American Airlines Competitive Strategy

812 Words2 Pages
bulb-icon

Recommended: Strategic management case study analysis

Evaluate American’s 1992 announcement of a new rate structure:

a. What changes did American make?
American Airlines (American) made four fundamental changes to its rates. First, it moved to a four-tier rate structure; American offered first-class rates and three tiers of coach: full-fare, 21-day advance purchase and 7-day advance purchase. Overall, it expected to reduce coach fares by 38% and first-class fares by 20% to 50%. Though full fare coach prices dropped by about 38%, advance-purchase fares dropped by 6% when compared to the advance purchase tickets already being offered. Through this fare structure, American also eliminated deep discount tickets. Second, American eliminated the negotiated discount contracts of many large companies. Though it intended to fulfill any outstanding contracts, it did not intend to renew any of these contracts. Third, American realigned its pricing with its costs. Under the new structure, American fares were more distance based (therefore cost-based) than they had been in the past. Finally, American changed its non-refundable policy. Advance purchase tickets could now be rescheduled for a $25 processing fee.

b. Which customers benefited most from the move? Were any customers made worse off?
There are five groups of customers that are affected by the rate changes. Travel agents are affected financially by reduced fares that will result in reduced commissions. On the other hand, American’s four-tier structure substantially reduced the numb...

Show More
Related

  • Deregulation Of The Airline Industry

    1703 Words  | 4 Pages

    of price versus service in the airline industry as a whole, as well as, the

    Read More

  • African Imperialism In Things Fall Apart By Chinua Achebe

    802 Words  | 2 Pages

    In Things Fall Apart, Okonkwo was one of the strongest proponents of violence against the white missionaries. Throughout the book, he advocated for violence while be outnumbered by his fellow natives who objected. Near the end of the book, he had had enough. During a village meeting gathered to discuss what to do about the white missionaries, a messenger for the missionaries arrived to tell them the meeting had been ordered to be stopped. “In a flash Okonkwo drew his machete. The messenger crouched to avoid the blow. It was useless. Okonkwo’s machete descended twice and the man’s head lay beside his uniformed body”.3 The man had been killed. Shortly after, Okonkwo hanged himself on a tree. Violence was by far the most disruptive response to to the presence of white missionaries in Africa. It was the only response that led to deaths. Not only was the violence disruptive, it was also ineffective. In the last paragraph of the book, the Commissioner of the missionaries articulated how Okonkwo’s actions would make a good paragraph in the book he planned to write. Violence against missionaries was disruptive and led to death for both the locals and the

    Read More

  • Spirit Airlines: An Unorthodox Airline

    618 Words  | 2 Pages

    Spirit Airlines has long been considered an unorthodox airline. They, of course, address all four P’s in their marketing strategy; however, they focus a large amount of their effort on price and promotion. They focus on cutting price through “unbundling”. They focus on promotion through taking advantage of social issues and breaking news. Many advertisements and deals promoted by Spirit have given the public a definite shock-factor. Spirit has made two objectives very clear: they are furious at getting the customer the lowest fare possible by any means necessary, and they will similarly use any means necessary to get those potential customers to notice those fares. Such a blatant marketing strategy works. Even going up against some big competition, Spirit finds ways to be competitive and successful in flagrant fashion.

    Read More

  • Things Fall Apart by Chinua Achebe

    1112 Words  | 3 Pages

    The novel Things Fall Apart written by Chinua Achebe highlights the many important historical events that happened during the period of colonialism, spread of religious fervor to Africa from Europe, and the importance of the native religion among African societies. Achebe shows that religion holds a major influence in many African societies and influences the daily life of the natives. Furthermore, the novel introduces a major event that happen during pre-colonial Africa, the spread of the Christian faith, which forever changed and affected the natives in Africa, more specifically the Igbo society located in Nigeria. Things Fall Apart vividly describes and explains how the Christian faith that arrived in Africa changed both the individuals in the Umoufia and society. To add on, the novel shows how the spread of Christianity ultimately leads to the destruction of the many native African cultures, and shows what redeeming qualities that arise from the destruction of their culture. Achebe describes how the Christian faith acts as a guide to the Igbo society and at the same time acts as the inevitable downfall of the Igbo society.

    Read More

  • Cultural Differences In Things Fall Apart By Chinua Achebe

    960 Words  | 2 Pages

    He was in great conflict with the ideas of the white men and the missionaries. Okonkwo saw that their beliefs had not only changed the daily life of the Ibo, but it also changed the people themselves: “He mourned for the warlike men of Umuofia, who had so unaccountably become soft like women” (Achebe 183). The author uses strong diction to compare the men before and after colonization. This quote also portrays Okonkwo’s opinion towards the cultural collision. He values strength and masculinity immensely because of his fear of appearing weak like his father Unoka. When he describes that the men of Umuofia changed to be soft like women, this shows how much he dishonors the Western ideas and how it has taken over the village. He made an attempt to get rid of the Western influence by urging the tribe to fight like men, but they refuse to. He was determined and still attempted to furthermore encourage the people of Umuofia to revolt against the new culture. He realizes that his attempts to return the village back to the way it was before were futile. He knew that Christianity was tearing his people apart, but knew he was incapable of making change to help his people. Okonkwo then starts to feel hopeless and abandoned by his clan, which causes him to commit suicide by hanging himself: “Obierika… turned suddenly to the District Commissioner and said ferociously: ‘That man was one of the greatest men

    Read More

  • Western Imperialism

    532 Words  | 2 Pages

    Beginning in 1880, there was a growing desire for European countries to expand and control their rule. The only continent at that time that was left uncontrolled and, in the European's eyes uncivilized, was Africa. This was the start of Western Imperialism. All European countries wanted their piece of Africa and to get it, they would let nothing stand in their way. They would change the entire government, religion, market, and behavior of most of the African nation and affect almost every person living there. An account of the impact of Imperialism is given in Chinua Achebe's Things Fall Apart. This book shows the changes that occurred in Africa during Imperialism and its affect on the community and the people of the tribes that existed there.

    Read More

  • Southwest Airlines Case Study Solution

    707 Words  | 2 Pages

    Before to select the proper alternative, three alternatives were analysed and evaluated under four decisions criteria: customer experience, cost, growth rate / market penetration and ease to implementation (See Exhibit 2: Factor Analysis). Between all the alternatives, it was suggested that Southwest Airlines enters to New York City by bidding the slots and gates at the LGA (See Exhibit 3: Alternatives Analysis). This alternative sustains the challenge of changing the customer experience which means adding more flights from and to the East; furthermore, entering to new markets will reinforce “the power of the network” through LGA. At the same time, this decision will allow signing more code-sharing agreements with other airlines flying to international destinations and offer new products and services to LUV customers as loyalty rewards, in-flight internet, onboard duty-free purchases, etc.; as a result of this, it will increase passenger’s insights and experiences by flying with Southwest Airlines. Nevertheless, there is potential risk by selecting this alternative, in the recent years the energy prices has had a huge increase affecting costs, fares and even capacity needed, however Southwest Airlines has been able to hedge fuel for decad...

    Read More

  • IT Governance in Airline Industry Case Study

    1556 Words  | 4 Pages

    Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).

    Read More

  • Drug Essay: Drug Use And Abuse

    857 Words  | 2 Pages

    Drug use as well as drug abuse is on a constant rise. There is a wide spread misunderstanding about drugs. Many believe a drug is something that the government has said is illegal to use or consume. However this is not entirely true. A drug is any chemical you take that affects the way your body works. Alcohol, caffeine, aspirin and nicotine are all drugs. A drug must be able to pass from your body into your brain. Once inside your brain, drugs can change the messages your brain cells are sending to each other, and to the rest of your body. They do this by interfering with your brain's own chemical signals, I will discuss this further later on in the paper.

    Read More

  • Drug Abuse Essay

    758 Words  | 2 Pages

    According to The Science of Drug Abuse & Addiction, there are different types of commonly abused drugs. They are

    Read More

  • Product Strategy of the British Airways

    2943 Words  | 6 Pages

    Product Strategy of the British Airways 1.1 Introduction to product strategy Product is the most important component in an organization. Without a product there is no place, no price, no promotion, and no business. Product is anything that can be offered to a market to satisfy a want or a need. It is the core ingredient of the marketing mix and is everything favorable and unfavorable, tangible and intangible received in the exchange of an idea, service or good (Kotler 11th edition, 2003). British Airways is a business offering service products, flights across destinations, in the transportation industry.

    Read More

  • Airline Sustainable Competitive Advantage

    1432 Words  | 3 Pages

    Porter stated; “for an airline to succeed in the marketplace, it must have a sustainable competitive advantage” (Porter M. E., 2008). The airline industry is the highest competitive industry, and I believe a sustainable completive advantage is essential to succeed in the future of the aviation industry. The competitive advantages that an airline embrace, needs to be based on the airlines strategy and differentiation to competitors. Emirates displays how it has a strategy and how the airline gets ahead of its competitors through how unique it is.

    Read More

  • Market Segmentation Of Airline Industry

    718 Words  | 2 Pages

    There are other ways in which airlines customers are segmented. The airline services are divid...

    Read More

  • Igbo Culture In Achebe's Things Fall Apart

    791 Words  | 2 Pages

    The constant change within the society is inevitable in every culture, ranging from traditional sense of social values to the law and condition of the land that people needs to obey by as time when on. And these changes within the culture can have significant impact on the perspective of the whole community and the mindset of an individual. We can see this in Achebe’s “Things Fall Apart” as the old Igbo culture clashing with the Missionaries’s ideals from the western world that leads to the dividing of the two culture and create this social barrier between them as one culture would often contradict with the other. This changes unfold to the reader through the eyes of the main character of the story, Okonkwo.

    Read More

  • Persuasive Essay: The Dangers Of Prescription Drug Abuse

    1021 Words  | 3 Pages

    Among teens in the United States, some of the most commonly abused drugs are prescription drugs.

    Read More

More about American Airlines Competitive Strategy

Open Document