Business Model Analysis

Authors: Chris Dale, Alex Edwards, Brandon Thomson

Agenda

• Articulate the Value Proposition• Specify the Target Segment• Determine Competitor• Evaluate the Value Chain and Cost Model• Evaluate the Value Network• Determine the Revenue Model• Determine the Critical Success Factors• Analysis Grid

Value Proposition

• Vast network– 3,500 flights daily– Domestic and international flights– New and upgraded airplanes

• AAdvantage Frequent Flyer Program– World’s first and largest

Target Segment

• Premium Customers– Business and International Travelers– OneWorld Alliance

• The “new American”– Innovative and Efficient– Increased social media presence

Competitors

• Domestic Carriers– Legacy– Low-cost leaders

• International Carriers• Substitutes– Alternate forms of transportation– Advances in technology

Value Chain and Cost Model

• Inbound logistics– Jet fuel

• Operations– Fuel Smart Program

• Service• Procurement– Planes

• Infrastructure

Value Network

Revenue Model

• Filed for bankruptcy– Developed the “new American”– Merger with U.S. Airways

• Negative net income– $2.2 billion in restructuring costs

• Premium Customers

Critical Success Factors

• Reduce Costs– Fuel efficiency– Maintenance costs

• Finances– Net-unit revenue– Managing debt

• Sales & Marketing– Competitive pricing schemes– Social media presence

Analysis Grid

• Focus on financial position– Merger with U.S. Airways

• Targeting Premium Customers– High-profit flights

Analysis Grid American Airlines

Southwest JetBlue U.S. Airways

Delta Airlines

Value Proposition 3 4 4 4 4Target Markets 2 5 3 3 4Value Chain Cost Model

3 4 4 3 3

Value Network 4 3 5 3 5Revenue Model 1 5 3 4 3Strategy 3 3 5 4 4

Final Notes

• December 9, 2013– Merger with U.S. Airways finalized– Set to become the largest airline in the world

Questions or Comments?

• Contact Information

– Chris Dale: cdale81@lakers.mercyhurst.edu

– Alex Edwards: aedwar44@lakers.mercyhurst.edu

– Brandon Thomson: bthoms45@lakers.mercyhurst.edu