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y of Technology, Jamaica – Strategic Information Systems
American Airlines Vs Southwest Airlines
Class Activity 1: Strateg...
Airline Industry
Since the birth of flight in 1903, air travel has emerged as a crucial means of transportation for
people...
American Airlines Company Profile
• Founded: April 15, 1926
• Merged with U.S Airways & American Eagle December 9, 2013
• ...
Southwest Airlines Company Profile
• Founded: March 16, 1967
• Commenced operation June 18, 1971
• Headquarter Dallas Texa...
Share Price Information
Domestic market share of leading U.S. airlines between February 2015 and January 2016
Fig 1: https...
Share Price Information
Domestic market share of leading U.S. airlines between November 2015 and October 2016
Fig 2
Share Price Information – Cont’d
American Airlines Income Statement
Fig 3
http://finance.yahoo.com/quote/LUV/financials?p=...
Share Price Information – Cont’d
Southwest Airlines Income statement
Fig 4
http://finance.yahoo.com/quote/AAL/financials?p...
Share Price Information – Cont’d
AA Future Share Price Growth Southwest Future Share Price Growth
Fig 5a - money.cnn.com F...
Analysis Using IS Planning Techniques
Four IS planning tools used:
• Critical Success Factors
• Five Forces Model
• SWOT A...
Critical Success Factors
American Airline:
• Strong Management team
• Capable workforce
• Service promotions and in-flight...
Porters Five Forces Analysis
Competitive Forces
American Airline
Strength of Force
Southwest Airlines
Strength of Force
Su...
American Airlines - SWOT Analysis
Strength – internal positive factors Weaknesses - internal negative factors
• Merger wit...
Southwest Airlines SWOT Analysis
Strength – internal positive factors Weaknesses - internal negative factors
• Low-cost, e...
Airline Industry Value Chain Analysis
Fig 9: Adapted with permission from Surenderan E,
Research Manager at IMRB Internati...
Competitive Advantage: IS Strategies
Purpose:
Because Sabre is the platform
currently being used at American
Airlines, it ...
Competitive Advantage: IS Strategies
Purpose:
To move some of its applications to the
cloud and make use of IBM infrastruc...
Competitive Advantage: IS Strategies
Customer Relationship Management:
AA signed a strategic technology agreement with Len...
Competitive Advantage: IS Strategies
Customer Relationship Management
Southwest Airlines Uses Big Data To Deliver Excellen...
Competitive Advantage: IS Strategies
Purpose:
So Southwest can virtualize their
physical servers and run apps on
clouds in...
Virtualization at Southwest Airlines
7-21
THE END
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American Airlines Vs Southwest Airlines

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.

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American Airlines Vs Southwest Airlines

  1. 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. 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. 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. 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. 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. 6. Share Price Information Domestic market share of leading U.S. airlines between November 2015 and October 2016 Fig 2
  7. 7. Share Price Information – Cont’d American Airlines Income Statement Fig 3 http://finance.yahoo.com/quote/LUV/financials?p=LUV
  8. 8. Share Price Information – Cont’d Southwest Airlines Income statement Fig 4 http://finance.yahoo.com/quote/AAL/financials?p=AAL
  9. 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. 10. Analysis Using IS Planning Techniques Four IS planning tools used: • Critical Success Factors • Five Forces Model • SWOT Analysis • Value Chain Analysis
  11. 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. 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. 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. 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. 15. Airline Industry Value Chain Analysis Fig 9: Adapted with permission from Surenderan E, Research Manager at IMRB International
  16. 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. 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. 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. 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. 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. 21. Virtualization at Southwest Airlines 7-21
  22. 22. THE END

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