Case | HBS Case Collection | July 2014 (Revised November 2014)

American Airlines in 2011

by Willy Shih

Abstract

The American Airlines in 2011 case was developed to provide a setting for the comparative analysis of two very different business models in the U.S. domestic airline industry—the network carrier and the low cost carrier (LCC). These models offer very different value propositions. Firms allocate resources into distinctively different processes, and they earn returns using parallel but different profit models. Yet while most scholars view the LCC model as disruptive, the two different models have been able to co-exist for over forty years, albeit with substantial evolution. By unpacking how one of the major network carriers was able to evolve its model successfully for such a long time before industry structural changes necessitated a radical overhaul, the cases seek to give students insights into how the different business models were established, how competitive forces have driven their evolution, and the importance of constantly evolving and tuning a firm's model.

Keywords: American Airlines; network carrier; low cost carrier; LCC; Business Model; Organizational Change and Adaptation; Competition; Competitive Strategy; Disruption; Transportation Industry; Travel Industry; Air Transportation Industry; United States;

Citation:

Shih, Willy. "American Airlines in 2011." Harvard Business School Case 615-009, July 2014. (Revised November 2014.)