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the any time fares for business, new plan ahead for leisure, lower first class

fares, etc. 7- The distribution system The main distribution system for air

travel is the travel agent, which provides not only the flight ticket, but also

supplementary services such as car rentals, hotels, excursions, etc. Airlines

ask the agents to make reservations and deliver tickets. There is a difference

in the distribution of tickets for business travellers and leisure travellers.

Leisure travellers deal always with the agent, but for business travellers

sometimes the airlines make deals directly with the companies. Airlines also

make special offers to large corporate buyers, like price discount for frequent

flier travellers, or quantity discounts. Nowadays there are other distribution

systems, such as on line booking, and airlines? home delivery tickets. 8-

Pricing After the deregulation, pricing policies changed drastically, airlines

started to offer a wide variety of fares discounted below the regular price.

These discount were accompanied by several restrictions such as advanced

booking, no refund, no changing dates, etc. Therefore people unwilling to meet

these restrictions paid a higher price. At American Airlines management was

viewed as selling the right seat to the right person, this means that they

search for ways to find out who is willing to pay a higher price, and how can

they make him pay a higher price. By 1991, the industry?s pricing structure

had become enormously complex. American?s flights involved maintaining 500,000

fares. By late 1991 93% of the tickets were sold at one kind of a discount or

another. And the average discount was 63%. Due to the complex pricing structure

American developed the ?value pricing? plan. This plan consisted in: First

for any given flight there would be only four different fares. Second, all fares

would be mileage-related, and finally, the new fares were set below the levels

of comparable existing fares so lower prices would be available to more business

and leisure travellers. 9- Marketing related strategies Some the marketing

strategies carried out by American Airlines have been: -Computerised reservation

Systems: This system changed the industry?s marketing and distribution

systems. This system stored information about, flights, seats availability and

fares. Which made the booking and distribution a lot easier. CRS systems gave

American Airlines a great competitive advantage over the other airlines, as

booking fees by CRS enabled American to earn substantial amounts from its

competitors. -Hubbing: With hubbing, flights from various origins on spokes of

the network are channelled through an intermediate location, where they change

planes and are re-routed to their final destination. This way the airline can

serve more locations with fewer planes. -Frequent Flyer programmes: These

programmes provide discounts or bonuses to frequent travellers. The value of the

bonuses increase as the mileage flown increase, the bonuses can take various

forms such as, fare reductions, upgrades to better classes or even free tickets.

10- Assumptions and risks In my opinion all of this strategies are brilliant,

the only risk I see is in hubbing, customers sometimes don?t want spend

additional time changing planes, there is the risk of missing connecting planes,

luggage may get lost, etc. In the rest of the strategies I don?t see any risks

what so ever.

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