Abstract
The airline industry has changed tremendously in recent years. New airline business models have emerged in different markets since the middle of the 90s, for example, low-cost and hybrid airlines. In the airline industry, many different business models can be defined according to each airline’s business design. There are five business models that are used by the majority of airlines around the world. Today, the distinction between the different business models has changed and is no longer as clear as in the past. Competition has led many low-cost carriers to adopt attributes of network operators, including frequent flyer programs and most commonly the ability to connect with other airlines’ services. As a result, hybrid carriers have appeared recently. This categorization of business models stems from operational attributes as well as strategic choices such as business model components. This study explores both common characteristics and business model components of airline business models.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Airline Strategies and Business Models. Boeing Planning Seminar. (2017). Available from: https://www.aci-na.org/sites/default/files/2017businessofairlines-airlinestrategiesandbusmodels.pdf. Accessed 16 July 2018.
Alamdari, F., & Fagan, S. (2005). Impact of the adherence to the original low-cost model on the profitability of low-cost airlines. Transport Reviews, 25(3), 377–392. https://doi.org/10.1080/01441640500038748.
Al-Debei, M. M., & Avison, D. (2010). Developing a unified framework of the business model concept. European Journal of Information Systems, 19(3), 359–376. https://doi.org/10.1057/ejis.2010.21.
Amit, R., & Zott, C. (2001). Value creation in e-business. Strategic Management Journal, 22(6–7), 493–520. https://doi.org/10.1002/smj.187.
Amit, R., & Zott, C. (2015). Crafting business architecture: The antecedents of business model design. Strategic Entrepreneurship Journal, 9(4), 331–350.
Baden-Fuller, C., & Haefliger, S. (2013). Business models and technological innovation. Long Range Planning, 46(6), 419–426.
Berrittella, M., La Franca, L., & Zito, P. (2009). An analytic hierarchy process for ranking operating costs of low cost and full service airlines. Journal of Air Transport Management, 15, 249–255. https://doi.org/10.1016/j.jairtraman.2008.11.006.
Bieger, T., & Agosti, S. (2005). Business models in the airline sector—Evolution and perspectives. In S. Auerbach, H. Baum, & W. Delfmann (Eds.), Strategic management in the aviation industry (pp. 41–64). Köln: Kölner Wissenschaftsverlag.
Bieger, T., & Wittmer, A. (2006). Air transport and tourism—Perspectives and challenges for destinations, airlines and governments. Journal of Air Transport Management, 12, 40–46. https://doi.org/10.1016/j.jairtraman.2005.09.007.
Bieger T. & Wittmer A. (2011). Airline strategy: From network management to business models. In Aviation systems (pp. 77–102). Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-20080-9_5.
Bitzan, J., & Peoples, J. (2016). A comparative analysis of cost change for low-cost, full-service, and other carriers in the US airline industry. Research in Transportation Economics, 56, 25–41. https://doi.org/10.1016/j.retrec.2016.07.003.
Casadesus-Masanell, R., & Ricart, J. E. (2010). From strategy to business models and onto tactics. Long Range Planning, 43(2), 195–215. https://doi.org/10.1016/j.lrp.2010.01.004.
Casadesus-Masanell, R., & Zhu, F. (2013). Business model innovation and competitive imitation: The case of sponsor-based business models. Strategic Management Journal, 34(4), 464–482.
Chesbrough, H. (2007). Business model innovation: It’s not just technology anymore. Strategy & Leadership, 35(6), 12–17. https://doi.org/10.1108/10878570710833714.
Chesbrough, H. (2010). Business model innovation: Opportunities and barriers. Long Range Planning, 43(2–3), 354–363.
Chesbrough, H., & Rosenbloom, R. S. (2002). The role of the business model in capturing value from innovation: Evidence from xerox Corporation’s spin-off companies. Industrial and Corporate Change, 11(3), 529–555. https://doi.org/10.1093/icc/11.3.529.
Daft, J., & Albers, S. (2015). An empirical analysis of airline business model convergence. Journal of Air Transport Management, 46, 3–11. https://doi.org/10.1016/j.jairtraman.2015.03.008.
Demil, B., & Lecocq, X. (2010). Business model evolution: In search of dynamic consistency. Long Range Planning, 43(2), 227–246. https://doi.org/10.1016/j.lrp.2010.02.004.
Dobruszkes, F. (2006). An analysis of European low-cost airlines and their networks. Journal of Transport Geography, 14, 249–264. https://doi.org/10.1016/j.jtrangeo.2009.05.005.
Doganis, R. (2006). The airline business (2nd ed., p. 307). New York: Routledge.
Francis, G., Humphreys, I., Ison, S., & Aicken, M. (2006). Where next for low cost airlines? A spatial and temporal comparative study. Journal of Transport Geography, 14(2), 83–94. https://doi.org/10.1016/j.jtrangeo.2005.05.005.
Franke, M. (2004). Competition between network carriers and low-cost carriers—Retreat battle or breakthrough to a new level of efficiency? Journal of Air Transport Management, 10, 15–21. https://doi.org/10.1016/j.jairtraman.2003.10.008.
Franke, M., & John, F. (2011). What comes next after recession?–Airline industry scenarios and potential end games. Journal of Air Transport Management, 17(1), 19–26. https://doi.org/10.1016/j.jairtraman.2010.10.005.
Gassmann, O., Frankenberger, K. & Csik, M. (2013). The St. Gallen Business Model Navigator (Working Paper). St. Gallen, Switzerland: University of St. Gallen.
Gillen, D. (2006). Airline business models and networks: Regulation, competition and evolution in aviation markets. Review of Network Economics, 5(4), 366–385. https://doi.org/10.2202/1446-9022.1103.
Hedman, J., & Kalling, T. (2003). The business model concept: Theoretical underpinnings and empirical illustrations. European Journal of Information Systems, 12(1), 49–59. https://doi.org/10.1057/palgrave.ejis.3000446.
Janssen, M., Kuk, G., & Wagenaar, R. W. (2008). A survey of Web-based business models for e-government in the Netherlands. Government Information Quarterly, 25(2), 202–220. https://doi.org/10.1016/j.giq.2007.06.005.
Jean, D. A., & Lohmann, G. (2016). Revisiting the airline business model spectrum: The influence of post global financial crisis and airline mergers in the US (2011–2013). Research in Transportation Business & Management, 21, 76–83. https://doi.org/10.1016/j.rtbm.2016.06.002.
Johnson, M. W., Christensen, C. M., & Kagermann, H. (2008). Reinventing your business model. Harvard Business Review, 12, 50–59.
Klophaus, R., Conrady, R., & Fichert, F. (2012). Low cost carriers going hybrid: Evidence from Europe. Journal of Air Transport Management, 23, 54–58. https://doi.org/10.1016/j.jairtraman.2012.01.015.
Lawton, T. C. (2002). Cleared for take-off: Structure and strategy in the low fare airline business (p. 234). New York, NY: Ashgate.
Leick, R., & Wensveen, J. (2014). The airline business. In D. Prokop (Ed.), The business of transportation (pp. 65–99). Santa Barbara, CA: Praeger.
Lohmann, G., & Koo, T. T. (2013). The airline business model spectrum. Journal of Air Transport Management, 31, 7–9. https://doi.org/10.1016/j.jairtraman.2012.10.005.
Magretta, J. (2002, May). Why business models matter. Harvard Business Review, pp. 86–92.
Mason, K., & Morrison, W. G. (2008). Towards a means of consistently comparing airline business models with an application to the ‘low cost’ airline sector. Research in Transportation Economics, 24(1), 75–84. https://doi.org/10.1016/j.retrec.2009.01.006.
Moreira, E. M. (2014). An analytical model for the assessment of airline expansion strategies. Journal of Airline and Airport Management, 4(1), 48–77. https://doi.org/10.3926/jairm.15.
Nenonen, S., & Storbacka, K. (2010). Business model design: Conceptualizing networked value co-creation. International Journal of Quality and Service Sciences, 2(1), 43–59.
Osterwalder, A., Pigneur, Y., & Tucci, C. L. (2005). Clarifying business models: Origins, present, and future of the concept. Communications of the association for Information Systems, 16(1), 1–40.
Pantazis, N., & Liefner, I. (2006). The impact of low-cost carriers on catchment areas of established international airports: The case of Hanover Airport, Germany. Journal of Transport Geography, 14(4), 265–272. https://doi.org/10.1016/j.jtrangeo.2005.05.002.
Pels, E., Njegovan, N., & Behrens, C. (2009). Low-cost airlines and airport competition. Transportation Research Part E, 45, 335–344. https://doi.org/10.1016/j.tre.2008.09.005.
Reichmuth, J., Ehmer, H., Berster, P., Bischoff, G., Grimme, W., Grunewald, E., & Maertens S. (2008) (Eds.). Analyses of the European air transport market Airline Business Models. German Aerospace Center, 1(01).
Rodríguez, A. M., & O’Connell, J. F. (2018). Can low-cost long-haul carriers replace Charter airlines in the long-haul market? A European perspective. Tourism Economics, 24(1), 64–78. https://doi.org/10.1177/1354816617724017.
Sengur, Y., & Sengur, F. K. (2017). Airlines define their business models: a content analysis. World Review of Intermodal Transportation Research, 6(2), 141–154. https://doi.org/10.1504/WRITR.2017.082732.
Shafer, S. M., Smith, H. J., & Linder, J. C. (2005). The power of business models. Business Horizons, 48(3), 199–207. https://doi.org/10.1016/j.bushor.2004.10.014.
Teece, D. J. (2010). Business models, business strategy and innovation. Long Range Planning, 43(2–3), 172–194. https://doi.org/10.1016/j.lrp.2009.07.003.
Timmers, P. (1998). Business Models for Electronic Markets. Research Note, 8(2), 3–8.
Wallace, J., Tiernan, S., & White, L. (2006). Industrial Relations Conflict and Collaboration: Adapting to a Low Fares Business Model in Aer Lingus. European Management Journal, 24(5), 338–347. https://doi.org/10.1016/j.emj.2006.09.001.
Yip, G. (2004). Using strategy to change your business model. Business Strategy Review, 15(2), 17–24.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2020 Springer Nature Singapore Pte Ltd.
About this paper
Cite this paper
Kuyucak Şengür, F., Şengür, Y. (2020). Innovation Through Business Models: The Case of the Airline Industry. In: Coşkun, İ., Othman, N., Aslam, M., Lew, A. (eds) Travel and Tourism: Sustainability, Economics, and Management Issues. Springer, Singapore. https://doi.org/10.1007/978-981-10-7068-6_5
Download citation
DOI: https://doi.org/10.1007/978-981-10-7068-6_5
Published:
Publisher Name: Springer, Singapore
Print ISBN: 978-981-10-7067-9
Online ISBN: 978-981-10-7068-6
eBook Packages: Business and ManagementBusiness and Management (R0)