Purpose: The purpose of this article is to develop an analytical model to assess airline expansion strategies by combining generic business strategy models with airline business models.Design/methodology: A number of airline business models are examined, as are Porter's (1983) industry five forces that drive competition, complemented by Nalebuff and Brandenburger's (1996) sixth force, and the basic elements of the general environment in which the expansion process takes place. A system of points and weights is developed to create a score among the 904,736 possible combinations considered. The model's outputs are generic expansion strategies with quantitative assessments for each specific combination of elements inputted. Originality/value:The analytical model developed is original because it combines for the first time and explicitly elements of the general environment, industry environment, airline business models and the generic expansion strategy types. Besides it creates a system of scores that may be used to drive the decision process toward the choice of a specific strategic expansion path. Research implications:The analytical model may be adapted to other industries apart from the airline industry by substituting the element "airline business model" by other industries corresponding elements related to the different specific business models.
Recent events have confirmed the concerns that many within the aviation industry have held about the viability of the low cost business model for long-haul operations. This paper begins by reviewing the operating cost differences between low cost carriers (LCC) and legacy airlines in different regions of the world. This is followed by a summary of the various cost advantages of low cost carriers operating in short-haul markets. The main focus of the work, however, is a cost simulation involving the use of a Boeing 767-300 by both a LCC and a legacy carrier under varying operating assumptions. The research demonstrates that in none of the cases cited is the LCC cost advantage greater than 10%.
Purpose: This article aims to apply to the case of Avianca Airlines the Analytical Model for the Assessment of Airline Expansion Strategies developed by Moreira (2014) in order to explain the rationale of the expansion strategy followed by this airline and indicate other possible expansion strategies.Design/methodology/approach: This article is a case study in the sense that it aims to arrive to broad generalizations based on the collected evidences, focusing on one of the most traditional airlines in the world. This article is a positivist case study, based in the positivist understanding; because it is supported by objective facts of the situation which are informed by the researcher's interpretive understanding according to it is recommended for this type of study. Findings:The application of the Analytical Model for the Assessment of Airline Expansion Strategies above referred was successful, considering that the model was able to explain a wide range of complex aspects of the Avianca's development. Thus, being one of the oldest airlines in continued operation in the world, the expansion process of this airline is connected to many political, sociological and economic facets -ie., its general environment -of its mother country, Colombia. The analytical model offered the opportunity to explore these issues in a detailed manner, adding a broader comprehension of this airline that goes beyond its operating and economic analysis.-80- Journal of Airline and Airport Management 7(1), 80-105Originality/value: They reside on the fact that this is the first time that this analytical model is applied to study extensively an actual situation. Besides, airlines in Latin America have not been widely covered by the academia and this is an opportunity to begin to fill this gap. Furthermore, the referred analytical model is applicable to organizations or firms that operate in other industries if the proper adjustments are made. Implications:The implications for the academic research are to understand that the reasons for the success or failure of an airline in an expansion process may be explained by the suitability between the expansion strategy followed by this airline, its business model, its operating environment and its general environment. Moreover, this article demonstrates that the analysis of the suitability of the expansion strategy followed by a specific airline may be made in the light of a solidly founded analytical framework.
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