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AMERICAN AIRLINES, INC.

GROUP 5
ARADHANA PATWA |ASMITA SINGH |POOJA GUPTA
SHABNAM KERKETTA | DEEKSHA SHARMA |NEHA KUMARI
5 C ANALYSIS
Company

•American Airlines, Inc. (American), principal subsidiary of Dallas/Fort Worth-based AMR Corporation, was the largest airline in the United States.

•At year-end 1988 American operated 468 aircraft on 2,200 flights daily to 151 destinations in the United States, Bermuda, Canada, Mexico, the
Caribbean, France, Great Britain, Japan, Mexico, Puerto Rico, Spain, Switzerland, Venezuela, and West Germany.

•In 1988 operating income - $801 million , revenue - $8.55 billion

Collaborators: industry databases SABRE and other CRSs

Customers: Travellers travelling via Chicago-West Coast and New York-San Juan

Competitors: United and Continental for flights via Dallas/Fort Worth.

Eastern Airlines and TWA in the Caribbean market.

Context: In the five years 1984-1988, American's international traffic grew by nearly 70%Cfrom just over 8% of total revenue passenger miles to nearly
14%. With increasing deregulation in foreign skies, the expected opening of European markets in preparation for 1992, the growing importance of the
Pacific rim, and the intense battle over global CRS networks, the airline was poised for a sustained growth in its international business. The emergence
of hub-and-spoke systems had a major impact on industry structure.
PROBLEM STATEMENT

How to do revenue management by selling the right seats to the right customers at the right prices?
ALTERNATIVES

Marketing

Upgrade computerized
reservation system
EVALUATION OF ALTERNATIVES

Advantages of marketing Advantages of upgrading computerized


reservation system
 To sell deeply discounted seats at the last
minute could make additional profit Increase the productivity of yield
management specialists help in spending
 AA could be known to have fantastic last more time to only critical flights
minute offer
Guide to make better pricing strategy
Disadvantages of marketing
Cons:
Focusing on marketing in an industry that
changes highly will be costly It takes time and capital investment
Short term benefits Time to have the benefit of learning curve
RECOMMENDATION

Improve SABRE usage to take benefit of the yield management system and increase responsiveness and effectiveness to
coordinate reservations inventory decision

Option 2 that is upgrading yield management system is recommended to implement above

Because the yield management decision making process is so large and complex at AA effective control of inventory of
seats can be accomplished only with more advanced automated models.

The new model is aiming at handling overbooking control, discount allocation and traffic management