Long-haul low cost airlines: Characteristics of the business model and sustainability of its cost advantages. (December 2017)

• Record Type: Journal Article
• Authors: Soyk, Christian; Ringbeck, Jürgen; Spinler, Stefan
• Is Part Of: Transportation research. Volume 106(2017)
• Page Start: 215
• Page End: 234
• Publication Date: 2017-12
• Subjects: Airlines -- Business models -- Long-haul -- Low cost -- Point-to-point; Transportation -- Research -- Periodicals; 388.011
• DOI: 10.1016/j.tra.2017.09.023
• Languages: English
• ISSNs: 0965-8564

Abstract

Abstract: Existing academic literature is inconclusive about characteristics and viability of the long-haul low cost airline business model, whereas several airlines of this type are emerging. This article aims to validate its defining characteristics by clustering a sample of 37 transatlantic airlines using principal component and hierarchical cluster analyses along a newly constructed long-haul airline business model framework. To contribute to the evaluation of business model viability, cost differences between clusters are uncovered subsequently followed by a discussion of their sustainability. Key findings include the characterization of the emerging long-haul LCC business model and its significant differences from existing legacy hub and leisure carrier models. On a cluster average, 33% lower unit costs compared to legacy hub carriers were identified, of which 24 percentage points were evaluated as sustainable.