American Airlines is a major airline based in the United States of America and is headquartered in Fort Worth, Texas. It is the largest airline in the world when measures with the number of passengers it serves, the size of the fleet and revenue passenger mile. The company operates both in the local and the international market, and it operates about 6800 flights in a day to 350 different destinations that are located in more than 50 countries in the world. The airline still has the potential of expanding to the other parts of the world. Charles Lindbergh flew the first flight for American Airlines, which carried U.S. mail from St. Louis, Missouri, to Chicago (American Airlines, 2020).
The airline continued with the mail routes for eight years after which it started improving its capacity to carry people to and from different destinations in the world. C.R. Smith partnered with Donald Douglas intending to create the DC-3 which remodelled the airline industry. The plane enabled the company to switch from carrying mails to carrying passengers. The American Airlines was the first-ever airline to fly the DC-3 commercial flight from New York to Chicago on 25th June 1936. The American Airlines started trading in the New York Stock Exchange on 10th June in the year 1939. The airline then introduced the first Turboprop plane manufactured in the United States of America dubbed Lockheed Electra. The American then hired the first-ever African American pilot to ever work in a commercial airline on 3rd December 1964. The airline then merged with the Caribbean airlines with the aim of gaining the routes in the Caribbean highlands. The American Airlines has become the best airline company in the world, having the biggest fleet of planes and serving the biggest number of employees and serving the largest population in the world (American Airlines, 2020).
The airline industry
Who are the customers?
Customers are the most important stakeholders in the airline industry as the competition becomes intense in the industry. It is important to understand who the customers are in the airline industry in order to find out the best ways of satisfying them. The airline industry serves many clients from different social classes. The airline industry serves people from different social classes as they travel in different parts of the world. Most of the people travelling overseas use aeroplanes in their travel. The COVID-19 pandemic has cut down on the travelling activities by the people in the society (Hashem, 2017).
Environmental audit is important because it enables the company to be aware of the factors affecting business in the market and in so doing, the management comes up with measures of dealing with them for the benefit of the company. Business environment audit involves the assessment of both the internal and the external environment. The assessment of the internal environment involves conducting a SWOT analysis, whereas the assessment of the external environment involves conducting PESTLE analysis.
American Airlines has a superior market share in the United States of America that enables it to have more clients and desirable profitability. The company also has an extensive operational network that is measured using available seat miles and revenue passenger miles. The fact that it is the largest scheduled passenger airline in the world makes it to make more revenue since it serves a huge number of clients in the market. American Airlines also has strong alliances and tie-ups that increases the flight frequencies and in so doing it increases the amount of revenue made by the company. The fact that American Airlines has a loyalty flyer program which enables the clients to earn loyalty points for any flight ticket they purchase. They can later redeem the points for a free flight. The program helps the company to attract more clients. The management can make use of the strengths of the company to increase its performance in the market. (Augustine, 2013).
The fact that the company relies on a limited number of suppliers means that it is at risk of design defects, mechanical problems and inadequate performance. A large number of low-cost competitors in the market pose a threat to the company’s success as they take a substantial market share.
The growth of global tourism means that many people are travelling, a situation that will lead to an increase in the number of clients available for American airlines. The fact that the company has a large operation network around the world means that it will serve a substantial number of clients. It is therefore important for American Airlines to do its best to take advantage of the opportunity. The other opportunity is the growth in the U.S. airline industry. The growth in the industry means that there are many clients in the market that are supposed to be served by the companies available. The growth in the industry is, therefore, a good opportunity for American Airlines to grow. The cargo sector is also growing at a high rate meaning that it is the next big thing in the airline industry. American Airlines should, therefore, make many investments and take advantage of the situation (Li et al., 2014).
Intense completion in the sector is an issue of concern for many firms in the industry. The fact that competition is reducing a significant market share that belongs to American Airlines means that it is time for the company to put measures in place to deal with the situation. The growing security concerns and the airline accidents are potential causes of massive losses in the airline industry that may affect the company in future hence it is important to put measures in place that will help in reducing the air crashes, and they may also reduce losses in case an air crash occurs. The airline industry is also subject to various environmental laws. American airlines should, therefore, comply with the laws and regulations to prevent the lawsuits. The COVID-19 pandemic is threatening the economy of the world many countries have banned any form of foreign travel into their territories in a bid to combat the virus. The airline industry is therefore affected greatly as the number of travellers decline. This situation will definitely have an impact on American Airlines.