Since the birth of flight in 1903, air travel has emerged as a crucial means of transportation for people and products. The hundred-plus years following the invention of the first aircraft have brought about a revolution in the way people travel. The airline business is a major industry, relied upon by millions not only for transportation but also as a way of making a living.

1. y of Technology, Jamaica – Strategic Information Systems
American Airlines Vs Southwest Airlines
Class Activity 1: Strategic Information Systems
Student Name
Jan 21, 2017

2. Airline Industry
Since the birth of flight in 1903, air travel has emerged as a crucial means of transportation for
people and products. The hundred-plus years following the invention of the first aircraft have
brought about a revolution in the way people travel. The airline business is a major industry,
relied upon by millions not only for transportation but also as a way of making a living.
Early 20th Century
Airplanes were around the first few years of the 20th century, but flying was a risky endeavor not
commonplace until 1925. In this year, the Air Mail Act facilitated the development of the airline
industry by allowing the postmaster to contract with private airlines to deliver mail. Shortly
thereafter, the Air Commerce Act gave the Secretary of Commerce power to establish airways,
certify aircraft, license pilots, and issue and enforce air traffic regulations. The first commercial
airlines included Pan American, Western Air Express and Ford Transport Service. Within 10
years, many modern-day airlines, such as United and American, had emerged as major players.

3. American Airlines Company Profile
• Founded: April 15, 1926
• Merged with U.S Airways & American Eagle December 9, 2013
• Commenced operation June 25, 1936
• Headquarters Forth Worth Texas U.S.
• Key people: Doug Parker (Chairman & CEO) Robert Isom (President)
• Hubs: 5
• Fleet size 931
• Destinations 350
• Slogan: "The World's Greatest Flyers Fly American“

4. Southwest Airlines Company Profile
• Founded: March 16, 1967
• Commenced operation June 18, 1971
• Headquarter Dallas Texas U.S
• Fleet size 723
• Destinations 101
• Slogan: “Low fares, Nothing to Hide
• Key people: Gary C. Kelly – chairman, Tom Nealon – president, Mike Van de –
chief Operating officer
• Hubs 10
• Website: www.southwest.com

5. Share Price Information
Domestic market share of leading U.S. airlines between February 2015 and January 2016
Fig 1: https://www.statista.com/statistics/250577/domestic-market-share-of-leading-us-airlines/

6. Share Price Information
Domestic market share of leading U.S. airlines between November 2015 and October 2016
Fig 2

7. Share Price Information – Cont’d
American Airlines Income Statement
Fig 3
http://finance.yahoo.com/quote/LUV/financials?p=LUV

8. Share Price Information – Cont’d
Southwest Airlines Income statement
Fig 4
http://finance.yahoo.com/quote/AAL/financials?p=AAL

9. Share Price Information – Cont’d
AA Future Share Price Growth Southwest Future Share Price Growth
Fig 5a - money.cnn.com Fig 5b - money.cnn.com

10. Analysis Using IS Planning Techniques
Four IS planning tools used:
• Critical Success Factors
• Five Forces Model
• SWOT Analysis
• Value Chain Analysis

11. Critical Success Factors
American Airline:
• Strong Management team
• Capable workforce
• Service promotions and in-flight
service
• Efficient management of cost
Southwest Airlines:
• Hire great people and treat them
like family
• Care for the customer warmly
• Keep fares and operating cost
lower than competitor
• Prepare for bad times with
strong financial strategy

12. Porters Five Forces Analysis
Competitive Forces
American Airline
Strength of Force
Southwest Airlines
Strength of Force
Supplier Power High High
Buyer Power High High
Threat of Substitute Moderate Moderate
Competitive Rivalry High High
Threat of new entrants Low Low

13. American Airlines - SWOT Analysis
Strength – internal positive factors Weaknesses - internal negative factors
• Merger with U.S Airlines
• Strong Hub in Dallas/Fort Worth
• Advantage recognized as the best customer loyalty
program
• Strong Brand image, Started many new routes since
2010
• Strong image for onboard entertainment content
• Wide reach with over 250 destinations with a strong
fleet size of 600 carriers
• Financial position is a cause for concern
• Losing out market share to LCCs and other
competitive players
Opportunities - external positive factors Threats - external negative factors
• Leverage on code share agreement with a number of
airlines
• Capitalization on growth of HDTV
• More international destinations on popular routes
• Increasing Fuel Costs and Increasing Labor Costs
• Pressure from regulation bodies and Gov policies
• Low fare service providers

14. Southwest Airlines SWOT Analysis
Strength – internal positive factors Weaknesses - internal negative factors
• Low-cost, efficient operations equates to low
fares/great value
• Employees are allowed/encouraged to have and show
their sense of humor
• More departures than any other US airline
• High capacity usage (few unfilled seats)
• No flights to international destinations
• Dependent on a single type of aircraft - the Boeing
737
• Booking flights is not available except directly
through Southwest Airlines
• Few morning flights offered
Opportunities - external positive factors Threats - external negative factors
• International markets are not yet served by Southwest
• Longer flights are a growing market
• New plane technology, will increase air travel
• New technology - opportunities for new services and
products
• Fuel price increases could reduce air travel
• Decline of leisure travel due to terrorism and/or a
depressed economy
• Increased competition would likely hurt industry
profitability

15. Airline Industry Value Chain Analysis
Fig 9: Adapted with permission from Surenderan E,
Research Manager at IMRB International

16. Competitive Advantage: IS Strategies
Purpose:
Because Sabre is the platform
currently being used at American
Airlines, it should minimize
disruption for the maximum number
of people and systems by bolstering
employee readiness, speeding up
implementation and improving
customer responsiveness throughout
the integration.
Customer Relationship Management:
American Airlines selects Sabre reservations system
Benefits of using Sabre:
• Assist in processing 85,000 daily telephone
calls, 30,000 daily requests for fare
quotations 40,000 daily passenger
reservations, 30,000 daily queries to and
from other airlines, and 20,000 daily ticket
sales.
All of this processing for most individual
interrogations will be handled in less than
three seconds.

17. Competitive Advantage: IS Strategies
Purpose:
To move some of its applications to the
cloud and make use of IBM infrastructure
as a service and platform as a service
tools.
American Airlines Application and Data Management System
Benefit:
• Greater enterprise flexibility, scalability and
reliability
• Take advantage of IBMs storage capacity and
technical expertise
• AA will have access to IBM advanced analytics
capabilities and technologies
• Allows American airline to advance its
enterprise into a cognitive infrastructure that
offers greater resiliency and better customer
experiences

18. Competitive Advantage: IS Strategies
Customer Relationship Management:
AA signed a strategic technology agreement with Lenovo
Purpose:
• AA aims to create the
ultimate business experience
for its customers who need to
access the home or office
while traveling.
Benefits:
• To giving business travelers
access to top-flight PCs and
workstyle/lifestyle services
in a setting that fosters
comfort, convenience and
personal productivity.

19. Competitive Advantage: IS Strategies
Customer Relationship Management
Southwest Airlines Uses Big Data To Deliver Excellent Customer Service
Purpose:
To deliver the highest
quality of customer service.
Benefits:
• This allows Southwest Airlines to provide
even better customer service using more data
analysis.
• Deliver Southwest Airlines more information
on what the customers are looking for and
how their experience with Southwest Airlines
is.

20. Competitive Advantage: IS Strategies
Purpose:
So Southwest can virtualize their
physical servers and run apps on
clouds instead of desktops.
VMware Technology: Provides virtualization software to Southwest
Benefit of using VMware virtualization:
 Easily integrate into southwest infrastructure
 Provide top performance and scale to expand
to expand the company’s IT objectives
 Roll out new employee tools
 Launch a new platform and provide a quick
transition of operation

21. Virtualization at Southwest Airlines
7-21

22. THE END