IDEAS home Printed from https://ideas.repec.org/a/eee/jaitra/v11y2005i5p313-327.html
   My bibliography  Save this article

Incompatibilities of the low-cost and network carrier business models within the same airline grouping

Author

Listed:
  • Graf, Luca

Abstract

This paper examines the strategy of setting up a low-cost unit adopted by some incumbent airlines to the threat and opportunity of the low cost incursion. Based on the analysis of five case studies in the European airline industry, the chances and risks of establishing a low-cost carrier within the same grouping of a network carrier business model are explored. The paper examines the hypothesis that incompatibilities of the two business models are the causal reason for failure of earlier attempts. By following this idea, a set of propositions is developed that contribute to the debate of how to control these incompatibilities and when it is favorable to follow other strategic response options.

Suggested Citation

  • Graf, Luca, 2005. "Incompatibilities of the low-cost and network carrier business models within the same airline grouping," Journal of Air Transport Management, Elsevier, vol. 11(5), pages 313-327.
    • Handle: RePEc:eee:jaitra:v:11:y:2005:i:5:p:313-327
    DOI: 10.1016/j.jairtraman.2005.07.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969699705000578
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jairtraman.2005.07.003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Olav Sorenson, 2000. "Letting the market work for you: an evolutionary perspective on product strategy," Strategic Management Journal, Wiley Blackwell, vol. 21(5), pages 577-592, May.
    2. Mason, Charlotte H. & Milne, George R., 1994. "An approach for identifying cannibalization within product line extensions and multi-brand strategies," Journal of Business Research, Elsevier, vol. 31(2-3), pages 163-170.
    3. Robert A. Burgelman, 1991. "Intraorganizational Ecology of Strategy Making and Organizational Adaptation: Theory and Field Research," Organization Science, INFORMS, vol. 2(3), pages 239-262, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Schosser, Maximilian & Wittmer, Andreas, 2015. "Cost and revenue synergies in airline mergers – Examining geographical differences," Journal of Air Transport Management, Elsevier, vol. 47(C), pages 142-153.
    2. Homsombat, Winai & Lei, Zheng & Fu, Xiaowen, 2014. "Competitive effects of the airlines-within-airlines strategy – Pricing and route entry patterns," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 63(C), pages 1-16.
    3. Joshan, Saeid & Maertens, Sven, 2020. "Low cost carriers in the Middle East and North Africa (MENA) region: Emergence and barriers to development," Journal of Transport Geography, Elsevier, vol. 87(C).
    4. Martin Rüger & Sven Ulrich Maertens, 2022. "The Content Scope of Airline Sustainability Reporting According to the GRI Standards—An Assessment for Europe’s Five Largest Airline Groups," Administrative Sciences, MDPI, vol. 13(1), pages 1-23, December.
    5. Pearson, James & Pitfield, David & Ryley, Tim, 2015. "Intangible resources of competitive advantage: Analysis of 49 Asian airlines across three business models," Journal of Air Transport Management, Elsevier, vol. 47(C), pages 179-189.
    6. Chung, Jin Young & Whang, Taehee, 2011. "The impact of low cost carriers on Korean Island tourism," Journal of Transport Geography, Elsevier, vol. 19(6), pages 1335-1340.
    7. Pearson, James & Merkert, Rico, 2014. "Airlines-within-airlines: A business model moving East," Journal of Air Transport Management, Elsevier, vol. 38(C), pages 21-26.
    8. Gillen, David & Gados, Alicja, 2008. "Airlines within airlines: Assessing the vulnerabilities of mixing business models," Research in Transportation Economics, Elsevier, vol. 24(1), pages 25-35.
    9. Ko, Young Dae, 2016. "An airline's management strategies in a competitive air transport market," Journal of Air Transport Management, Elsevier, vol. 50(C), pages 53-61.
    10. Heinz, Stephan & O’Connell, John F., 2013. "Air transport in Africa: toward sustainable business models for African airlines," Journal of Transport Geography, Elsevier, vol. 31(C), pages 72-83.
    11. Wang, Kun & Tsui, Wai Hong Kan & Li, Lan-Bing & Lei, Zheng & Fu, Xiaowen, 2020. "Entry pattern of low-cost carriers in New Zealand - The impact of domestic and trans-Tasman market factors," Transport Policy, Elsevier, vol. 93(C), pages 36-45.
    12. Akamavi, Raphaël K. & Mohamed, Elsayed & Pellmann, Katharina & Xu, Yue, 2015. "Key determinants of passenger loyalty in the low-cost airline business," Tourism Management, Elsevier, vol. 46(C), pages 528-545.
    13. Wang, Yixiao & Sun, Luoyi & Teunter, Ruud H. & Wu, Jianhong & Hua, Guowei, 2020. "Effects of introducing low-cost high-speed rail on air-rail competition: Modelling and numerical analysis for Paris-Marseille," Transport Policy, Elsevier, vol. 99(C), pages 145-162.
    14. Adiloğlu-Yalçınkaya, Leyla & Besler, Senem, 2021. "Institutional factors influencing business models: The case of Turkish Airlines," Journal of Air Transport Management, Elsevier, vol. 91(C).
    15. Renan P. de Oliveira & Alessandro V. M. Oliveira & Gui Lohmann, 2021. "A Network-Design Analysis of Airline Business Model Adaptation in the Face of Competition and Consolidation," Transportation Science, INFORMS, vol. 55(2), pages 532-548, March.
    16. Ko, Young Dae, 2019. "The airfare pricing and seat allocation problem in full-service carriers and subsidiary low-cost carriers," Journal of Air Transport Management, Elsevier, vol. 75(C), pages 92-102.
    17. Corbo, Leonardo, 2017. "In search of business model configurations that work: Lessons from the hybridization of Air Berlin and JetBlue," Journal of Air Transport Management, Elsevier, vol. 64(PB), pages 139-150.
    18. Chiambaretto, Paul & Combe, Emmanuel, 2023. "Business model hybridization but heterogeneous economic performance: Insights from low-cost and legacy carriers in Europe," Transport Policy, Elsevier, vol. 136(C), pages 83-97.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Julian Birkinshaw & Mats Lingblad, 2005. "Intrafirm Competition and Charter Evolution in the Multibusiness Firm," Organization Science, INFORMS, vol. 16(6), pages 674-686, December.
    2. Gillen, David & Gados, Alicja, 2008. "Airlines within airlines: Assessing the vulnerabilities of mixing business models," Research in Transportation Economics, Elsevier, vol. 24(1), pages 25-35.
    3. Yalcinkaya, Goksel & Aktekin, Tevfik & Yeniyurt, Sengun, 2020. "Out with the old: A Bayesian approach to estimating product modification rates," Journal of Business Research, Elsevier, vol. 118(C), pages 141-149.
    4. Claudio Giachetti & Giovanni Battista Dagnino, 2014. "Detecting the relationship between competitive intensity and firm product line length: Evidence from the worldwide mobile phone industry," Strategic Management Journal, Wiley Blackwell, vol. 35(9), pages 1398-1409, September.
    5. Malen, Joel, 2015. "Motivating And Enabling Firm Innovation Effort: Integrating Penrosian And Behavioral Theory Perspectives On Slack Resources," Hitotsubashi Journal of commerce and management, Hitotsubashi University, vol. 49(1), pages 37-54, October.
    6. Basu, Shubhabrata & Pereira, Vijay & Sinha, Paresha & Malik, Ashish & Moovendhan, V., 2022. "Esoteric governance mechanism and collective brand equity creation in confederated organizations: Evidence from an emerging economy," Journal of Business Research, Elsevier, vol. 149(C), pages 217-230.
    7. Birkinshaw, Julian & Ridderstråle, Jonas, 1999. "Fighting the corporate immune system: a process study of subsidiary initiatives in multinational corporations," International Business Review, Elsevier, vol. 8(2), pages 149-180, April.
    8. Giarratana, Marco S. & Cesaroni, Fabrizio & Martínez-Ros, Ester, 2010. "US market entry by Spanish pharmaceutical firms," DEE - Working Papers. Business Economics. WB wb101103, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    9. Sophie Hooge & Milena Klasing Chen & Dominique Laousse, 2019. "Managing the emergence of concepts in fuzzy front end: a framework of strategic performance and emerging process of innovation briefs," Post-Print hal-02167857, HAL.
    10. Da Mota de Pina E Cunha, A.M., 1998. "Determinants of Product Innovation in Organizations : Practices and Performance in the Portugese Financial Sector," Other publications TiSEM e6e4e56e-b72a-4392-8d79-f, Tilburg University, School of Economics and Management.
    11. Bhatti, Waheed Akbar & Larimo, Jorma & Coudounaris, Dafnis N., 2016. "The effect of experiential learning on subsidiary knowledge and performance," Journal of Business Research, Elsevier, vol. 69(5), pages 1567-1571.
    12. Barry L. Bayus & Rajshree Agarwal, 2007. "The Role of Pre-Entry Experience, Entry Timing, and Product Technology Strategies in Explaining Firm Survival," Management Science, INFORMS, vol. 53(12), pages 1887-1902, December.
    13. Piórkowska Katarzyna, 2016. "Behavioural strategy: Adaptability context," Management, Sciendo, vol. 20(1), pages 256-276, May.
    14. Yue M. Zhou & Xiang Wan, 2017. "Product variety, sourcing complexity, and the bottleneck of coordination," Strategic Management Journal, Wiley Blackwell, vol. 38(8), pages 1569-1587, August.
    15. Markus Reihlen & Jan‐Florian Schlapfner & Monika Seeger & Hannah Trittin‐Ulbrich, 2022. "Strategic Venturing as Legitimacy Creation: The Case of Sustainability," Journal of Management Studies, Wiley Blackwell, vol. 59(2), pages 417-459, March.
    16. Dirk Deichmann & Michael Jensen, 2018. "I can do that alone…or not? How idea generators juggle between the pros and cons of teamwork," Strategic Management Journal, Wiley Blackwell, vol. 39(2), pages 458-475, February.
    17. Sandra Charreire, 2003. "Les rôles de la migration et de la légitimation des savoirs dans l'apprentissage organisationnel:études de cas," Revue Finance Contrôle Stratégie, revues.org, vol. 6(2), pages 115-153, June.
    18. Louise Lindbjerg & Theodor Vladasel, 2021. "Hiring Entrepreneurs for Innovation," Working Papers 1309, Barcelona School of Economics.
    19. Marko Kohtamäki & Stephan C. Henneberg & Veronica Martinez & Koji Kimita & Heiko Gebauer, 2019. "A Configurational Approach to Servitization: Review and Research Directions," Service Science, INFORMS, vol. 11(3), pages 213-240, October.
    20. Friberg, Richard, 2019. "All the bottles in one basket? Diversification and product portfolio composition," CEPR Discussion Papers 14119, C.E.P.R. Discussion Papers.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaitra:v:11:y:2005:i:5:p:313-327. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/journal-of-air-transport-management/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.