Dynamically interdependent business model for airline–airport coexistence

Abstract

Governments provide various forms of financial support for sustaining unprofitable regional airways, especially when such airways are essential to local livelihoods and economies. However, inefficient provision of subsidies has been subject to worldwide criticism. Therefore, this study examines the load factor guarantee, a dynamically interdependent business model for airline-airport coexistence where an airline and an airport agree on the load factor of a flight, after which either party compensates for any discrepancies between the actual and agreed-upon load factor. The model is calibrated by using 2003-2014 data regarding Noto Airport and All Nippon Airways, and system dynamics are employed to model the dynamic interactions between the two parties. The findings show that successful coexistence between an airline and an airport hinges on the integral management of annual negotiations regarding the target load factor and the monthly demand adjustment of subsidies. In addition, although a subsidy represents a temporary financial loss for an airport, it is an effective way of maintaining long-term, airline-airport coexistence. This model is applicable to unprofitable airways worldwide, and it contributes to their sustainable management.

Qualitative design and quantitative analysis of sustainable business models using value triangular business model canvas and system dynamics

“…Some studies dynamically analyzed the conventional business models (CBMs) (e.g., Moellers et al, 2019;Ganzarain et al, 2019) and the others dynamically analyzed the sustainable business models (SBMs) (e.g., Liu et al, 2022;Luksta et al, 2021;Franco, 2019;Minato and Morimoto, 2017).…”

Airport route development strategy planning and performance measurement with a dynamic performance management framework

“…Nevertheless, the reciprocal and cooperative relationship between local economic growth and airport development has been evidenced theoretically and empirically [ 47 ]. Hence, from the perspective of airports, government subsidies used to develop routes could be considered an exogenous policy assistance (in dotted line) to help airports achieve self-sufficiency within the airport ecosystem [ 31 ].…”

“…This paper aims to explain how route resources can make airports more connected, attractive to consumers, productive, commercially viable, and beneficial to communities. This requires all stakeholders (such as airports, governments, airlines, and local communities) to think beyond their governance boundaries and to perceive the value of RD in the airport ecosystem context, in which air services often represent “livelihoods services” and/or significantly contribute to airport profitability, regional economic, and social development [ 31 , 32 ]. In particular, this paper emphasizes the system processes regarding resources alignment within an airport business and stakeholders’ efforts, leading to the improved productivity and financial performance of an airport business owing to enhanced airport connectivity and attractiveness to customers.…”

Operational Statistics of Kosice Airport

“…The second place belongs to Czech Airlines with a percentage of 20.6% on scheduled flights. In the current year, Austrian Airlines carried 15 The largest number of passengers was transported by the low-cost airline, Wizz Air (201,366) and the least transported by Turkish Airlines (6,485). For Turkish Airlines this average number is due to the later start of operations at the airport compared to other airlines.…”

“…al. observed that the load factor guaranteed a dynamically interdependent business model for airline-airport coexistence where an airline and an airport agree on the load factor of a flight, after which either party compensates for any discrepancies between the actual and the agreedupon load factor [15]. Kratudnak et.…”