US Airlines

The American full-service airlines do not need to differentiate themselves since their simple presence in the aviation sector for decades offers them an advantage in the most competitive industry in America and the rest of the world, which is aviation. Yet, due to reasons such as airline competition, the political makeup of the country, social, economic, and technical issues, the services supplied may be of poor quality. Passenger miles transportation is a major criterion for rating airlines, and that is how American Airlines Incorporated-an AMR Corporation subsidiary-is ranked fourth largest. The five forces of industry competition by Porter are critical tools that can also be utilized to make an effective analysis of the airline industry (Hill & Gareth, 2009). It can also be concluded at this juncture that the terror attacks that occurred in September 11th 2001 also played a crucial role in changing the face of the aviation industry not only in America but the entire world forever. In addition, the financial catastrophe in 2007/2008 that was caused by the crumple of the mortgage industry has brought about numerous problems on the performance of the aviation industry in the U.S (Hitt, Duane, Robert, 2010).

There are two categories, through which airlines are divided into, Major carriers and the other one is known as discount carriers. “Discount carriers employ pricing strategies cutting profit margins of majors into a bare minimum” (Ben-Yosef, 2005). Low-fare airlines also referred to as discount carriers have elevated their services in terms of quality and this has lead the major airlines in spending even more as they put more effort to uplift their quality standard. Looking at it from a practical perspective, in terms of passenger miles carried, American Airline Incorporated (AA) was the airline which was ranked as the world’s largest in 2004, but in the United States, as far as quality service is concerned it was ranked eleventh. The first four positions in the top ten were taken by low air fares and actually low fare carriers took all of the four spots.

The execution of the airline deregulation act in the late 1970’s has been a political factor that has had negative impacts on the performance of the major airlines (Teece, 2008). The formulation of this regulation lay in the hope that would bring about efficiency in airlines and it would become common and customers on the other hand are charged lower fares. The aim of the deregulation act was to initiate competition within the airline industry with the goal of enhancing the economy in general and as soon as the law was enacted abolishment of oligopolistic markets and monopolies took place (Johnson, 2011).

According to Robert Crandall, the former chairman and president of American Airline Incorporated (AA), not only did the deregulation act have an undesirable effect on major airlines but the aviation industry was holistically affected. This has brought about fierce competition among full service and low-fare airlines and monopoly which major airlines such as AA once took pleasure in enjoying on certain parts of the globe is a thing of the past (Bryce, 2001). This has brought about congestion in airports, large numbers of customers and loss of goods with minimal chance of recovery.

Economically, factors like increase in fuel prices, the irregular rise and fall of major currencies like the euro and the Us dollar and the dawdling pace at which the US is taking to recover from the 2007/2008 economic recession (Brady, 2011).According to (Barney, 2010) complaints have been on the rise and the quality of services offered by most airlines has become unacceptable.

In a culture that focuses mainly on customers but rarely pays little attention to the workers that offer services in a given set up, legislations that are put in place such as the wage legislation are bound to be breached. This will lead to Unions which are supposed to ensure improvement of interests of all the employees pushing for the well being their well being leading to mass protests and expensive court proceedings. This may lead to an institution, in this case an airline’s reputation being hurt.

In an industry where competition is fierce, not only has Singapore airlines managed to promote their brand as an airline with the most unique and high-quality service but they have also managed to promote tourism and present Singapore as a tourist destination. From the perspective of a human resource manager, Singapore airlines deliver excellent service in a very cost effective way and it emphasizes on training of the cabin crew which is an important branch in the airline industry.

References

Barney, J. (2010). Gaining and Sustaining Competitive Advantage. London:

Pearson Education, Limited.

Ben-Yosef, D. (2005). The Evolution of the Us Airline Industry: Theory,

Strategy and Policy. New York: Springer.

Bryce, R. (2001). Time to Fly American Airlines. Interactive Week, 8(12), 2

Casadesus-Masanell, R., Tarzijan, J.(2011). When One Business

Model Isn’t Enough. Harvard Business Review, 90(2), 132-137.

Hill, C. & Gareth, J. (2009). Strategic Management Theory: An Integrated Approach.

Stamford, Connecticut: Cengage Learning.

Hitt, M., Duane, R., & Robert, H. (2010). Strategic Management: Competitiveness &

Globalization, Concepts. Stamford, Connecticut: Cengage Learning.

Johnson, S. (2011). How will American Airlines’ bankruptcy affect workers?

New York Amsterdam News, 102 (50), 10-38.

Teece, D. (2008).Technological Know-How, Organizational Capabilities, And

Strategic Management: Business Strategy and Enterprise

Development in Competitive Environments. Singapore :World

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