Swot analysis of American Airlines. American Airlines is the world’s largest passenger carrier US airlines. American Airlines came into existence in 1930 by the merger of 8 smaller airlines and became operational on June 25, 1936. The headquarter of the company is in Fort Worth, Texas, USA.
American Airlines Group Inc. is a parent company of American Airlines and it came to existence on December 09, 2013, by the merger of American Airlines and US Airways Group. Federal Aviation Administration issued the license on April 08, 2015.
According to an estimate, the annual revenue of American Airlines in March 2021 was 45.210 billion dollars, and it has increased by 84.67%. Out of which, the net income of the company was -1.607 billion dollars, and it has declined by 50.04%. However, the airline has employed 123,400 employees to manage its worldwide operations.
American Airlines’ top competitors are Northwest Airlines, Delta Airlines, United Airlines, JetBlue Airways, Boeing, British Airways, Alaska Air Group, Air France KLM, and Sun Country Airlines.
Today, we’ll discuss the swot analysis of American Airlines. It’s going to analyze the internal and external factors impacting the world’s largest airline company. Here’s the swot analysis of Airlines as follows;
Strengths of American Airlines
According to an estimate, American Airlines offers 117 international destinations and 234 domestic destinations in 59 countries across the globe by the end of April 2021. However, it falls one of the world’s largest airlines. The company deals with 500,000 passengers daily and 200 million annually as of 2019.
Strong Brand Image
American Airlines has established a strong brand name over the years. It’s because of various reasons like providing personal devices, seatback screen, overhead screen, and much more. The usage of personal devices and entertainment increase the satisfaction level of customers. That’s why they the airline for travel over and over again.
American Airlines has offered many loyalty programs to retain customers. For instance, the passengers earn miles while traveling with AA, and they can use the total mileage to buy the retail product, rent a car, hotel stay, or upgrade the flight cabin while traveling. They can also lend the total mileage they have earned to someone else. It’s important to mention here the total millage the time customers have spent on the flight.
Merger and Alliances
The alliance between American Airlines and US Airways is the world’s 3rd largest alliance. AA had filed for bankruptcy in 2011. The merger and alliance with US Airways in 2013 saved the airline from disaster. But the merger kept the brand name “American Airlines” because it had a better and strong brand reputation.
According to an estimate, the market share of American Airlines in 2020 was 19.3% in the US market. It was the highest and Southwest Airlines was at the 2nd position with a market share of 17.4%. The high market share provides the airline a leading role in the domestic market.
Weaknesses of American Airlines
American Airlines has faced some tech issues regarding the pilot scheduling system in 2017/2018; where the company’s computer system used to accept the pilot request of any pilot who applies for it. However, it caused a lot of tension between the Allied Pilot Association and the airlines.
According to a report by NAACP published in 2017 claiming that African American passengers could face disrespectful attitudes while flying with American Airlines. The report was following several incidents of discrimination that passengers have experienced. It had a very bad impact on the brand image of AA.
American Airlines’ annual revenue and net income have dropped during the pandemic years of 2020. Comparatively, it was the same in the entire air industry. But the company’s position is more fragile considering the recent merger.
Opportunities available to American Airlines
American Airlines should expand its market by adding more destinations and countries to its list. Things would get better economically after the pandemic in the next few years. The tourism industry would accelerate once things go back to normal. Therefore, AA should expand and be ready for the opportunity to cash it in.
The high definition television trend is growing for the past few years. American airlines should add it in its entertainment section. It would further increase the customers’ satisfaction level and attract more people.
Threats American Airlines has to face
The brand has to follow the laws and regulations relevant to the protection and safety of the environment. Whenever the government and the environmental regulatory authority make any changes in the laws, American Airlines has to follow them.
There are many events in international politics that have caused the disruption of fuel supply. Ultimately, it has increased fuel prices across the world and impacted the fair rate and other operation costs. It would impact the profitability of the company.
Low Fare Airlines
There are many new airlines that offer air travel at a very lower fare. They have attracted a significant portion of the price-conscious customer market share. However, the economic recession and low buying power would further increase their growth.
Many politicians and government officials are considering the vaccine passport. It means that the people who are vaccinated would travel and the remaining won’t. However, it has initiated a very heated debate on social media among pro-vaccination and anti-vaccination people. If it becomes mandatory, it would decrease the total number of travelers.
Conclusion: American Airlines Swot Analysis
After an in-depth study of the swot analysis of American Airlines, we have realized that American Airlines is indeed one of the world’s largest airlines. The pandemic, vaccine passport, regulations, discrimination, and declining revenue are some of the main challenges. American Airlines should expand its destinations and lower the fare in order to attract more customers.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.