Transatlantic Market Competition Between Hybrid Carrier and Long-Haul Low-Cost Carrier Business Models

Abstract

Long-haul low-cost carrier (LHLC) business models are generating considerable interest from the aviation practitioners and academics. Despite the high interest for the LHLC business model, only few have compared the LHLC business model to hybrid carrier business model and studied how airlines can compete with LHLCs. This paper analyses the differences of hybrid and long-haul low-cost carrier models and shows how Aer Lingus airlines has secured its dominant position in the Irish-US market. Product comparison with the help of in-depth interviews with key aviation practitioners as well as secondary data about the capacity and demand of the two carriers in question proves the differences between the two models. Porter five forces model provides an overview of the external competitive environment where the airlines in question operate. The research concluded that the hybrid and long-haul low-cost business model characteristics have many similarities, but also significant differences. It was also discovered that LHLC lack capacity and frequency as well as feeder traffic are very important elements for the transatlantic market. Robust route network including interline traffic and low operating cost, elements present in the hybrid airline business model, ensure profitability.