A Network-Design Analysis of Airline Business Model Adaptation in the Face of Competition and Consolidation
Year: 2021
Type: article
Abstract: By focusing on the intrinsic relationship between business models and network configurations in the airline industry, this paper develops a two-stage methodology to estimate the strategic drivers of network design of the major carriers in Brazil. The empirical approach decomposes their domestic network-building rationales into the ones adopted by virtual archetypical carriers. We consider the previously conceived low-cost, full-service, and regional carrier archetypes. Our main contribution is the development of a model that allows airlines’ networks to be strategically designed in a time-evolving pattern, reflecting a dynamically chosen blend of these archetypes. Moreover, we also consider the effects that mergers and acquisitions may have had in inducing changes in these blends. Our results suggest that all analyzed airlines have repositioned themselves through their trajectories to adopt a hybrid configuration, aiming at the intersection of at least two archetypical network-design rationales. Besides, the effects of consolidations point to certain diversions of the acquiring airlines’ domestic network-building rationales toward the ones of the acquired carriers, providing evidence that the consolidations may have served as stepping stones for market-repositioning moves.
Source: Transportation Science
Institutions: Instituto Tecnológico de Aeronáutica, Griffith University
Language: English
Domain: Social Sciences
Open Access status: green
Awards: G2155083697, G29316538, Airline emission charges: an econometric model to investigate their potential effects on the Brazilian air transport industry, G3359668359, G3676848836, Empirical assessment of competitive impacts of regulatory rules of airport slots redistribution, G4402799499, G8367849318, G893013814
OpenAlex ID: W3132477841