Distortions of airline revenues: why the network airline business model is broken

Distortions of airline revenues: why the network airline business
model is broken

Journal: Air Transport Management

Author: Michael W. Tretheway

Published: 2004

Abstract

This paper looks at the inherent flaws that have emerged in the business models that have been pursued by the major network airlines. The business model adopted by the low-cost carriers is more robust and has gradually undermined the ability of the network carriers to practice the price discrimination needed for them to recover their full costs. The full service network carriers still have a future but they will take a smaller market share. The paper points to a number of modifications that need to be made to the full service network carriers’ business model if it is going to maximise this share.

Keywords: Low-cost airlines; Network economics; Business models; Airline competition

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