Airline Business Model Analysis

Good Essays
An airline’s business model is a description of the value the company delivers to targeted customers and of how it configures resources internally and externally to achieve this (Holloway (2012).
Tretheway (2004) states that from 1945 to end of the 20th century, the world’s airline industry built a product that offers passengers to fly seamlessly to almost any other part of the world by purchasing a single ticket. However, to develop this product, airlines had to invest costly systems and infrastructure that will be used to serve not only to the passengers needing to connectivity but also to the passengers simply flying to point to point destinations. Tretheway says that there are no studies if there are economies of scope by serving both passengers with simple itineraries and
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High cost carriers can offer low fares, but these are not sustainable (Tretheway, 2004).
In aviation sector, deregulated markets, entrepreneurs, population growth and economic wealth, availability and capacity of secondary airports and the growth of internet use as a distribution channel accelerated the spread of LCCs (Francis, Humphreys, Ison, Aicken, 2006).
Southwest, Ryanair, easyJet, Westjet, GOL and Air Asia are examples of this model.
 Hybrid carriers
Hybrid airline business model combines best features of low-cost model (cost saving methodology) and full service model (service, flexibility and en-route structure). Hybrid airlines mostly operate on short-haul routes.
Air Berlin is an example of this category. It started as a charter airline until the mid-1990s, and then changed its business model to a hybrid model by offering services like full service and by expanding its destinations.
Aer Lingus is another typical example of this category. It was formerly full service airline, and then because of large competition, reinvented itself by offering low-cost flights.
(Vidovic, Stimac, Vince, 2013).
 Charter

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