CASE STUDY OF AMERICAN AIRLINES 7
The airline industry is one of the most competitive industries inthe world today. There has been an influx of numerous airlinecompanies in the past 20 to 30 years, and this has enhancedcompetition. American Airlines is one of the oldest companies and oneof the largest, which has had to face competition in the past fromnewcomers into the industry. Airlines are adopting new strategieswhich are aimed at attracting new customers and improving efficiency.
Purpose statement: This paper seeks to analyze the American Airlinecompany and it strategies that will enable it to become and remaincompetitive in the market.
General overview of American Airlines
The American Airline is one of the largest airlines in the world,and it has been operation since the 1930s when it was established.The airline is owned by the AMR Corporation. The Airline is said tohave the largest fleet of planes, and it is the second largest interms of the destinations it serves across the world. The company,whose headquarters are in Texas, was leading regarding profitabilityuntil 2011 when it filed for bankruptcy. The company operates in ahighly competitive environment where other major airlines such as theEmirates, Virgin Airlines, and United Airlines operate (Cullen,2010). The other airlines which offer quality and timely servicescreate an external competitive environment for the American Airlinecompany. Majorly, the biggest competitors to the enterprise areSouthwest Airlines Company, Delta Airlines, and JetBlue Airlines.These airlines are known to offer services and boast of employees whoare dedicated to customer service. This has led to numerous returncustomers. The airline started numerous new routes in 2010 and thisstrengthened the company’s brand.
The American has come up with various strategies that will enablethe business to deal with the fierce competition from otherinternational airlines. The airline has resorted to forming mergersas one of the strategies. Recently, American created a merger with USAirways as a way of enhancing its ability to deal with thecompetition (Boston University, 2014). The company also seeks toreduce fuel cost, as well as the maintenance cost for the airlines.Additionally, the airline has realized the power of social media, andit is seeking to enhance its social media presence as a form ofmarketing. It is also evident from research that the American istrying to acquire new and upgraded planes, as well as identify itscompetitors.
The objective of the American is to get back to its former dayswhere it was the leading airline in the world concerningprofitability. The American seeks to become the first choice forpassengers across all its destinations in the world. The airline alsoaims to become innovative and efficient in its services to thepassengers. Lastly, the company is seeking to become a low-costairline through the reduction in fuel costs and maintenance costs.
Future of American Airline (five years)
It is clear that the strategies of the company and the objectivesare viable if the management remains focused and steadfast. It isclear from research that the corporation has started realizing thebenefits of the merger that it has had with the US Airways (Simons &Stephen, 2014). The company has managed to pay part of its debts andgave out dividends amounting to over USD 350 million. This is a clearindication that the strategies that the company is taking areworking, and they are likely to lead the company back toprofitability (Drocton, 2014). Fuel cost has been the major setbackfor the company in the recent years. Therefore, if the companycontinues with its strategy of reducing fuel consumption, it is clearthat in 5 years time, the company will be making profits again. Thecompany must acquire new planes that are fuel efficient and withlarger capacity. This will reduce the fuel cost while increasingrevenues for the enterprise.
In five years time, if the company continues with its strategy ofreducing maintenance cost, it will significantly increase the chancesof making profits. The old planes require regular and costlymaintenance and therefore acquiring new and upgraded planes willreduce the maintenance cost substantially. However, the fullpotential for the airline might not be realized in five years time,but positive results will have started to be recognized. There is nodoubt that social media is a powerful marketing tool, but it can alsobe used as a means of bringing down competitors through harmfulpublication (Cullen, 2010). The strategy of increasing social mediapresence will have great results for the airline in five years time.The company will have reached numerous customers and improved itsinteraction with the customers. Social media platforms such asTwitter and Facebook will allow the Airline to communicate cheaplyand quickly with its clients.
If the company implements all the strategies that it has laid downexpertly, it is clear that it will meet the set objectives. In fiveyears time, the Airline will have gained a leading position in themarket, and passengers will have American Airline as their firstchoice. Additionally, if the company ensures that it reduces the fuelcost and the maintenance cost, it will be in a position to offer lowprice services.
Strategies I would recommend as CEO
If I were in the position of the CEO of the company, I wouldrecommend strategies that are aimed at neutralizing the competitiveadvantage that the competitors enjoy. To start with, it is prudentfor the American Airlines to retrain its employees concerningcustomer service. It is clear that the competitors are takingadvantage of their quality customer service. Secondly, it isessential to hire young and experienced pilots. It is evident thatthe company’s downfall in 2011 was partly as a result of numerouspilots retiring. It is also essential to invest mostly on mergerssince this brings together ideas and enhances bigger investments.Another strategy that I would propose as the CEO would be increasingthe destinations of the Airline. It is evident that the competitorsof the Airline are offering customers transport to numerousdestinations across the world.
Strategies by competitors
The various competitors of the Airline such as JetBlue use somestrategies. Firstly, the Airlines have enhanced their customerservices where they offer quality services to the clients. Secondly,the competitors have reduced on the plane amenities hence reducingthe cost. It is also evident that the competitors offer transport tonumerous destination and have acquired upgraded and fuel efficientaircraft (Helleloid et al., 2015). This has reduced the operationalcost significantly hence providing them a competitive advantage. Thecompetitors have also resorted to social media as a cheap andefficient marketing tool. They have managed to engage and communicateefficiently and quickly through the social media. The most effectivestrategy is the provision of quality services to the passengers at alower cost than the American Airlines.
The American Airline should combat this strategy through retrainingits employees on the provision of quality services to the passengers.It is important to have employees who are focused on the customersand whose objective is to make customers satisfied. It is criticalfor the American to have a few amenities, but of high quality. Themove of incorporating HDTV in the planes is welcome since it willimprove customer satisfaction.
The American Airlines must adopt new strategies and remain focusedon their implementation in order to face the competition from otherairlines. The loss that American Airline faced towards 2011 was as aresult of a failure to adopt new strategies such as reduction of fueland maintenance costs. The strategies proposed above will beinstrumental in ensuring that the company resumes profitableoperations. It is vital to mention that the social media is apowerful tool which the company must adopt and utilize if it has toengage effectively with the passengers and potential clients. It isessential for the American Airlines to look at the competitiveadvantages of the competitors and develop strategies that willcounter the advantages of the competitors.
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