American Airlines Strategy Paper Essay

Currently the airline fabrication as a whole seems to be on the road of recovery. We, Ameri bum Airlines, the fourth largest newsboy recently avoided bankruptcy, but had a summer bounteous of pressure due to ongoing union struggles and question equal to(p) executive pay packages. After having incurred such big losses, this recovery has come about because of the political sympathies bailout and many of our large competitors abilities to survive the turbulence in the industry. So far, the prospects opinion promising. Revenue has mitigated across every(prenominal) regions of the business. Domestic unit gross was up almost 10 pct and Latin American revenue has change magnitude by close to 11 percent in the sound quarter of 2012 comp bed to the same period the prior year. We are performing crack than other airlines that deal filed for protection and have d atomic number 53 so without slash capacity.In short, American is doing the right things to return to business efficiency and client effectiveness. In order to establish a sustainable position for the coming(prenominal), American Airlines must adopt a three-pronged strategy moving forward. First, we should strain on low priced operations and increased marketing strategies to improve customer demand. We have to enhance customer experience and our volume of loyal customers to build a satisfyinger presence in Airline Industry. Second, we must focus on change magnitude and improving the routes to cater to large customer base. Lastly, we must address the difficulties our companion might face in integrating with the culture of US Airlines. Our future success is highly dependent on these two entities efficiently direct as a single organization.Industry AnalysisCurrent baffleUS Airline industry today is dominated by phoebe bird major house servant carriers. United, Delta and Southwest each has more(prenominal) than 15 percent market share. American is fourth, with around 12 percent and US Airways is fifth with around 10 percent. Four of these five are profitable all but American. We lost $2 billion in 2011 and $1.7 billion in the first quarter of 2012.Future StrategyOur emphasis in 2013 is on operational flexibility, international growth through alliance and selective interlocking expansion, and domestic partnerships to reduce operational and repose sheet risks. Americans market differentiation is based on emphasizing and meeting the inevitably and expectations of high value customers (particularly large global corporates) and better alignment with the one foundation airline net and value proposition. Also, being the lead carrier between not solo the United States and Latin America but, increasingly, the world and Latin Americaconnecting through Dallas, Los Angeles, or Miami. This strategy makes sense if they can get all labor work groups on board, they should be able to make it happen. That is still the main challenge, as is competitor contestation, particularly from l arger traditional rivals like Delta and United. remedy customer DemandLower working(a) CostsAmerican passenger division which already has 57 few planes in service than an year ago, should further shrink by another(prenominal) 57 planes this summer. This would improve operational efficiency. Current service levels include 275 cities with a fleet of over 1000 aircraft. American carries about 80 one million million passengers daily and receives more than 329,000 reservation calls, handles more than 293,000 pieces of luggage and flies more than 4300 flights in one typical day. In order to reduce cost further over 27000 jobs will have to be eliminated. Because of high challenger in the industry, substantial price fluctuations occur related to fares.Enhance Customer Base profit value added services offered through our interactive website, AA.com. all differentiation that convenience added capabilities offer is the center of focus. Busy hiub systems and schedule patterns remove to be looked at to improve efficiency and routing effectiveness, thereby enhancing customer experience. We need to do rigorous marketing to attract more customers. Our marketing is soon focused on seasonal and business travelers and much analysis is taken in order to optimize peak travel seasons as advantageously as frequent flier miles programs and pints systems. The Making More Room in coach program is the original marketing ploy of American to shed a perception of higher passenger comfort levels. As increased advertising and intense market share is gained, we will continue to last out a key player assuming passenger demand goes up as projected. We will focus on upgraded in-flight entertainment systems, football back up special fares, and buy-on board meal options to further enhance customer experience.Improve NetworkAmerican Airlines new interlock strategy is designed to improve profitability by offering the routes and schedules that attract and retain not only their deliver high value customers but besides those of alliance partners, an weighty source of revenue through codeshare agreements and closely aligned loyalty programs. The network is the core product that works in concert with lie-flat seats, onboard amenities, and customer service. Latin America is a prominent focus, due in part to our strong presence in key hubs to Latin America such as Dallas and Miami. This is where the profits are. Passenger growth forecasts for Latin America for 2013-17 are 6 percent for Latin America North (Central America and the northern beach of South America) and 8 percent for Latin America South (southern cone shape countries such as Brazil and Argentina). This compares with 3.6 percent for Europe and 4.4 percent for Asia.Increase International RoutesTo follow the growth markets, we must change our portfolio mix to focus more on international rather than domestic routes. This is a slow process, moving from 38 percent international and 62 percent domestic capac ity in 2013 towards a 44/56 percent balance by 2017. As we refocus more of our flying towards international opportunities, it is belike to look towards increased code-sharing with domestic carriers like Alaska Airlines, jetBlue, and others to further enhance our network in places like Los Angeles and New York City. This is likely to have initial odontiasis problems, due to terminal colocation and product disparity issues. For instance, the business passengers that we are move may be disgruntled by jetBlues more limiting carry-on baggage policies or by extra time and added security checks if they are required to change terminals.Refurbish domestic feedOur plan is also to diversify our domestic feed by increasing the number of regional carriers with which we do business to reduce operational and balance sheet risk. Today, we in the beginning get a feed from our wholly-owned subsidiary, American Eagle, which has higher costs than or so other regional carriers. American Eagle is g oing through its own restructuring to lower its costs, and it may ultimately be spun off.Synergies with US AirlinesMerger with US Airways will result in the largest carrier in US. It would create rough $1.2 billion in financial benefits.