The business environment is witnessing multiple changes, and that calls for constant innovations in every enterprise to ensure that they can stay in line with the shifting dimensions. Technology is one of the most influential forces in the market with various implementations providing each company with an opportunity for better performance. The airline industry has evolved since the beginning and requiring innovations in the business models to keep up with the changing trends (Marques, 2015). Various factors influence the performance of air travel companies, most of them deriving from the conditions in other market aspects. For example, movements in fuel prices impact the fare rates that the enterprises offer. The interest is to establish the underlying factors in the air travel sector and how each will influence the industry in future. American Airlines is one of the prominent companies in the aviation industry of its countries. As a result of its positioning, it serves as a good case to offer a perspective on the trends that occur in the segment in the future and how they impact the performance of the company.
The airline industry relies heavily on its customers as they are the primary source of revenue in the airline business model (Diaconu, 2012). That leads to the challenges that the companies in the sector face in handling the needs of the customers. Traditionally, the focus was on offering the lowest prices in the market as a cost leadership approach to retain previous clients and attract new ones. On the other hand, another set of airlines utilized customer experience as the primary differentiating factor to increase the competitive edge of the company. In the second approach, the enterprises sought to provide the best quality to every client as a value proposition to satisfy their travel needs (Marques, 2015). Choosing between the two options presents a significant challenge for the organizations as they seem to compel one another. Providing cost leadership may hinder the capacity of the company to generate enough revenue to invest in the customer experience approach. American Airlines counts as one of the businesses that noticed the essence of both options and chose to establish a hybrid strategy that can provide the best of both considerations. However, the low-cost carriers are taking over the industry as their customer volumes are growing (Diaconu, 2012). That is a reflection that the airline industry can expand by laying out the best strategies that attract more clients.
Regional travel has grown in various countries around the world with more people preferring to use aeroplanes for intracontinental trips (PwC, 2016). More airline companies are considering the use of larger planes for shorter trips to take advantage of the economies of scale. Since the volumes of customers are growing for the intracontinental journeys, it would be wiser to invest in larger aeroplanes that carry more passengers at one go to increase fuel efficiency. That enables the airline companies to achieve their low-cost strategy and encourage even more participants. The industry is expanding with a rising dominance of the low-cost carriers increasing their market share. The indication is that the pricing of air travel is developing into an influential force that most airlines will need to consider as part of the business strategy.
Technology is another influential factor in the aviation industry, and it provides various efficiencies to the companies and improving overall performance (Marques, 2015). Technological innovations have various influences that enhance the experiences of both the clients and the carriers simultaneously. The first area of influence derives from the improvements in computing technologies and specifically the internet. Operations at the company level have improved as computers allow the workers to handle their activities with ease and more convenience than traditional methods. Availability of information on the internet is another impact that the companies enjoy especially in creating awareness of what the enterprise has to offer to the client. The internet has enhanced the landscape for airline marketers through platforms such as social media (Sengupta & Wiggins, 2014). The improvement in marketing strategies implies that the companies can access more clients at a particular period. However, the most influential aspect of computing and internet technology is online and electronic ticketing platforms.
American Airlines uses that approach to provide the relevant services to their customer who book tickets from their convenient locations (AA, 2016). That also enhances the service delivery of the company as clients have a real-time awareness of the changes in travel rates and availability of seats in different periods of booking. That minimizes the frustration that may result, for example, from a customer visiting the offices and finding that the seats are full and wait for the next airplane. The increase in the awareness of the customers promotes their confidence in air travel, and that enhances the number of the users of that mode of transport. American Airlines is also using the online platform to improve customer loyalty by encouraging people to hold the company’s electronic cards where they receive discounts after the travelling for a certain number of miles (AA, 2016a). The aim is to encourage frequent travelers to use the company’s services to ensure the individuals accumulate the total mileage that can earn them bonuses.
Technology also influences the quality of services that the airline companies are capable of offering to the clients (Hussain, Nasser & Hussain, 2015). Some of the prominent improvements are in cabin comfort and fuel efficiency that have a significant impact on the future of air travel. The incorporation of various technologies into the cabin implies that customers can access better services than it was previously. For example, the inclusion of a network connection serves a better purpose that the traditional televisions in the cabins. The primary influence of this factor is that it enables the airlines to use them as a competitive tool, thereby, improving the conditions for the passenger. Flight management technologies are also growing better with promises for further improvements in future to deal with sensitive aspects such as safety (Fleischer, Tchetchik & Toledo, 2015). That increases the confidence of the consumers to use air travel. Therefore, the technological improvements are enhancing the safety and comfort of air travels that improves the opportunity of the airlines to generate more revenue in the future through the influence that will attract more clients.
The implications of the analysis are that the cost of air travel and technology are the primary influences on the industry that look to shape future trends around the globe. The sector is growing in the number of clients due to an expansion in the regional trips. The indication is that the cost-leadership approach is the most influential strategy that the airlines should use in their business models. The premium customer experience is a differentiation strategy that the airlines use as a value proposition to enhance their competitive image. Technology is enabling the industry to create more confidence in the customers which promises to attract more people into air travel. Cross-border trips are growing more frequent, and airlines are the best way to get across different countries quickly. The instances present a bright future for the participants in the air travel industry with an expanding potential for revenue generations. The challenge is in attracting investors as the historical performance of the sector indicates that it only generates capital balances with little gains. However, if the revenue capacity grows, more investors may open up and enable the industry to expand even more rapidly.
References
AA. (2016). Airline Tickets and Cheap Flights at AA.com. American Airlines. Retrieved on 5th April 2016 from: https://www.aa.com/homePage.do?locale=en_US&pref=true
AA. (2016a). Advantage. American Airlines. Retrieved on 5th April 2016 from: https://www.aa.com/homePage.do?locale=en_US&pref=true#advantage
Diaconu, L. (2012). The Evolution of the European Low-cost Airlines ‘Business Models. Ryanair Case Study. Procedia-Social and Behavioral Sciences, 62, 342-346.
Fleischer, A., Tchetchik, A., & Toledo, T. (2015). Does it pay to reveal safety information? The effect of safety information on flight choice. Transportation Research Part C: Emerging Technologies, 56, 210-220.
Hussain, R., Al Nasser, A., & Hussain, Y. K. (2015). Service quality and customer satisfaction of a UAE-based airline: An empirical investigation. Journal of Air Transport Management, 42, 167-175.
Marques, R. J. P. P. (2015). The Future of Airline Business Models: Which Will Win? (Doctoral dissertation, Luiss Guido Carli University).
PwC. (2016). 2015 Aviation Trends. PriceWaterhouse Coopers. Retrieved on 5th Apr. 2016 from: http://www.strategyand.pwc.com/perspectives/2015-aviation-trends
Sengupta, A., & Wiggins, S. N. (2014). Airline pricing, price dispersion, and ticket characteristics on and off the internet. American Economic Journal: Economic Policy, 6(1), 272-307.
