Situational Analysis on American Airlines and the Domestic Airline Industry

Executive Summary

For the past five years from 2001 to 2006 , American Airlines has seen a period of continuous losses . While the airline industry as a whole was plunged into such a situation , there were certain players like Southwest who have shown continuous profits and increased consumer and employee loyalty . To change its existing condition American Airlines management has developed a Turnaround Plan . According to this company wishes to make an about face and reach a target revenue of 4 billion (Arpev 2007

To achieve this target , the company has defined strategic

goals and objectives for all it departments i .e . marketing , operations , and employee engagement . The objective of the marketing division is to achieve bigger customer base and improve customer service , while the operations division is focused towards cost-reduction and efficient usage of existing resources and the employee engagement division 's goal is to mobilize and motivate all its employee so that they work together in achieving this goal

This report analyses the internal conditions prevailing the company which were responsible for the operational inefficiency , the present trends in customer preferences and the external environment condition existing in the entire domestic airline industry

Situation Analysis

A . The Internal Environment on American Airlines

Review of marketing goals and objectives

Current marketing goals and objectives - American Airlines needs to build back its customer base and increase its revenues as against the earlier years ' losses . With this corporate mission in mind , the company management has come up with a Turnaround plan , which aims to increase the net earnings through a variety of measures in various divisions . In the marketing division , the company plans to centre its focus on improving relations with the customers . The division plans to achieve this by designing and implementing a robust international network and service . In addition it also plans to improve its regional airline system so as to gain the domestic customer base from its competitors The marketing division intends to further promote AAdvantage , the world 's largest loyalty program and to have its products available to the more customers by utilizing all possible distribution systems (Garton 2007

The strategy is entirely consistent with the present mission of the company which is given in its Turnaround Plan . American Airlines mission is to compete with its rivals by lowering costs , building a strong financial foundation , giving the customers value for what they pay and finally pull all its resources together so that they all could help in gaining over the competition to fulfill the vision of the company which is to become the largest airline in the world (Arpev 2007

With a drastic change occurring in the socio-economic condition in the United States post 9 /11 and also the successive developments occurring throughout the world , the concept of `flying ' has changed a lot . First of all , it has become very expensive for the airlines in terms of the various security measures and other consumer friendly regulations which they have to undertake under the strict policies of the government...