Incumbent Response to Entry by Low-Cost Carriers in the U.S. Airline Industry

2011 ◽  
Author(s):  
Kerry M. Tan
Keyword(s):  
Airline Industry ◽  
Low Cost ◽  
Low Cost Carriers ◽  
The U.S

An Empirical Investigation of the Relationship between Profitability Persistence and Firms' Choice of Business Model: Evidence from the U.S. Airline Industry

2011 ◽  
Vol 23 (1) ◽  
pp. 37-70 ◽  
Author(s):  
Denton L. Collins ◽  
Francisco J. Román ◽  
Hung C. (“Leon”) Chan
Keyword(s):  
Business Model ◽  
Airline Industry ◽  
Low Cost ◽  
Profit Margin ◽  
Pricing Policy ◽  
Low Cost Carriers ◽  
Asset Turnover ◽  
The Individual ◽  
The U.S ◽  
Relative Persistence

ABSTRACT This paper examines the influence of a firm's business model on the relative persistence of profitability in the U.S. airline industry. The strategic management literature describes a firm's business model as reflecting how that firm chooses to compete in the marketplace. Given this linkage between business model, competition, and the marketplace, we conjecture that the persistence of profit margin and asset turnover ratios will be influenced by firms' choices of business model. Further, we hypothesize that this choice of business model influences the relative persistence of the individual revenue and expense components of current profit margin and asset turnover ratios for future profitability ratios. We test these conjectures by (1) partitioning our sample firms according to business model (network carriers versus low-cost carriers), and (2) decomposing sample firms' profit margin and asset turnover ratios into components relating to pricing policy, input cost control, and productivity. We find that the profit margin and asset turnover ratios of network carriers tend to be more persistent than those of low-cost carriers, and that this differential persistence is reflected in the associations between current revenue and expense components, and future profit margin and asset turnover ratios.

Hedonic and Utilitarian Values Behind Engagement of Online Consumers

2021 ◽  
pp. 1242-1263
Author(s):  
Farrah Zeba ◽  
Musarrat Shaheen ◽  
Raveesh Krishnankutty
Keyword(s):  
Lived Experience ◽  
Airline Industry ◽  
Low Cost ◽  
Marketing Strategies ◽  
The Self ◽  
Customer Engagement ◽  
Third Order ◽  
Diary Method ◽  
Low Cost Carriers ◽  
Order Construct

In the hyper-competitive Indian airline industry, the low-cost carriers as well as full-service airlines are in dire need of innovative marketing strategies to engage their customers. To understand the dynamics behind the process of customer engagement, the purpose of this paper is to gain insights into the lived experience of consumers about their online air-ticket bookings experiences. In total, 60 frequent air travellers were approached to participate in the study and the self-completion diary method was incorporated to record their ticket booking experiences. The responses recorded in the diaries were analyzed on the basis of their content from which eight themes were derived. The findings bring forth the importance of hedonic experiential values along with utilitarian experiential values toward the engagement of customers during the online air-ticket booking process. The current study is one of the pioneers in conceptualization of customer engagement as a third-order construct by uncovering the sub-dimensions of the second order factors—utilitarian and hedonic experiential values.

Ailing Kenyan carrier will face more competition

2016 ◽  
Keyword(s):  
Airline Industry ◽  
Low Cost ◽  
Air Travel ◽  
Recovery Strategy ◽  
East African ◽  
Content Type ◽  
Profit Margins ◽  
Low Cost Carriers ◽  
Fuel Costs ◽  
Air Carriers

Significance Despite low fuel costs and the global airline industry running profitable operations, Kenya Airways has recorded multiple years of losses, leading the company to consider a recovery strategy that includes selling aircraft and shedding jobs. Impacts East African air carriers could benefit from industry rationalisation, but domestic political concerns could obstruct regional reforms. Low-cost carriers have emerged in Africa but struggle to make headway against publicly owned airlines. Once Kenya Airways exits fuel-hedging commitments, lower prices should improve profit margins. Without airline liberalisation and local carrier rationalisation, foreign airlines will benefit most from growing African air travel. Government protectionism, high taxes and regulation will restrict competition, especially from low-cost carriers.

scholarly journals Overview of the developments in the domestic airline industry in South Africa since market deregulation

2013 ◽  
Vol 7 (1) ◽  
Author(s):  
Rose Luke ◽  
Jackie Walters
Keyword(s):  
South Africa ◽  
Airline Industry ◽  
Structural Changes ◽  
Low Cost ◽  
Air Traffic ◽  
Air Transport ◽  
Load Factors ◽  
Low Cost Carriers ◽  
Global Impacts ◽  
Domestic Airline

Deregulation or liberalisation of air transport has had major global impacts on the domestic air transport markets, with effects ranging from stimulation to changes in the structure and functioning of these markets. In South Africa, deregulation has had wide-reaching effects on the domestic market. The purpose of this article was to investigate the current domestic air transport market. A literature review was performed to examine the effects of deregulation in other domestic air transport markets around the world. This was followed by a review of the South African domestic air transport market prior to deregulation in order to determine the changes that were made following deregulation. The ten-year period immediately following deregulation was also examined; this period was characterised by relatively large numbers of market entries and exits. A database was obtained from the Airports Company South Africa; air traffic movements, passenger numbers and load factors were evaluated. The study showed that the market is still characterised by regular market entries and exits. Also that the entry of the low-cost carriers has stimulated the market, resulting in increased air traffic movements, higher passenger numbers, higher load factors in general and the opening of a secondary airport in Gauteng, Lanseria International. Deregulation and, more specifically, the entry of the low-cost carriers has resulted in structural changes in the market and more choice for passengers.

An Evaluation for Long-Haul Low-Cost Carriers Using User-Generated Content

2020 ◽  
pp. 231-251
Author(s):  
Mahmut Bakır ◽  
Sahap Akan ◽  
Ozlem Atalik
Keyword(s):  
Regression Analysis ◽  
Service Quality ◽  
Business Model ◽  
Airline Industry ◽  
Low Cost ◽  
Perceived Value ◽  
User Generated Content ◽  
Low Cost Carriers ◽  
New Business ◽  
The Relationship

Since the liberalization of the airline industry, the low-cost business model has been developed worldwide and a new business model of long-haul low-cost carriers (LHLCCs) has evolved. This chapter aims to investigate the LHLCC business model from a customer-oriented perspective in terms of service quality and perceived value. For this purpose, the authors investigated the effect of service quality on perceived value for money for LHLCCs. In this chapter, user-generated content was adopted to collect data, and 824 user-generated airline reviews were collected from TripAdvisor.com, the largest tourism-related repository. In order to investigate the relationship, a predictive correlational design was structured and a logistic regression analysis was applied. To contribute to the regression analysis, a receiver operating characteristic (ROC) analysis was performed to measure the classification success. As a result, the logit model describes well the relationship between variables for LHLCCs.

scholarly journals Tracing the Woes: An Empirical Analysis of the Airline Industry

2010 ◽  
Vol 2 (3) ◽  
pp. 1-43 ◽  
Author(s):  
Steven Berry ◽  
Panle Jia
Keyword(s):  
Airline Industry ◽  
Structural Model ◽  
Travel Demand ◽  
Low Cost ◽  
Air Travel ◽  
Demand And Supply ◽  
The Us ◽  
Low Cost Carriers ◽  
Air Travel Demand ◽  
The Impact

The US airline industry went through tremendous turmoil in the early 2000s, with four major bankruptcies, two major mergers, and various changes in network structure. This paper presents a structural model of the industry, and estimates the impact of demand and supply changes on profitability. Compared with 1999, we find that, in 2006, air-travel demand was 8 percent more price sensitive, passengers displayed a stronger preference for nonstop flights, and changes in marginal cost significantly favored nonstop flights. Together with the expansion of low-cost carriers, they explain more than 80 percent of legacy carriers' variable profit reduction. (JEL L13, L25, L93)

Hedonic and Utilitarian Values Behind Engagement of Online Consumers

2020 ◽  
Vol 18 (3) ◽  
pp. 1-20
Author(s):  
Farrah Zeba ◽  
Musarrat Shaheen ◽  
Raveesh Krishnankutty
Keyword(s):  
Lived Experience ◽  
Airline Industry ◽  
Low Cost ◽  
Marketing Strategies ◽  
The Self ◽  
Customer Engagement ◽  
Third Order ◽  
Diary Method ◽  
Low Cost Carriers ◽  
Order Construct

In the hyper-competitive Indian airline industry, the low-cost carriers as well as full-service airlines are in dire need of innovative marketing strategies to engage their customers. To understand the dynamics behind the process of customer engagement, the purpose of this paper is to gain insights into the lived experience of consumers about their online air-ticket bookings experiences. In total, 60 frequent air travellers were approached to participate in the study and the self-completion diary method was incorporated to record their ticket booking experiences. The responses recorded in the diaries were analyzed on the basis of their content from which eight themes were derived. The findings bring forth the importance of hedonic experiential values along with utilitarian experiential values toward the engagement of customers during the online air-ticket booking process. The current study is one of the pioneers in conceptualization of customer engagement as a third-order construct by uncovering the sub-dimensions of the second order factors—utilitarian and hedonic experiential values.

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