In 1990 American Airlines was the largest US carrier -- but its profits were less than of 1% of sales and it faced tough competition on many fronts.  The airline had an aggressive growth strategy that involved dominating as many hubs as possible, maintaining a modern fleet, providing a widely used reservation system, high visibility and good customer
service.

In this case, we see AA trying to decide whether to change its "product" and pricing on the key JFK-LAX route. The case takes us deeply into operations -- and therefore serves as a good example of how Marketing is tightly tied to operastions.
American Airlines: Proposal for a Three-Class Transcon Service

As you prepare this case, please consider the following:

• What is AA’s "old" product?  How does the proposed "new" product differ?
• How well has AA defined and segmented the market for this product line? Do you agree?
• How does segment-by-segment customer reaction to prices affect this decision?
• What is AA’s competitive position? How will this move affect it?
• What else will be affected if AA goes forward with this plan? What will be the new Marketing Mix?
• What are the economics of this move? What must you consider to calculate the economic impact? How sure are you of the outcome? Be sure to make your own calculations of your "best guess" as to what will happen if they go forward -- compared to staying with the current strategy.
• What are the risks? How AA weigh them?
• If you were Barbara Amster what would you recommend? Why?
• How would you sell your recommendation within AA?

Please participate in e-campus Discussion and Polling on these issues.