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The evolving low-cost business model: network implications of fare bundling and connecting flights in Europe 1. Introduction Low-cost travel is becoming the dominant way of flying within Europe (Dobruszkes, 2013). However, there are signs of a slowdown in the organic growth of low-cost carriers (LCC) due to decreasing average frequencies and increasing average route distances, which is forcing LCC to adopt other business strategies for growth (de Wit and Zuidberg, 2012), including the possibility of establishing long-haul low-cost operations (Morrell, 2008) and hybrid low-cost business models (Klophaus et al., 2012). These evolutions make it more difficult to define the LCC business model; in fact, according to Mason and Morrison (2008) several business models coexist and can be categorised under the "low-cost carrier" label. Yet, discussions on long-haul low-cost and hybrid low-cost have developed relatively independently from each other, but both are related with changes in two fundamental principles of the low-cost business model: fare unbundling and point-to-point operations. The unbundling of fares is one of the characteristics of the archetypical LCC business model. Fare unbundling strategy is aimed at attracting price-sensitive passengers and competing on base ticket fares. In Europe, this strategy can be traced back to easyJet discounting fares for tickets booked through their preferred channel (direct online tickets were discounted at point-of-sale by £2.50 per sector in 1997), and the introduction of separate fees for various items (by 2005 these included credit card fees, change fees, partner fees, excess baggage and in flight food and beverage). These innovations were introduced to customers as a way of aligning the variable costs borne by the airline to provide such services to the cost of providing them. If a customer does not want to pay for a bag to be carried in the hold, the airline will have lower ground handling costs, which may be reflected in a lower base fare for that customer. All passengers paid a similar base fare, but those looking for a better level of service (e.g., larger leg-room) or additional services (e.g., inflight meals) could purchase them as an ancillary service (i.e., "à la carte fees"). 1 However, the unbundling strategy is rapidly changing and by 2013 an increasing number of low-cost carriers have introduced a fare category system in order to offer bundles of different services that used to be sold as independent ancillary products. Bundling services can help airlines to standardise their offering and have better control on the level of service provided to the customer, which

This study investigates the effect of organisational readiness, innovation and airport size and ownership on digital change at airports. Data is collected from a survey of managers at 94 airports worldwide and analysed using partial least squares structural equation modelling. Organisational readiness is found to have a direct effect on digital change. Organisational readiness also has a direct effect on innovation, which subsequently affects digital change. Airport size has a direct effect on digital change while the effect of ownership is not significant. The findings show that successful development of organisational readiness can be used to speed up the rate of innovation needed for digital change at airports.