The airline business model spectrum

Abstract

The paper examines the passenger airline industry on the premise that there is now a continuum of different business models in play rather than a simple categorization by discrete groups. We allocate the airlines within a spectrum of different business models, taking particular cognizance of the subtleties of hybrid and regional airlines that tends to mix the characteristics of low-cost and full service providers. Data from nine major US carriers are used to map and summarize their business models in terms of revenue, connectivity, convenience, comfort, aircraft and labor use. While airline business models can be delineated to a certain extent, our results also highlight a high degree of variation within each carrier with respect to the factors examined, and particularly so for hybrid airlines.