Case Analysis Of American Airlines

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This case study is about competition between American Airlines (AAL) and other airlines, as well as the way AAL behaved in the face of new entries of low cost carriers (LLC) at AAL’s Dallas Fort-Worth (DFW) hub. In this case study, economy of scope produced by a hub, the use of information technology (IT) as a competitive advantage, and the use of loyalty program are discussed. AAL’s use of predatory pricing to drive out existing competitors, its reputation for predation, and the arguments from both sides of the antitrust lawsuits are also studied.
Background of American Airlines
American Airlines was founded on April 15, 1926, and grew to become the predominant carrier at the Dallas-Fort Worth (DFW) International Airport, serving more than 70% of passengers boarding in Dallas. On all of its routes, AAL carried between 60% and 100% of passengers traveling to and from Dallas during the 1990s (Herb, 2007). On December 9, 2013, AMR Corporation (the parent company of AAL) and US Airways Group form the American Airlines Group, while preserving the American Airlines brand name (“History of American Airlines,” n.d.).
Characteristics of airline industry in America. The U.S. domestic airline industry has changed drastically in the two decades, from having a group of large airlines flying regulated routes to a deregulated environment where new smaller airlines appeared and disappeared in a relatively short time. At present the air travel market is dominated by
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