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Long-haul low cost airlines: Characteristics of the business model and sustainability of its cost advantages

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  • Soyk, Christian
  • Ringbeck, Jürgen
  • Spinler, Stefan

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.

Suggested Citation

  • Soyk, Christian & Ringbeck, Jürgen & Spinler, Stefan, 2017. "Long-haul low cost airlines: Characteristics of the business model and sustainability of its cost advantages," Transportation Research Part A: Policy and Practice, Elsevier, vol. 106(C), pages 215-234.
    • Handle: RePEc:eee:transa:v:106:y:2017:i:c:p:215-234
    DOI: 10.1016/j.tra.2017.09.023
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    References listed on IDEAS

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    Cited by:

    1. Zuidberg, Joost & de Wit, Jaap G., 2020. "The development of long-haul low-cost networks in the North Atlantic airline market: An exploratory data approach," Transport Policy, Elsevier, vol. 95(C), pages 103-113.
    2. Albers, Sascha & Daft, Jost & Stabenow, Sebastian & Rundshagen, Volker, 2020. "The long-haul low-cost airline business model: A disruptive innovation perspective," Journal of Air Transport Management, Elsevier, vol. 89(C).
    3. Urban, Marcia & Hornung, Mirko, 2021. "Mapping causalities of airline dynamics in long-haul air transport markets," Journal of Air Transport Management, Elsevier, vol. 91(C).
    4. Chiambaretto, Paul, 2021. "Air passengers’ willingness to pay for ancillary services on long-haul flights," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 147(C).
    5. Bernardo, Valeria & Fageda, Xavier, 2020. "Impacts of competition on connecting travelers: Evidence from the transatlantic aviation market," Transport Policy, Elsevier, vol. 96(C), pages 141-151.
    6. Soliman, Amr & O’Connell, John Frankie & Tamaddoni-Nezhad, Alireza, 2022. "A data-driven approach for characterising revenues of South-Asian long-haul low-cost carriers per equivalent flight capacity per block hour," Journal of Air Transport Management, Elsevier, vol. 103(C).
    7. Soyk, Christian & Ringbeck, Jürgen & Spinler, Stefan, 2021. "Effect of long-haul low-cost carriers on North Atlantic air fares," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 152(C).
    8. Soyk, Christian & Ringbeck, Jürgen & Spinler, Stefan, 2018. "Revenue characteristics of long-haul low cost carriers (LCCs) and differences to full-service network carriers (FSNCs)," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 112(C), pages 47-65.
    9. Klophaus, Richard & Merkert, Rico & Lordan, Oriol, 2021. "Mesh network as a competitive advantage for European LCCs: An alternative topology to hub-and-spoke for selling online connections," Transport Policy, Elsevier, vol. 106(C), pages 196-204.
    10. Kuljanin, Jovana & Kalić, Milica & Begović, Boris & Mijović, Nemanja & Renold, Manuel, 2021. "The effect of LCC market entry on dominant FSC's price into long haul sector: A case of Norwegian competition on British Airways' prices on selected transatlantic routes," Journal of Air Transport Management, Elsevier, vol. 91(C).
    11. Chiambaretto, Paul & Combe, Emmanuel, 2023. "Business model hybridization but heterogeneous economic performance: Insights from low-cost and legacy carriers in Europe," Transport Policy, Elsevier, vol. 136(C), pages 83-97.
    12. Hunt, Jennifer & Truong, Dothang, 2019. "Low-fare flights across the Atlantic: Impact of low-cost, long-haul trans-Atlantic flights on passenger choice of Carrier," Journal of Air Transport Management, Elsevier, vol. 75(C), pages 170-184.
    13. Bauer, Linus Benjamin & Bloch, Daniel & Merkert, Rico, 2020. "Ultra Long-Haul: An emerging business model accelerated by COVID-19," Journal of Air Transport Management, Elsevier, vol. 89(C).
    14. Klophaus, Richard & Yu, Chunyan, 2023. "Short-haul airline services in Europe and North America - A cross-business model and cross-continental analysis," Journal of Air Transport Management, Elsevier, vol. 109(C).

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