American Airlines: Unsuccessful Firm Essay

American Airlines, Inc. (AA) is a major airline of the United States and is the world’s second-largest airline in passenger miles transported, passenger fleet size, and operating revenues. American Airlines is a subsidiary of the AMR Corporation, and was founded in 1930. Distribution: American Airlines is headquartered in Fort Worth, Texas, and operates an extensive international and domestic network, with scheduled flights throughout North America, Latin and South America, Europe, Asia, Pacific and the Caribbean. American Airlines has a fleet size of 605 Aircraft carriers, and flies to over 260 destinations. AA. com) Pricing: American Airlines uses a value-based pricing strategy for their airline fair. All fairs are mileage-related. Consumers have the options of Economy Class, Business Class, and First/Premium Class. Compared to other major US Airways, American Airlines provides competitive rates for round-trip and direct flights. (Yahoo Finance) Promotion: The AA Advantage is a frequent flyer rewards program implemented by American Airlines. Launched in 1981, it is the largest loyalty program in the world, with over 67 million members.

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. The AA Advantage has been American’s most successful promotional campaign. (AA. com) People: American Airlines total workforce includes 87,897 people. Management level employees consist of 8,453 positions, while non-management employees make up 79,444 people in total. American Airlines has an Allied Pilots Association, which is the union that represents 12,000 pilots.

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Tom Horton is the current Chief Executive Officer of the company. (Hoovers. com) Servicescape: Coach and Business Seating in a typical American Airline Coach-Class seating consists of close-quartered cabins. Customers reviewed these seats as cramped, but were given a decent amount of storage room for carry-on luggage (glassdoor. com). First-Class seating is far more luxurious and open, compared with coach and business class. Customers are given a higher level of services for a higher fair price. (AA. com) Service Delivery:

On domestic flights and flights to Canada, Central America, and areas in the Caribbean, American Airlines offers a “buy on board” program offering sandwiches and snacks for purchase. American offers free coach meals on flights to Europe, Haiti, Asia, and select South American destinations. First Class and Business Class passengers receive alcoholic beverages for free, while non-alcoholic beverages are free for all classes. Customers are provided with are provided with 14 channels of music and a variety of TV programs in the CBS ranging from sports, movies, and reality television shows.

There are a range of magazines that are offered on-board. Customers are also able to experience in-flight shopping through the Skymall. Headsets are available to coach class for two dollars on domestic flights and free on flights to/from Europe, Asia, India and South America, and they are free for business and first class flyers. (AA. com) Customer’s Role: Customers have the options to purchase tickets remotely online, over the phone, or face to face with an employee at the airport. Customers can choose to print their tickets the day of the flight, and perform a self-check in, so virtually no assistance is needed until boarding.

Once on the flight customers are expected to experience service encounters with the flight attendants. Whether it is for food and beverage, entertainment, or comfort needs, flyers can ask flight attendants for their assistance. Customers on average reviewed the in-flight experience as “satisfactory”. There were still however, a number of cases where customers filed complaints for unpleasant experiences with “mean” employees (glassdoor. com). Flight attendants responded in their reviews that they feel undervalued and unfairly treated by the company admits the recent pay cuts, so that is the source of their accused bitterness (glassdoor. om). Customer Satisfaction: American Airlines have received low customer satisfaction scores due to a number of reasons. Based on complaints filed to the census bureau in September, the biggest sources of aggravation for fliers of American Airlines were flight delays and cancellations. According to The American Customer Satisfaction Index the airline is currently at their lowest level of customer satisfaction. 31 percent of customers reported “neutral on their satisfaction survey, while 25 percent reported dissatisfied, and 17 percent were very dissatisfied.

The remaining 27 percent consisted of satisfied customers (ACSI. com). In order to determine the current dissatisfaction amongst customers, extensive research was performed to determine the sources of American Airline’s unreliability. Sources of Flight Delays and Cancelations: American Airlines faces unrest amongst pilots, flight attendants, and employees due to the continual pay and benefit cuts amidst the current financial crisis AMR Corp is facing. AMR (American Airlines’ parent) filed for bankruptcy a year ago in hopes of reducing labor costs and returning to profitability.

Reports show for AMR Corp a total of $238 million net loss in the third quarter, while in the month of October alone, AMR faced $164 million in net loss (Yahoo Finance). The organization is decentralized, and the mistreatment of employees by upper level management is causing pilots to strike. “Pilots are calling in sick and crews are slowing operations by filing huge numbers of maintenance reports to punish the company for imposing tough cost-cutting measures as part of its bankruptcy reorganization” (MDJonline. com).

This is the central factor of American’s poor performance, decreasing customer satisfaction scores, and loss of a core customer base. Weekly Cancelation Statistics: American has already canceled 300 flights in the past week, or 1. 25 percent of its schedule, and this number is expected to rise (FlightStats. com). Last Sunday and Monday alone, American canceled more than 5 percent of flights per day. The percentage of American flights arriving late has also increased. At midday Thursday, only 52 percent of American flights were on time, compared with at least 90 percent at United, Delta and US Airways, FlightStats figures also showed.

Customer Perceptions and Relations: Consumers currently view American Airlines as an unreliable company. After extensive research through customer reviews, news articles, and service surveys, we have been able to conclude that American Airlines has failed to reach satisfactory-level performance to meet customer needs, because it fails to reach basic, expected service levels. Relations amongst American Airline’s consumer base have been weakening, because customers do not feel valued by the company, nor do they find American Airlines trustworthy (nbcnews. com).

The regular under-performance by American Airlines is causing their loyal customers to choose other airlines, and put American at the end of their choice spectrum. Customers are also being advised by the media to stay away from the company. The Wall Street Journal’s veteran travel reporter, Scott McCartney, told travelers to avoid the carrier because “American’s operation is in shambles” (nbcnews. com). Conclusions: Consumers are seeking alternative carriers because they are afraid to book with American Airlines amidst the financial crisis it is undergoing.

When traveling by air, consumers want a stress-free and accurate service transaction, from check-in at boarding to check-out at landing. American Airlines is unable to provide reliance to their customers, nor can they meet basic expectations, so the company is vulnerable to long-term damage if passengers continue to choose other carriers. The value of employee’s must be the central focus for American Airlines to terminate the on-going defiance by pilots’ and flight attendants. In order to meet customer satisfaction, the company must centralize on valuing their employees first.

This will ensure successful service delivery by the employees, which will provide the customer satisfaction consumers are expecting while flying with American Airlines.

Work Cited

American Airlines “Airline Tickets and Flights at AA. com. ” AA. com. American Airlines, n. d. Web. 03 Dec. 2012. http://www. aa. com/homePage. do “AMR Corporation Company Profile” – Yahoo! Finance. ” AMR Corporation Company Profile – Yahoo! Finance. Yahoo Finance, 22 Nov. 2012. Web. 03 Dec. 2012. http://biz. yahoo. com/ic/10/10021. html “AMERICAN AIRLINES, INC. Company Information. ” Hoovers. com. Web. 03 Dec. 2012. ;http://www. oovers. com/company-information/cs/company-profile. American_Airlines_Inc. 89737ab2c5ec00cb. html;. “American Airlines Reviews | Glassdoor. ” Glassdoor. American Airlines, 19 Oct. 2012. Web. 03 Dec. 2012. http://www. glassdoor. com/Reviews/American-Airlines-Reviews-E8. htm American Customer Satisfaction Index. ACSI, 14 Nov. 2012. Web. 03 Dec. 2012. http://www. theacsi. org/? option=com_content “The 2012 Statistical Abstract. ” Airline Operations and Traffic. Census Bureau, n. d. Web. 03 Dec. 2012. www. census. gov/compendia/statab/cats/transportation/airline. html “(AA) American Airlines Information. Flightsats. com. American Airlines, n. d. Web. 03 Dec. 2012. http://www. flightstats. com/go/Airline/airlineDetails. Curtis, Brian. “Flight Cancellations Surge at American Airlines. ” Travel. NBCNews. com, 19 Sept. 2012. Web. 03 Dec. 2012. www. nbcnews. com/travel/flight-cancellations-surge-american-airlines-1B5984573 Brown, Nick. “American Airlines Asks for More Time to Control Bankruptcy. ” Chicago Tribune. Chicago Tribune – Business, 30 Nov. 2012. Web. 03 Dec. 2012. “Labor Strike Threatens Airline. ” The Marietta Daily Journal. MDJonline. com, 12 Nov. 2012. Web. 03 Dec. 2012


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