what routes they could fly and managed the prices they could charge. According to Aviation Week, “the Deregulation Act eventually dissolved the Civil Aeronautics Board (CAB), which regulated U.S. airlines like a public utility, setting where they could fly and what they could charge” (Unnikrishnan, 2015, para. 2). With this barrier out of the way and the introduction of low cost carriers, both legacy carriers and new airlines researched ways to improve the utilization of their airplanes and increase profitability.

Southwest Airlines was founded and incorporated in 1971 in the State of Texas by Herb Kelleher and Rollin King. These two men identified a target market of potential customers serving the Dallas, Houston and San Antonia regions who would normally drive rather than fly to locations that was less than 500 miles (Smith, 2004). Therefore, Southwest first home office was in Love Field, Texas, which was befitting as the organization’s name on the New York Stock Exchange is LUV, emphasizing their “love” for their employees and customers as a core behavior of the organizational culture (Klein, 2012). After forty-six years in business starting with 4 planes, the airline has now accumulated a fleet of 723 Boeing 737 aircrafts, serving 101 locations, in 40 states, including Puerto Rico, and internationally, Mexico, Jamaica, the Bahamas, Aruba, Dominican Republic, Costa Rico, Belize and Cuba (S&P Capital IQ, 2017). Moreover, this airline of almost 56,000 employees, is considered one of the worlds most successful airlines, generated close to 21 billion in revenue for 2016, and has been dethroned from the largest passenger carrier airline in the world to the fourth, due to industry mergers

of the safety and security of air travel, less spending due to economic downturn, and less need

In the airline industry, we have two major industries classified as the traditional airlines and the budget airlines. Traditional airlines have vertically integrated services and purchase their aircrafts directly from their manufacturer. On the other hand, budget airlines lease their aircrafts in order to source their fleet and provide cheaper flights. These cheap flights are supported by the subsidiaries in the secondary airports they flight in and out of.

• Large newer network airlines with global networks as well as domestic and regional airlines are beginning to put pressure on established airlines’ competitive advantage of the large spread between high full-economy fares and the much lower average discounted fares.