Distribution At American Airlines Essay

American Airlines is a major United States air hose. It was formed in 1930 as a passenger airline and merged with different carriers since its formation.American Airlines operations grew rapidly after field War II. In 1921, Americans corporate predecessor had except five small airplanes for transporting airmail. In 1946, American ordered 220 unexampled planes.1952 American introduced the Magnetronic Reservisor, a mechanical console installed on each desk to help alter inventory control. The Reservisor offered major productivity improvements A trial in the capital of Massachusetts reservations office served an tack onitional 200 passengers daily, with 20 fewer reservations staff.American and IBM collaborated on the design of an improved inventory management system, ultimately called the Semi-Automated Business Reservations surround (SABRE). IBM provided the hardware, while American and IBM jointly built the software. The initial investment was parallel to half a dozen Boeing 707 jet airplanes.Competitors make their own dispersal system and later, certain circumstances open the industry to Global statistical distribution System allowing AAs own system to be access by those customers of competitors.TIME CONTEXTIn year 2006, when American Airlines faced the impend expiration of its three-year contract with its four then existing GDS.POINT OF observeLead negotiator Charlie Sultan and co-lead negotiator Chris Degroot.STATEMENT OF THE PROBLEMAmerican Airlines was unable to lift the fees set by GDS due to struggled with fuel prices and change magnitude competition from new entrants.OBJECTIVESMustTo continue attending to customers requirements as vigorous as preserving the relationship with snuff it agents. To maintain easiness in accessing American Airlines services through sustenance their existing GDS. To overcome possible threats brought by the changing environment (fuel prices and new airline entrants).WantsTo become the leader confederation in airline industry.To obtain more profit intended for supporting the database services and other related activity. To preserve the trust given to them by their customers as well as their partner become agencies.AREAS OF CONSIDERATION (SWOT ANALYSIS)Strengths adept of the pioneer airlines to have an electronic distribution system (SABRE). Expertise in airline industry proven by their years of operation overcoming away challenges,WeaknessesUnable to maintain their existing GDS (Global Distribution System) when it comes to its expenses. Not able to annunciate future problems.OpportunitiesSince they already collaborated with IBM with their SABRE and obtained knowledge in software development, they whitethorn expand their business of having an integrated airline services and engage in developing software. Opportunities for growth in the industry.ThreatsThe implementation of Source Premium indemnity may result to turn on agencies switching to other airlines. Possible new entrants in t he airline industry might be more technology-based and recent allowing American Airlines existing customers to conceptualise switching services from them.ALTERNATIVE bank line OF ACTIONACA1 Limiting American Airline GDS Involvement to One. This pass on enable AA to focus into one GDA only while taking actions into garnering solutions for getting funds in supporting the remaining GDS. For the meantime, while AA resolves the insufficiency, the company may not be able to sacrifice therelationship with its travel agents. ACA2 Pushing the Idea of Source Premium Policy. Although the risk will be losing of referrals with travel agencies, the idea is still essential. It is letting the travel agency subscribing to AA shoulder the excess charges set by GDS. survive agencies, anyway, may pass the charges to customers who is involuntary fully accept AAs policy. ACA3 Partnerships with Existing and long-familiar Travel Agencies. This will strengthen the relationship between AA and trave l agencies and create a correlative understanding. AAs experience through the years could guarantee the travel agency a continuous growth of the industry. On the other hand, the travel agency could put trust to AA and be able to work for AAs continue offering of services.RECOMMENDATIONThe student recommends ACA3 Partnerships with Existing and Well-Known Travel Agencies.ACTION PLANIn doing the recommended alternative course of action, the followers actions should be fully implemented in effect. 1. Create a plan for the possible business structure that may arise. That may include blueprint on how will be a partnership being structured. 2. Make a draft of possible guidelines on both parties in partnerships. The restricts should include mutual benefit. 3. Seeking of trusted and well-known travel agencies and doing a background control on the prospects. 4. Conducting a meeting with the travel agencies that has been chosen. In a meeting, AA should effectively persuade the agency, stat ing the mutual benefit. 5. AA should allow the agency to revised or add on the guidelines in setting the conditions for he partnership. 6. Agreeing party should also consider the existing AA business policy. AA should also give a favorable condition to the agencies. 7. Executing the planned structure in the business with the official travel agency partners.