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A FRAMEWORK FOR ASSESSING THE LOW-FARE MODEL IN THE AIRLINE INDUSTRY

Ekonomika

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Title A FRAMEWORK FOR ASSESSING THE LOW-FARE MODEL IN THE AIRLINE INDUSTRY
 
Creator Huettinger, Maik
Adomavičius, Benas
 
Description 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 “lowfare” 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. These factors differentiate the “low-fare” business model on the value proposition level. Cost structure factors focus on internal cost-saving measures designed to significantly reduce the average costs per passenger: outsourcing, aircraft type homogeneity, levels of aircraft utilization, labour factors, airport costs, distribution and in-flight arrangements.The SFC framework allows academics and practitioners to coherently analyze and identify gaps between current and desired levels of the “low-fare” business model implementation.
 
Publisher Vilniaus universiteto Ekonomikos fakultetas / Vilnius University Faculty of Economics
 
Date 2011-01-01
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.zurnalai.vu.lt/ekonomika/article/view/952
10.15388/Ekon.2011.0.952
 
Source Ekonomika; Ekonomika 2011 90(1)
1392-1258
1392-1258
 
Language lit
 
Relation http://www.zurnalai.vu.lt/ekonomika/article/view/952/473
 
Rights Autorinės teisės (c) 2014 Ekonomika