American Airlines' Value Pricing (Abridged)

This is an abridged version of the 1992 case where American Airlines (AA) launched "Value Pricing" in an attempt to simplify the pricing structure of the airline industry. AA expected that this plan would benefit not only consumers, but also AA and the entire airline industry. However, there were uncertainties about how competitors would react to AA’s decision and whether or not this pricing policy would become the mainstay of the airline industry. Even though many things have changed in the airline industry in the last 30 years, the fundamental issues of price competition and competitive reactions remain critical today. These issues are likely to become even more important in the airline industry in the post-COVID era.