May 24

American Airlines

2010

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American Airlines
American Airlines has the distinction of being the largest airline in the world in terms of total passengers transported and second in terms of revenue earned. A subsidiary of AMR Corporation, American Airlines is headquartered in Fort Worth, Texas and is well known as a domestic operator, operating re gular flights throughout the USA. It is also known as an international carrier flying to some foreign countries such as Japan, India, Canada, Latin America , parts of Europe and the Caribbean as well (Karis Welty, 2006).

The formation of American airlines first began with a group of small independent mail carrying aviation companies. One of them, Robertson Aircraft of Missouri, had begun flying in 1921, em ploying Charles Lindbergh who flew a bag of mail in a DH-4 biplane, flying the first regularly scheduled flight in 1926 that was to later become American airlines. In 1929 The Aviation Corporation was founded and it acquired many small lines which included, Colonial Air Transport, Embry Riddle, Southern Air Transport, Universal Air and Interstate. In 1930, The Aviation Corporation's airline subsidiaries were incorpor ated into American Airways, Inc which later became known as American Airlines, Inc in 1934 (Century of flight, 2003). That same year, E.L Cord took over American Airlines and delegated the responsibility of running the airline to C.R Smith who in turn chan ged aviation history and the profile of American Airlines by flying the world¶s first commercial DC-3 trip from Chicago to New York (Karis Welty, 2006). By the end of the decade, American Airlines became the nation's number one domestic air carrier in te rms of revenue passenger miles and topped this off by carrying its one -millionth passenger in 1937 (Century of flight, 2003).

American achieved its largest-in-the-industry status through a mix of pioneering initiatives and aggressive expansion and its resounding success can be attributed to its ability to constantly innovate and keep pace with changing times. Its

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distinction of holding many firsts in aviation history include regularly adding new airplanes to, keep pace with the changing face of technology and the growing need of people to fly. Credited to be the first to introduce in flight meal services in 1942, American was also the first to study passenger flying motivation psychology and create a series of advertisement campaigns to encourage the American public to take to flying. Innovations such as the Air traffic control system and ticket reservation systems were also the brainchild of American airlines (Karis Welty, 2006). Other initiatives brought forth by American include the introduction of the Fa mily Fare plan in 1948 which enabled families t o travel together at reduced rates. It also introduced scheduled coach service, an economical and comfortable alternative to first class travel. American also introduced the Magnetronic Reservisor to keep tra ck of available seats on flights in 1952 and pioneered nonstop transcontinental service in both directions across the United States with the Douglas DC-7 in 1953. However its most prominent innovation would be SABRE (Semi-Automated Business Research Environment), in the early 1960¶s. Teaming up with IBM, American introduced and implemented the system touted to be the largest electronic data processing system for business use. This network extended from coast to coast and from Canada to Mexico and became the largest real-time data processing system, second only to th e U.S. government's SAGE system at that time (Century of flight, 2003).

Other American Airlines innovations include the introduction of the One-StopAutomated Check-in in 1974, and also th e introduction of its most popular fare in its history, the Super Saver in 1977. American also introduced the AAdvantage frequent flyer program in 1981, a revolutionary marketing program to reward frequent fliers where miles accumulated in the program allo w members to redeem tickets, upgrade service class, or obtain free or discounted car rentals, hotel stays, merchandise, or other products and services through partners . During the same year it also unveiled its AAirpass concept which guaranteed fixed personal and business air travel costs with five-year to lifetime range of options (Century of flight, 2003). As such it can be seen that through its contributions and innovations it has continually evolved and improved the quality of air travel thus allow ing the airline to remain successful.

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American Airlines continues to be a successful airline and as such its present strengths that give it an edge over its competitors can be attributed to the following. The recognizable brand name that American has built for itself is one of its greatest strengths. Its reputation for being the largest global airline in terms of passenger traffic and its perception by the general public as being a major carrier with commensurate levels of service provides it with a huge customer base that is familiar with the airline. This represents the core of all marketing, customer retention as well as the foundation to attract new customer trial. Customer retention and utilization represent the primary advantage that American Airlines enjoys and needs to utilize to protect its position as well as build upon (American Airlines, 2009). Another prominent strength of American airlines is its fleet size and the number of routes it plies domestically as well as internationally. Increased international travel helps the company win customers over as a result of its global routes and desti nations which is reinforced by size, reach, reputation, fleet and presence at over 154 airports (American Airlines, 2005).This ability to be the choice in full flight service along with the number of airports, seamless domestic and intern ational route structure enable it to offer direct service to the most destinati ons via its own branded airline. Consequentially it is this key convenience which enables it to garner success in this highly competitive environment (American Airlines, 2009).

Another major strength of American airlines is its impeccable information technology infrastructure namely its SABRE system. This computerized reservation system which was put in place in the early 1960¶s, and its software advances along with code sharing, peaking and American¶s route and connect ion structures has enabled it to offer increased convenience to its passenge rs thereby allowing it to keep its customer base intact and loyal to the airline. Continuous employee training is another of American¶s strengths whereby this has allowed the airline to keep customer service satisfaction levels at reasonable levels contrib uting to its success. The airline has also in place an employee suggestion program which has saved it 31 million in a single year ( Bill Robert, 2003). American Airlines as a corporate vision also makes it a point to increase creative ticketing, promotions, vacation packages

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and associated areas to distance the company from low fare carriers and thus minimize their effects. As such it can be seen that since it does not compete in a low fare platform, it makes use of target marketing with concentration on the frequent flier base and capitalizes on that to its advantage making this another one of its many strengths. By carefully mixing its customer base to a 50/50 business and leisure customer base American Airline¶s customer foundation enables it to compete successfully against other majors as well as differentiat e itself from low fare carriers (American Airlines, 2009).

However the airline is not without its weaknesses, with internal flight amenities draining its profits American recently imposed charges for blankets which it previously gave away for free (Marnie Hunter, 2010). Another of American¶s weaknesses would be its current financial position and top heavy organisation with too many divisions. When companies grow at the top of the organization, they become heavy on the management side thus becoming unmanageable as t here are too many reporting layers and within the structure. This coupled with its heavy losses during recent years has made the airlines weak and inefficient (Hans D. Baumann, 2008).Also rising fuel costs coupled with a weak economy has forced American to cut back on its unprofitable routes to avoid steep losses by the company( Matt Andrejczak, 2004).

Given current trends in airline development American is sticking to its corporate vision of setting the industry standard for safety and security, providing superior customer service, solidifying its brand name and image as a premier carrier increasing creative ticketing, promotions, vacation packages and associated areas and also capitalizing upon inherent advantages to survive and grow in future. American is also currently in the process of doing some restructuring in order to boost their profitabilit y, which would include retiring older aircrafts that are too expensive to keep running. American is also looking into getting rid of some of its least profitable routes, which will simplify their program and eliminate the spending of money to fly on them.

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References
American Airlines. (2009). For American Airlines, International Service. Available: http://www.aa.com/content/images/amrcorp/intstrength.pdf . Last accessed 15 May 2010.

American Airlines.2005 American Airlines Quick Facts. Available: http://airlines.ws/american-airlines.htm Last accessed 15 May 2010.

Bill Roberts . (2003). Portal takes off: Jetnet, American Airlines ' employee web page, aims to become a one-stop destination - Brief Article. Available: http://findarticles.com/p/articles/mi_m3495/is_2_48/ai_97873163/ . Last accessed 15 May 2010.

Century of flight. (2003). American Airlines. Available: http://www.century-offlight.net/Aviation%20history/coming%20of%20age/us airlines/American%20Airlines. htm. Last accessed 15 May 2010.

Hans D. Baumann. (2008). Top-heavy management drains companies. Available: http://www.isa.org/InTechTemplate.cfm?Section=The_Final_Say&template=/Content Management/ContentDisplay.cfm&ContentID=69084

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Last accessed 15 May 2010.

Karis Welty. (2006). History of American Airlines. Available: http://www.associatedcontent.com/article/31923/history_of_american_airlines.html?c at=3. Last accessed 15 May 2010.

Marnie Hunter. (2010). American Airlines to stop offering free blankets on domestic flights. Available:http://edition.cnn.com/2010/TRAVEL/02/09/american.airlines.blankets/inde x.html Last accessed 15 May 2010.

Matt Andrejczak. (2004). Ejection seats. Available: http://www.marketwatch.com/story/us-airlines-drop-unprofitable-routes-inrealignments. Last accessed 15 May 2010.

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