American Airlines and the Airline Industry Term Paper

Excerpt from Term Paper :

In order to reach and maintain this business standards, the company has created a set of basic rules for itself, regarding the respect for the customer and the ethic principles.

One of the sources of competitive advantage that the company benefits from is represented by its Human Resources policy. The importance of the relation that the company has with the members of its staff is worth underlining. One third of the American Airlines expenses go to wages and benefits. The proper motivation of the employees makes the company function in an efficacious manner. The god relations that American Airlines has are not just with the employees themselves. The company has reached agreements with three major labour unions, obtaining mutual advantages in terms of costs and payments.

Another source of competitive advantage for American Airlines is represented by the strategies which it uses in order to obtain and maintain the loyalty of its passengers. From this point-of-view, an important program that can be mentioned is represented by the AAdvantage frequent flyer program. People who are members of the program accumulate mileage credits. They do so by flying with the airplanes of American and/or by using the services offered by the other participants to the program, such as hotels, car renters, etc. The mileage credits can be transformed into travelling awards. In this way, the company tries to stimulate the continuous use of the service by its actual clients and at the same time to stimulate the acquisition of its services by potential customers.

American Airlines differs from its competitors through its proactive management strategy. In this regard, it can be stated that the company is using various strategies that could attract any potential client who wants to fly from and to the United States of America. Besides the program mentioned above, which is designed to obtain the loyalty of the American passengers, the company made sure that people were aware of its concern for any potential hazards.

The events from September 11, 2001 changed the way in which the American public opinion thought about flying and planes. A higher degree of risk was associated with planes, people were afraid of further terrorist attacks. Even if meanwhile the panic has disappeared, it is still important to prove that in case something should happen, the company is already well organized and ready to respond to the emergency situation, no matter if it has been caused by a terrorist act or by a calamity, etc.

The program to be mentioned in this regard is called CARE (Customer Assistance Relief Effort) and it consists in a number of more than one thousand volunteers speaking more than fifty languages who are ready to provide assistance to the people and the relatives of the people who may have been involved in an accident.

Taking into consideration the contemporary tendencies underwent by the patters of acquisition behaviour, it is important to mention that one of the key resources that American Airlines uses is represented by the Internet. There are various advantages that derive from the use of the web. First of all, the very well organized web site that the company has is a means of self-promotion. The link to the web site can be found on other web sites, belonging to companies which collaborate with AA, such as hotels, companies renting cars, tour operators, etc.

Secondly, the site responds to one of the most important needs of the potential customer, the one of being able to purchase a ticket online, comparing the prices. There is a numerous target audience that uses the internet as the main medium for acquisition and the company is doing a good job responding to this specific need that they have.

Not only does the company obtain a higher rate of ticket acquisitions by using the internet as the medium, but it also manages to record time and money savings for booking and ticket emission and reservation. Although it may not seem an important thing, from a long-term perspective, the strategy proves to be rather efficient.

Speaking about competitive advantages, it must be added that the company has been careful to create an image of itself as an organization with respect for its clients (through the quality of the offered services and the numerous services themselves), its staff members, for the environment and for all the people who may be in need of help.

In this regard, it is worth mentioning that American Airlines has been collaborating with the United Nations' Children's Fund, through an initiative called "Change for good." The program is one of the most famous ones run by UNICEF. Over the years, it has proved to be one of the most efficient programs of fund raising from all over the world. The concept according to which the program functions has the people travelling to international locations donating the unused currency or the U.S. dollars for the children in need.


American Airlines is one of the top American companies in the field of flying. It has the biggest market share and benefits from highly important strategic advantages, such as the ownership of the biggest and busiest hubs, the one situated in Atlanta. The company is not however free from problems or safe from potential risks.

One of the risks that American is facing is represented by the development of one of its rivals. The third biggest airline company in the United States of America, Delta Airlines, is extremely well organized and benefiting from important competitive advantages. The circumstances might help it acquire more clients, clients that would come from the present customers that American has. This would allow it not only to record an increase of profits, but it would also support the growth of its market share.

Taking into consideration the key capabilities that American Airlines has, such as the ability of transporting people on more than three hundred locations on five continents, the frequency of its flights and the organization of the flights schedule, the high quality of the offered services (the comfortable conditions inside the airplanes, the personalized entertainment), etc., as well as the business strategy that it currently uses, it could be stated that although the resources are well used, they could be used even better. In other words, American could improve its strategies in order not just to improve its profits, but in order to make sure that it will maintain its position of market leader.

One of the recommendations which could be made for American Airlines is the use of a low cost line. It is true that such an approach is not risk free and that fares already represent an element of pressure upon the airline. Nevertheless, the expansion of the low-fare airlines will continue, taking into consideration the nowadays trends regarding tourism and acquisition preferences. People prefer to travel more, paying less, rather than paying huge sums for just a few trips which benefit from top class conditions.

Another recommendation that American Airlines could seriously consider is represented by the enhancement of its identity. American may be the largest air carrier in the U.S.A., but that does not mean that people will get attached to its values and beliefs automatically. The company needs to do more in terms of communication, in order to differentiate itself from its main competitors.

American, just like its main competitors benefit from various key capabilities and key resources. Thus, the differentiation should also be made at the level of the image. People do not choose a product just for the immediate satisfaction of a concrete need. Psychological needs are to be satisfied through the acquisition of any product or service. That is why American has to become more present in the media, making people more aware of its offers, offers which reflect its values and beliefs, of course.

A further initiative that American could take up is represented by the flights to Africa. In this was it would offer an alternative to the service offered by its competitors and at the same time benefit from an economic opportunity. Tourism trends show an increasing preference for exotic vacations in warm places which can offer beautiful scenery, but also a high degree of "interestingness." Africa is such a place and American Airlines could have its share of benefits from people's desire to go there.

All in all, the airline industry in the U.S.A. is one which presents various characteristics rendering it attractive from an economical point-of-view. Despite the problem represented by the incidents which took place on September 11, 2001, the flying industry is likely to undergo a phenomenon of development, considering the future trends of tourism. Tourism and travelling by airplane will become more and more popular in the context of which low-cost companies are becoming more and more present on the market and have their popularity increase among customers as well.


American Airlines, May 9, 2007,


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