Measuring market orientation of Muscle Pharm Corp. (MSLP:US) REAL LIFECASE STUDY – REACHING NEW HEIGHTS | Page 3

Reaching new heights - Open source software application SabreSonic® Res.

1.

Introduction

The brand-new American Airlines is the result of last year’s contentious consolidation between US
Airways and American Airlines (AA). The new airline represents the world’s largest airline measured
by fleet and has a combined market capitalisation of approximately $11 billion. It is led by CEO,
Doug Parker, and Chief Integration Officer (CIO), Beverly Goulet. This merger is significant for the
airline industry. However, institutional investors foresee challenges with regard to American’s ability
to deliver the expected cost savings resulting from synergies between the two airlines. According to
Elliott (2014), the new American faces huge challenges in the integration of IT architecture and
consolidation of the various systems currently running within both carriers. The merger promises
improvement, but will it deliver?

1.1 Case study
Flying from Charlotte to Vancouver at the end of August 2014, passengers were charged around
$1,500 on US Airways while on American Airlines they were charged $877. The twist? It was exactly
the same offer, on the identical plane. The only difference was which airline’s homepage was used
to buy the flight. The reason for this is that despite the merger in December the airlines had not yet
merged their reservation systems. Consequently, due to delays in merging the computer systems
used to show fare prices, fares for the same flight varied by hundreds of dollars when different
search options were used. The reasons for the price differences is a combination of challenges in the
technological area, the complexity of merging two very large airline corporations, as well as the
intricacies of the systems used for pricing and selling airline fares. In early January 2014, the two
carriers commenced advertising fares for each other’s flights; a system known as code-share. More
specifically, the carriers combined each other’s code, or flight number, and consequently enabled
travellers to book a single journey via one of the airlines as if they were one. However, the airlines
will continue to operate as separated carriers until the two reservation systems are integrated
(Portillo, 2014).
Furthermore, separate loyalty programs are being run. The American Airlines Advantage® and US
Airways Dividend Miles membership program enables travellers to earn and redeem miles for travel
and common purchases, as well as car rentals , flight upgrades, hotel stays, vacation bundles and
similar retail products (American, 2014). The integration of different reservation systems, which are
normally old systems managing millions of pieces of data every day, is seen as the most difficult part
of an airline merger (Portillo, 2014). American Airlines said a solution is coming next year.

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