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.
According to American Airlines, it has lost nearly $77 million in 1990 and $165 million in 1991. In terms of customer's flying, the dollar volume of pleasure travel grew only 8% in the 1989-91 period compared to 19% for 1987-89. The comparable figures for business travel were a 9% increase for 1989-91 in contrast to 28% growth experiences in 1987-89. In 1992 American Airlines decided to create a pricing strategy Ultimately, American Airlines purpose for the value pricing was primarily to increase their market share. This strategy resulted in failure few months later.
Analysis
American airlines was the first airlines to introduce computerized airline reservation system called SABRE (1960), ‘uper Saver' fares (1977) and frequent- flier programs (1981). It was U.S.'s largest carrier, had a fleet of 622 jet aircraft, flying
This research is being submitted on June 14, 2010, for Mr. Bergeen’s Microeconomics course at Rasmen College by John Divler.
Today Southwest Airlines is the biggest domestic passenger carrier in the United States of America operating more than 3,400 flights a day. They provide service to 93 cities and 5 countries internationally. Last year Southwest Airlines, “Enplaned approximately 136 million Customers (About Southwest). The airline has grown since it’s first years flying out of Love Field in Dallas, Texas. In the beginning, Southwest provided flight service to only three Texas cities in 1971. One of Southwest Airlines’ early advertisements was a double page ad that ran in Dallas newspapers during May announcing their first flight on June 18, 1971 (Lusk). This advertisement introducing a new airline would soon revolutionize the airline industry and create the new category, of low cost carrier, to the world.
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
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.
According to Greyhound, it takes a total of sixty-five hours to drive from New York to Los Angeles by bus with no transfer (“Choose your outgoing trip,” 2016). The same trip with Southwest Airlines takes approximately eight hours (“Select Departing Fight,” 2016). In 1971 Southwest Airlines became an official airline company when they won a U.S Supreme Court ruling and purchased three Boeing 737 (Thomas, Peteraf, Gamble &Strickland, 2016, p. c-341). As of 2014 Southwest’s fleet has grown to an astonishing 665 aircraft that recorded 902 thousand flights in 2013 (Thomas, et al., 2016, p. c-341). By evaluating Southwest’s industry maturation, strategies, their success in the sector it will be possible to make recommendations for Southwest 's future growth.
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.
In 1934, American Airlines, was founded and later incorporated in October of 1982. In 2013 American merged with US Airways. Together they serve more than 350 cities in over 50 countries and operate a fleet of approximately 900 aircraft. American Airlines is also members of oneworld alliance. The oneworld alliance group fly to more than 1,000 destinations around the world. In addition to their passenger service, American operates Air Cargo services. They are one of the few airlines carriers that operate both passenger and cargo services. American offers an AAdvantage frequent flyer program.
In conclusion American Airlines continues to be the epitome of what utilizing all the knowledge and technology advances that one has to conquer success in the given field. And is the ideal example of what best practices
American Airlines had been the largest airline in the United States for a long time. In 1990 and 1991 due to a recession and the Gulf War, demand for air travel dropped drastically, for this reason, fare wars started and all the airlines incurred massive losses.
In between other revolutionary marketing programs, in 1981, American introduced the AADVANTAGE travel awards program to reward frequent flyers. On May 19, 1982, the company had a reorganization plan and a new holding company called AMR Corporation, which became the parent company of American Airlines. This reorganization brought to the company new frontiers. A year after AMR Services was formed as a subsidiary to provide aviation services to the other airlines, and AMR Consulting group which would provide consulting services in airline related business. Since 1990 American airlines has conquered most of its objectives, some of them are: the expansion of its routes all over the planet, the creation of a world wide web site for the convenience of its passengers and formed a customer-driven global alliance named “one world” with other airlines designing a raised standard of global air travel.
Being the largest airline in the world comes with some significant advantages, one of the most important is a physical presence in the locations that passengers want to travel. As part of the anti-trust settlement, American Airlines agreed to sell approximately 15% of their takeoff and landing slots in Washington D.C. and New York . Even with this sale of slots, American Airlines is still able to offer flights to over 250 destinations daily. Just by their sheer size, American Airlines should be capturing a significant share of the market.
With 1988 operating income of $801 million on a revenue of $8.55 billion, American Airlines, Inc. (American), principal subsidiary of Dallas/Fort Worth-based AMR Corporation, was the largest airline in the United States. At year-end 1988 American operated 468 aircraft on 2,200 flights daily to 151 destinations in the United States, Bermuda, Canada, Mexico, the Caribbean, France, Great Britain, Japan, Mexico, Puerto Rico, Spain, Switzerland, Venezuela, and West Germany.
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.
To formulate a strategy that will help Southwest Airlines maintain its competitive edge in the US airline industry.
American Airlines was the United States’ largest carrier in 1992 with a fleet of 622 jet aircraft, flying 2,450 flights daily to 182 locations, as well as new innovative technology and programs. American Airlines was the first to introduce a computerized airline reservation system called Sabre, “Super Saver” fares and frequent flier programs. Regardless of the innovations, American Airlines and the airline industry was still not operating as profitably or providing customer satisfaction the way it should have in 1992. In 1991, As a result of a recession and the Gulf War, demand for air travel fell, fare wars came about, and the airlines