A frAMEWOrK fOr ASSESSiNG ThE lOW-fArE MOdEl iN ThE AirliNE iNduSTrY (original) (raw)

Abstract. Despite the popularity of the “low-fare ” (or sometimes called “no-frills”) airline business model, no comprehensive framework has ever been developed to evaluate the level of implementation of this business model. In the paper, we propose a framework for evaluating the extent to which an airline has implemented a “low-fare ” business model. The framework (SFC) consists of three dimensions: (a) strategic direction factors; (b) pricing factors; (c) cost structure factors (COFA). Strategic direction factors primarily focus on the top-level strategic decisions of an airline: growth concepts, the range of flights, spatial strategy and target group selection. These factors serve to differentiate the “low-fare ” airlines from more traditional rivals on a strategic level. Pricing factors evaluate differentiators at the level of market offer: relative ticket prices, the number of booking classes, ticket restrictions, interlining, penalties, non-ticket income and target load levels...

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