IDEAS home Printed from https://ideas.repec.org/a/eee/jaitra/v127y2025ics0969699725000730.html

Towards a typology of airline vertical strategies

Author

Listed:
  • Wendel, Lars-Michael
  • Albers, Sascha
  • Dewulf, Wouter

Abstract

Vertical strategy – airlines’ vertical scope and positioning in the vertical industry structure – is crucial for firm performance. This paper uses a k-Means cluster analysis of 75 airlines – based on data of the year 2019 – to identify four airline vertical strategy types: Concentrators, Dependents, Peripherals, and Control Seekers, materialising around the three dimensions of vertical focus, organisational setup, and market environment. Our work focuses on a yet neglected domain of airline strategy, offering a conceptual framework for the assessment and further analysis of airline vertical strategies. Our typology offers practical implications for airline companies in their relative positioning to evaluate and potentially revise their strategies to improve competitive posture and profitability.

Suggested Citation

  • Wendel, Lars-Michael & Albers, Sascha & Dewulf, Wouter, 2025. "Towards a typology of airline vertical strategies," Journal of Air Transport Management, Elsevier, vol. 127(C).
    • Handle: RePEc:eee:jaitra:v:127:y:2025:i:c:s0969699725000730
    DOI: 10.1016/j.jairtraman.2025.102810
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0969699725000730
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jairtraman.2025.102810?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Redpath, N. & O'Connell, J.F. & Warnock-Smith, D., 2017. "The strategic impact of airline group diversification: The cases of Emirates and Lufthansa," Journal of Air Transport Management, Elsevier, vol. 64(PB), pages 121-138.
    2. Daft, Jost & Albers, Sascha, 2013. "A conceptual framework for measuring airline business model convergence," Journal of Air Transport Management, Elsevier, vol. 28(C), pages 47-54.
    3. Hangjun Yang & Anming Zhang & Xiaowen Fu, 2015. "Determinants of Airport-Airline Vertical Arrangements: Analytical Results and Empirical Evidence," Journal of Transport Economics and Policy, University of Bath, vol. 49(3), pages 438-453, July.
    4. Tiziana D'alfonso & Alberto Nastasi, 2014. "Airport-Airline interaction: some food for thought," Transport Reviews, Taylor & Francis Journals, vol. 34(6), pages 730-748, November.
    5. Jacobides, Michael G. & Knudsen, Thorbjorn & Augier, Mie, 2006. "Benefiting from innovation: Value creation, value appropriation and the role of industry architectures," Research Policy, Elsevier, vol. 35(8), pages 1200-1221, October.
    6. Thomas C. Powell, 2001. "Competitive advantage: logical and philosophical considerations," Strategic Management Journal, Wiley Blackwell, vol. 22(9), pages 875-888, September.
    7. Michael G. Jacobides & C. Jennifer Tae, 2015. "Kingpins, Bottlenecks, and Value Dynamics Along a Sector," Organization Science, INFORMS, vol. 26(3), pages 889-907, June.
    8. Merkert, Rico & Morrell, Peter S., 2012. "Mergers and acquisitions in aviation – Management and economic perspectives on the size of airlines," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(4), pages 853-862.
    9. Barbara Spencer, 2005. "International outsourcing and incomplete contracts," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1107-1135, November.
    10. Brueckner, Jan K. & Pels, Eric, 2005. "European airline mergers, alliance consolidation, and consumer welfare," Journal of Air Transport Management, Elsevier, vol. 11(1), pages 27-41.
    11. Thomas Bieger & Andreas Wittmer, 2011. "From the Aviation Value Chain to the Aviation System," Springer Texts in Business and Economics, in: Andreas Wittmer & Thomas Bieger & Roland Müller (ed.), Aviation Systems, chapter 0, pages 61-75, Springer.
    12. Gillen, David & Gados, Alicja, 2008. "Airlines within airlines: Assessing the vulnerabilities of mixing business models," Research in Transportation Economics, Elsevier, vol. 24(1), pages 25-35.
    13. Michael G. Jacobides, 2008. "How Capability Differences, Transaction Costs, and Learning Curves Interact to Shape Vertical Scope," Organization Science, INFORMS, vol. 19(2), pages 306-326, April.
    14. Magalhães, Liliana & Reis, Vasco & Macário, Rosário, 2015. "Can flexibility make the difference to an airport's productivity? An assessment using cluster analysis," Journal of Air Transport Management, Elsevier, vol. 47(C), pages 90-101.
    15. Silke J. Forbes & Mara Lederman, 2010. "Does vertical integration affect firm performance? Evidence from the airline industry," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 765-790, December.
    16. Nicola Cetorelli & Michael G. Jacobides & Samuel Stern, 2021. "Mapping a sector's scope transformation and the value of following the evolving core," Strategic Management Journal, Wiley Blackwell, vol. 42(12), pages 2294-2327, December.
    17. Button, Kenneth, 2003. "Does the theory of the ‘core’ explain why airlines fail to cover their long-run costs of capital?," Journal of Air Transport Management, Elsevier, vol. 9(1), pages 5-14.
    18. Jost Daft & Sascha Albers & Sebastian Stabenow, 2021. "From product-oriented flight providers to customer-centric retailers: a dynamic offering framework and implementation guidelines for airlines," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(6), pages 615-625, December.
    19. Kenneth Button & Álvaro Costa & Fabiene Costa & Carlos Cruz, 2011. "Problems of cost recovery by European airlines since market liberalization," Transportation Planning and Technology, Taylor & Francis Journals, vol. 34(2), pages 125-138, January.
    20. Constance E. Helfat, 2015. "Editor's Choice Vertical firm structure and industry evolution," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 24(4), pages 803-818.
    21. Thomas C. Powell, 2003. "Varieties of competitive parity," Strategic Management Journal, Wiley Blackwell, vol. 24(1), pages 61-86, January.
    22. Franke, Markus & John, Florian, 2011. "What comes next after recession? – Airline industry scenarios and potential end games," Journal of Air Transport Management, Elsevier, vol. 17(1), pages 19-26.
    23. Fu, Xiaowen & Homsombat, Winai & Oum, Tae H., 2011. "Airport–airline vertical relationships, their effects and regulatory policy implications," Journal of Air Transport Management, Elsevier, vol. 17(6), pages 347-353.
    24. Hsu, Chao-Che & Liou, James J.H., 2013. "An outsourcing provider decision model for the airline industry," Journal of Air Transport Management, Elsevier, vol. 28(C), pages 40-46.
    25. Francine Lafontaine & Margaret Slade, 2007. "Vertical Integration and Firm Boundaries: The Evidence," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 629-685, September.
    26. Tretheway, Michael W. & Markhvida, Kate, 2014. "The aviation value chain: Economic returns and policy issues," Journal of Air Transport Management, Elsevier, vol. 41(C), pages 3-16.
    27. Michael J. Leiblein & Douglas J. Miller, 2003. "An empirical examination of transaction‐ and firm‐level influences on the vertical boundaries of the firm," Strategic Management Journal, Wiley Blackwell, vol. 24(9), pages 839-859, September.
    28. Renan P. de Oliveira & Alessandro V. M. Oliveira & Gui Lohmann, 2021. "A Network-Design Analysis of Airline Business Model Adaptation in the Face of Competition and Consolidation," Transportation Science, INFORMS, vol. 55(2), pages 532-548, March.
    29. Scotti, Davide & Volta, Nicola, 2017. "Profitability change in the global airline industry," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 102(C), pages 1-12.
    30. Y. Zhang, 2015. "Merger Between Airlines in Financial Distress: Does the Merger Save Them?," Competition and Regulation in Network Industries, Intersentia, vol. 16(1), pages 66-82, March.
    31. Albers, Sascha & Rundshagen, Volker, 2020. "European airlines′ strategic responses to the COVID-19 pandemic (January-May, 2020)," Journal of Air Transport Management, Elsevier, vol. 87(C).
    32. Peterson, H. Christopher & Wysocki, Allen F. & Harsh, Stephen B., 2001. "Strategic Choice Along The Vertical Coordination Continuum," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 4(2), pages 1-18.
    33. Urban, Marcia & Klemm, Martin & Ploetner, Kay Olaf & Hornung, Mirko, 2018. "Airline categorisation by applying the business model canvas and clustering algorithms," Journal of Air Transport Management, Elsevier, vol. 71(C), pages 175-192.
    34. Rieple, Alison & Helm, Clive, 2008. "Outsourcing for competitive advantage: An examination of seven legacy airlines," Journal of Air Transport Management, Elsevier, vol. 14(5), pages 280-285.
    35. Sascha Albers, 2010. "Configurations of Alliance Governance Systems," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 62(3), pages 204-233, July.
    36. Silke Januszewski Forbes & Mara Lederman, 2009. "Adaptation and Vertical Integration in the Airline Industry," American Economic Review, American Economic Association, vol. 99(5), pages 1831-1849, December.
    37. Daniel Schubert & Christa Sys & Rosário Macário, 2022. "Customized airline offer management: a conceptual architecture," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 21(5), pages 553-563, October.
    38. B.A. Kuchinke & J. Sickmann, 2007. "Vertical Integration of Airlines and Airports: Impacts on Competition," Competition and Regulation in Network Industries, Intersentia, vol. 8(3), pages 283-302, September.
    39. Albers, Sascha & Koch, Benjamin & Ruff, Christine, 2005. "Strategic alliances between airlines and airports—theoretical assessment and practical evidence," Journal of Air Transport Management, Elsevier, vol. 11(2), pages 49-58.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wendel, Lars-Michael & Albers, Sascha & Dewulf, Wouter, 2026. "Beyond the brand: Analysing the rationale and relevance of one-brand, multi-AOC strategies in global airline groups," Journal of Air Transport Management, Elsevier, vol. 132(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang, Dapeng & (Cara) Wang, Xiaokun, 2018. "Understanding many-to-many matching relationship and its correlation with joint response," Transportation Research Part B: Methodological, Elsevier, vol. 108(C), pages 249-260.
    2. Tsunoda, Yushi, 2023. "Airport concession revenue sharing and entry deterrence," Economics of Transportation, Elsevier, vol. 33(C).
    3. Wendel, Lars-Michael & Albers, Sascha & Dewulf, Wouter, 2026. "Beyond the brand: Analysing the rationale and relevance of one-brand, multi-AOC strategies in global airline groups," Journal of Air Transport Management, Elsevier, vol. 132(C).
    4. Adiloğlu-Yalçınkaya, Leyla & Besler, Senem, 2021. "Institutional factors influencing business models: The case of Turkish Airlines," Journal of Air Transport Management, Elsevier, vol. 91(C).
    5. Michael G. Jacobides & Sidney G. Winter, 2012. "Capabilities: Structure, Agency, and Evolution," Organization Science, INFORMS, vol. 23(5), pages 1365-1381, October.
    6. Thomas Hutzschenreuter & Florian Gröne, 2009. "Changing Vertical Integration Strategies under Pressure from Foreign Competition: The Case of US and German Multinationals," Journal of Management Studies, Wiley Blackwell, vol. 46(2), pages 269-307, March.
    7. Lauren Lambie-Hanson & Timothy Lambie-Hanson, 2015. "Agency and incentives: vertical integration in the mortgage foreclosure industry," Working Papers 15-38, Federal Reserve Bank of Philadelphia.
    8. Jimenez, Edgar & Suau-Sanchez, Pere, 2020. "Reinterpreting the role of primary and secondary airports in low-cost carrier expansion in Europe," Journal of Transport Geography, Elsevier, vol. 88(C).
    9. Volodymyr Bilotkach, 2019. "Airline Partnerships, Antitrust Immunity, and Joint Ventures: What We Know and What I Think We Would Like to Know," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 54(1), pages 37-60, February.
    10. Christopher Hansman & Jonas Hjort & Gianmarco León-Ciliotta & Matthieu Teachout, 2020. "Vertical Integration, Supplier Behavior, and Quality Upgrading among Exporters," Journal of Political Economy, University of Chicago Press, vol. 128(9), pages 3570-3625.
    11. Jost Daft & Sascha Albers & Sebastian Stabenow, 2021. "From product-oriented flight providers to customer-centric retailers: a dynamic offering framework and implementation guidelines for airlines," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 20(6), pages 615-625, December.
    12. 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).
    13. Birger Wernerfelt & Alvin Silk & Shuyi Yu, 2021. "Internalization of Advertising Services: Testing a Theory of the Firm," Marketing Science, INFORMS, vol. 40(5), pages 946-963, September.
    14. Lauren Lambie-Hanson & Timothy Lambie-Hanson, 2017. "Agency and Incentives: Vertical Integration in the Mortgage Foreclosure Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(1), pages 1-24, August.
    15. Gudmundsson, Sveinn Vidar & Merkert, Rico & Redondi, Renato, 2017. "Cost functions and determinants of unit cost effects in horizontal airline M&As," Transportation Research Part A: Policy and Practice, Elsevier, vol. 103(C), pages 444-454.
    16. Legros, Patrick & Newman, Andrew F., 2017. "Demand-driven integration and divorcement policy," International Journal of Industrial Organization, Elsevier, vol. 53(C), pages 306-325.
    17. Chen, Yilin & Yang, Hangjun & Zheng, Shiyuan & Wang, Kun & Jiang, Changmin, 2025. "Fostering the connectivity on thin routes: Should regional airlines cooperate with network airlines or with local governments?," Transportation Research Part B: Methodological, Elsevier, vol. 195(C).
    18. Xiao, Yibin & Fu, Xiaowen & Zhang, Anming, 2016. "Airport capacity choice under airport-airline vertical arrangements," Transportation Research Part A: Policy and Practice, Elsevier, vol. 92(C), pages 298-309.
    19. Najoung Lim & Seojin Kim & Rajshree Agarwal, 2023. "Weathering a demand shock: The impact of prior vertical scope on post‐shock firm response," Strategic Management Journal, Wiley Blackwell, vol. 44(8), pages 1965-2004, August.
    20. Masucci, Monica & Brusoni, Stefano & Cennamo, Carmelo, 2020. "Removing bottlenecks in business ecosystems: The strategic role of outbound open innovation," Research Policy, Elsevier, vol. 49(1).

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jaitra:v:127:y:2025:i:c:s0969699725000730. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/journal-of-air-transport-management/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.