American Airlines is a good comparison to Spirit Airlines, because they often compete for the same customer base. They both are two big names in the airline business and they both offer low cost fares. Spirit Airlines has a better Current Ratio, which could suggest that Spirit would have an easier time paying its current liabilities better than American Airlines (Spirit’s current ratio of 1.83 vs American Airlines 0.74). Spirit Airlines has a higher Accounts Receivable ratio, which could suggest that Spirit Airlines has a more conservative credit policy and has a more aggressive collection’s department than American Airlines. Spirit Airlines only offers low-cost fares, while American has more price flexibility.
The airline industry is one of the most important industries in modern society as it keeps the world connected. Two of the biggest firms in this market are Southwest Airlines and Delta Airlines. The industry is an example of an oligopoly as only a small number of firms sell their services in a market with high barriers to entry. These high barriers largely come from the capital required to purchase a jet, let alone hundreds of jets, and to operate them with pilots and a crew. In this market, both Southwest Airlines and Delta Airlines share significant market power, and the decisions one company makes impacts the other, they are highly interdependent.
The United States Department of Justice objects American Airlines, Inc. and AMR Corporation and monopolistic conduct. This is because American Airlines Inc. and AMR Corporation “steal” the consumers’ benefits and against the antitrust laws. It is not a good news for American Airlines and AMR. It seems not that friendly.
“United Airlines, Inc., commonly referred to as United, is a major American airline headquartered in Chicago, Illinois” (Wikipedia). Varney Airlines was started in 1926, by Walter T. Varney and the name was later changed to United Airlines (United Hub). United has been very successful since its creation back in the 1920’s. According to United’s Website, they were the first airline company to have the first modern airliner, they had the first flight kitchen, they were the first to use electronic simulators, they had the first maintenance program, they were the first to order jetliners, they were the first airline to fly to all 50 states, they were the first to introduce the 777, and most recently, they were the first to fly the Boeing 787 Dreamliner. The purpose of United Airlines is to “Help unite the world by connecting people to the moments that matter most” (United Hub).
Airlines are constantly under pressure, due to unprecedented schedules, competition and flight planning. Everything must be on time to make a dollar at the end of the day, and American Airlines is no different. Since 1934, American Airlines has been owned by the AMR Corporation and headquarter in Dallas, Texas. The airlines competes with all airlines throughout North America, the Caribbean, Latin America, Europe, and the Pacific (NTSB, 1999).
The company will require developing plans that will see them increase their presence in both the domestic and international market. However, the company must first prioritize on increasing their presence in the domestic market. That plans that will involve frequent flights to all the major cities in the U.S.A. Currently, the company has six major focus cities; New York JKF, Fort Lauderdale, Los Angeles, Orlando, and San Juan. While these cities continue to be profitable to the company (CAPA Center for Aviation, 2015), they should consider increasing their access to other cities as well. Frequent and extensive flights in the San Diego and the San Francisco Bay Area will enable the company to capitalize on the business and tourist travels.
Southwest Airlines is competing against other airline companies for customers. That is why it is essential that Southwest Airlines enforces strategies that allows them to outperform other airline companies. This gives them a competitive advantage, which is defined in the textbook as the achieved advantage over rivals when a company’s profitability is greater than the average profitability of firms in its industry. (Hill, Schilling, & Jones, 2017) The higher the profitability levels are of Southwest Airlines along with the higher the profit growth of Southwest Airlines when compared to other airline companies, will see if they have a competitive advantage over their rival competitors.
Like state in the previous paragraph, American Airlines has thousands of employees that have different job positions. The jobs offer ranges from pilots, technicians, management, etc. This graphs shows approximately the number of employees American Airline has for each position available. Overall, American Airlines has 6,700 flights per day, to over 330 cities and 54 countries, according to their website.
Case Analysis #1 – “Southwest Airlines: Is It Still the King of Cheap Flights” 1. Answer the questions at the end of the case. 1. Airline customers can be segmented in a variety of ways. Two of these include by purpose of travel and their destinations.
It is important to find factors about a company that will stand out more than its competitors. United Airlines have a plethora of objectives to work on as a company in order to grow and prosper from the inside of the company out. United Airlines reaches out to people who have families going on vacation to the other side of the spectrum which is people going out on business trips. Objectives made by companies sets a goal and sets plan in order to achieve that success. United Airlines is a company that has been trusted to give back to its customers if they make any mistakes.
United is a hub-and-spoke company. United’s hubs are strategically located at Chicago,Washington, Denver, Los Angeles, and San Francisco airports. These hubs
American, AMR Eagle, and the American Connection airlines serve 250 cities in 40 countries with, on average, more than 3,400 daily flights. The combined network fleet numbers approximately 900 aircraft. American Airlines is also a fouding member of the global oneworld Alliance, which enables member airlines to offer its customers more service and benefits than any member airlines can provide individually. These services include a broader route network, opportunities to earn and redeem frequent flyer miles across the combined oneworld network and more airport lounges. Together, oneworld members serve nearly 700 destinations in over 150 countries, with 8,500 daily departures.
SABRE is largest electronic data processing system. In 1979, American Airlines shifted its headquarters from New York to Dallas, Texas. Two years after in 1981 they introduced AADVANTAGE travel awards program. More than 10,000 travel agency offices were using SABRE for reservations by 1985. Moving further American signed an agreement with Canadian Airlines to provide access to administrative services and computer technology.
Qatar Airways Qatar Airways are its aggressive growth plan backed by the state that includes the construction and development of the new Doha international airport, which will include the world's largest aircrafts' hangers to be used for maintenance of Qatar Airways. Singapore Airlines Success factors of Singapore Airlines are: young and efficient fleets, educated staff, top ranked travel gateway and its low cost airlines known as "Tiger Airways", plus it's a membership of star alliance airline networks American Airlines Success factors of American Airlines are: largest airline in the world in terms of the total passengers transported, highest number of aircrafts, first to launch the loyalty program "frequent flyers". PEST Analysis Political factors The airline industry is affected by political situations, namely wars and terrorism.
Lufthansa Lufthansa uses transnational strategy to gain global presence and recognition (Franz 2014). This strategy has been achieved by creating alliances and partnerships with other renowned carriers globally, especially in the European region. It is the most fundamental strategy Lufthansa leveraged on, in order to maintain core leadership in the airline industry not only in the European markets, but worldwide as well. As one of the founding members of Star Alliance, Lufthansa is able to offer customers across the globe a more convenient travel experience (Franz 2014).
