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Competing on value: Perspectives on business class aviation

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  • Claussen, Jan
  • O'Higgins, Eleanor

Abstract

This paper presents an airline consumer choice model to analyze value propositions – the benefits delivered to passengers in relation to the fares paid. The model is developed using a study of clientele flying business class, studying three premium start-up airlines Eos, MaxJet and Silverjet that provided business-class-only flights on London–New York routes. Premium airlines were compared to selected rival full-service carriers for sustainability of their business class value propositions, using preference profiles of five target customer groups that comprise the business class passenger population. We find that the three premium start-up airlines were superior in offering some appealing features at reasonable fares that were highly valued by some passengers, although they were unable to replicate some other attractive aspects in the value propositions of the incumbents. This suggests a coexistence of premium entrants and incumbent carriers would have been possible, had the environment they operated in not changed drastically for the worse, before the premium entrants had achieved the financial robustness necessary for survival.

Suggested Citation

  • Claussen, Jan & O'Higgins, Eleanor, 2010. "Competing on value: Perspectives on business class aviation," Journal of Air Transport Management, Elsevier, vol. 16(4), pages 202-208.
    • Handle: RePEc:eee:jaitra:v:16:y:2010:i:4:p:202-208
    DOI: 10.1016/j.jairtraman.2010.01.005
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    References listed on IDEAS

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    1. Liou, James J.H. & Tzeng, Gwo-Hshiung, 2007. "A non-additive model for evaluating airline service quality," Journal of Air Transport Management, Elsevier, vol. 13(3), pages 131-138.
    2. Casadesus-Masanell, Ramon & Ricart, Joan E., 2007. "Competing through business models," IESE Research Papers D/713, IESE Business School.
    3. Proussaloglou, Kimon & Koppelman, Frank S., 1999. "The choice of air carrier, flight, and fare class," Journal of Air Transport Management, Elsevier, vol. 5(4), pages 193-201.
    4. Dresner, Martin, 2006. "Leisure versus business passengers: Similarities, differences, and implications," Journal of Air Transport Management, Elsevier, vol. 12(1), pages 28-32.
    5. Kenneth Button & Kingsley E. Haynes & Roger E. Stough, 1998. "Flying into the Future," Books, Edward Elgar Publishing, number 1470.
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    Citations

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    Cited by:

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    2. Amit Mittal & Sahil Gupta, 2020. "Vistara: Aiming for the Sky," South Asian Journal of Business and Management Cases, , vol. 9(1), pages 138-147, April.
    3. Klingenberg, Christoph & Belke, Jan Loic, 2024. "Profitability of supersonic travel," Journal of Air Transport Management, Elsevier, vol. 117(C).
    4. Hugon-Duprat, Cindy & O'Connell, John F., 2015. "The rationale for implementing a premium economy class in the long haul markets – Evidence from the transatlantic market," Journal of Air Transport Management, Elsevier, vol. 47(C), pages 11-19.
    5. Jeon, Mi-Sun & Lee, Jang-Ho, 2020. "Estimation of willingness-to-pay for premium economy class by type of service," Journal of Air Transport Management, Elsevier, vol. 84(C).
    6. Osaki, Takanori & Kubota, Yukihiko, 2016. "Perceptions of premium service and superiority: Why do customers pay more for high-value-added domestic airline services in Japan?," Journal of Air Transport Management, Elsevier, vol. 57(C), pages 196-201.
    7. Maertens, Sven, 2011. "The market potential of all-premium class services on medium haul leisure routes from Germany," Journal of Air Transport Management, Elsevier, vol. 17(3), pages 181-186.
    8. 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).

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