America

n
Airlines
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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 regular 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, employing 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 incorporated 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 changed 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 terms 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 Family Fare plan
in 1948 which enabled families to 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 track 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 the
U.S. government's SAGE system at that time (Century of flight, 2003).

Other American Airlines innovations include the introduction of the One-Stop-

Automated Check-in in 1974, and also the 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 allow 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 allowing 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 destinations 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 international route structure enable it
to offer direct service to the most destinations 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 connection structures has
enabled it to offer increased convenience to its passengers 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 contributing 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 differentiate 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 there 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 profitability, 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-of-flight.net/Aviation%20history/coming%20of
%20age/usairlines/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=/ContentManagement/ContentDisplay.cfm&Cont
entID=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?
cat=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-in-
realignments.

Last accessed 15 May 2010.