Analysis of American Airlines' Competitors Environment

One of the most large scale United States Airlines since the late 1920s is the Delta Airlines Incorporation. The incorporation’s financial statements are more than $9 billion in operating income and over $40 billion in total revenue Its net income was US$ 926 million. It is also worthwhile to note that Delta Air Lines, Inc. was the most admired airline for the 5th time in the span of six years and was named Fortune's Top 50 Most Admired Companies. 2 – How Delta Airlines Compete With Other Airlines

In today’s business industry, the globalization process has become an important aspect and fundamental force. The elements that contribute to globalization is the environment, culture, regulation and technology and production. While the advancements globalization has increased greatly, so has the advancements in airline industry with their aircraft (Shevell, 1999). Globalization also provides a great amount of potential profits to nations and their corporations (Button, 2008). Air transportation has evolved into a major industry (Kroo, 1999). The airline industry’s continuously grows and is facilitated through its international investment, tourism, world trade and economic growth (Kroo, 1999).

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

Rivalry: The airline industry is filled with over 5000 airlines worldwide creating a considerable amount of competition. Initially, airlines would compete based on price, however, airlines such as the United Arab Emirates have begun to add unique amenities such as showers and Wifi to attract the wealthy, luxury seeking client. Moreover, despite Delta being one of the major airlines, there are over 100 airlines in the United States adding to the competitive market and allowing more choice for customers. These factors ultimately make the airline industry unattractive, both currently and in the future, as it is difficult to continue adding value that does not stem from price reductions.

When thinking about airline companies, most people naturally gravitate to the big name carriers of current times. Delta, American, United, and Southwest usually top the list of companies that come to mind when discussing airline companies. Throughout history, however, a multitude of airlines have operated in the United States and abroad. Some of these merged or were bought by other companies forming the mega airlines we see today. Others were not so fortunate. The airline industry is a complicated business with high costs and narrow

The United States economy has been able to grow steadily after the 200 recessionand because of this, most businesses have been able to also grow effectively. The airline should therefore invest heavily in refurbishing its aircrafts and also investing in projects that will attract employees. To fully take advantage of this project, the United airline should embrace good marketing startegies and also provide competitive prices to its customers.

Airlines provide air transportation facilities for everyone, being one of the most common passenger transportation around the world. Although the airline industry is a very competitive market it is very beneficial for everyone. Everyone has experienced distance at least once in their lives, however, the invention of the air craft is one of the many inventions that has changed how people live; making life easier for those that must travel long distances across the country or abroad for either business, fun, visit loved ones or for the pursuit of dreams and happiness. American Airlines is not only the largest airline network but, it is also the best and most affordable of all the airlines in the world.

Introduction American Airlines, Inc. (AA) is a major and the world’s largest U.S airline in terms scheduled passenger-kilometers flown, fleet size, scheduled passenger-kilometers flown, number of destinations served, number of destinations served and revenue. It’s headquarter is within the Dallas-Fort Worth metroplex in Fort Worth, Texas. American Airlines and its regional partners fly in wide-ranging domestic and international network with more than 6,700 flights per day. It also flies to more than 350 destinations and to more than 50 countries. American Airlines was established in 1930 through an amalgamation of more than eighty smaller airlines.

Buyer power has changed significantly in the airline industry over the last 20 years due largely to industry deregulation and technological innovation related to the impact of the Internet. Prior to deregulation, the Civil Aeronautics Board’s control over pricing and airline routes gave the consumer very little power as it did not provide the choices of unregulated competition. If consumers did not like the prices available for air travel, they were forced to look for substitutes, none of which offered a similar value proposition as the airline industry.

The Risk of Entry by Potential Competitors – Since the deregulation of the airline industry in 1978 over 1,300 new airlines have opened for business. However, most now are bankrupt or merged with the other carriers to stay workable. The established giants were Delta (merged with Northwest), American Airlines (merged with U.S. Airways), United Airlines (merged with Continental), and now Alaska Airlines (merged with Virgin America). Now the Low-Cost Carriers (LCCs) are posing a massive threat which includes Southwest Airlines (merged with Air Tran), and JetBlue.

One of the world’s most competitive and prominent industries is the airlines industry. It generates huge amounts of income as well as employment each year. Some of the common names in US air travel service providers are Alaska, Northwest, Southwest, US airways, American etc.

Airlines Industry is large and growing, it is also the most fiercely competitive sector. It facilitates international trade, world economy growth, tourism and international investment. The airline industry has over time with the use of modern technology been able to take advantage of the short haul, high frequency and gained a competitive advantage over other forms of travel, such as buses and railroad travel. Additionally, the airline industry still holds the market for global travel at a low cost and convenient way to travel. The aviation industry gives a good contribution to the GDP which includes the following: airline services, general aviation, civil airport operations, aircraft manufacturing, and

Since the merger of U.S. Airways and American Airlines, most people would now agree we are living in the age of airline oligopoly. Oligopolies form when there’s a state of restricted competition, and new companies cannot break into the industry for reasons like high-entry costs or government restrictions. This is the condition of the airline industry, today. In order to breach the oligopolistic nature of the airline industry, airlines must be able to break through high barriers to entry such as: retaining substantial capital requirements, having the need for technical and technological ingenuity and jurisdiction of patent rights. In addition, airplanes must be purchased, employees must be trained and facilities must be procured. Even after all these expenditures, some airlines still experience substantial financial losses. As a result, most of these airlines experiencing a financial hardship are subject to an airline merger. For this reason, the major airlines in the United States now consist of four competing large carriers: American Airlines, Delta Airlines, United Airlines and Southwest Airlines. These companies have survived the deregulation of the airline industry and sustained their places at the top of the industry. In an effort to stand out in an oligopolistic industry, airlines must experience: economy of scale, growth through merger, mutual dependence and price rigidity and non-price competition.

In examining the history of aviation in the U.S. and the development of the airlines, it is clear that the Federal Government played a vital role in the development of both. Historical records clearly show that this involvement by the Federal Government was critical in getting them established and in helping to develop them into the globally dominant enterprises they are today. Furthermore, it can be easily argued that U.S. aviation as a whole, and the airlines in particular, would not be where they are today without this direct involvement by the Federal Government and some of the very specific actions that it has taken to keep them relevant and competitive during the most dire of times. The Federal Government ensured that U.S. aviation and its airlines would develop and achieve a worldwide leadership role by becoming involved in three major ways: through funding, legislation, and policy setting.

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: