ABSTRACT
The business model of the traditional legacy carriers (Aer Lingus, Japan Air Lines, US Airways, for example), developed mainly around “one-size-fits-all,” is clearly ageing. Examples of the “onesize-fits-all” include hub-and-spoke systems, multi-class service, multiple types of airplanes, and later, membership in strategic alliances, as well as a new distribution channel, the airline website. In North America and Europe, almost no airline (with the possible exception of Lufthansa) managed to earn sufficient money over the last business cycle. Additionally, in many cases, consumer ratings are poor at best, and the employees do not appear to be enthusiastic about their deteriorating work rules, pension plans, and salaries. Similarly, the business model of the older-generation, low-cost airlines is also ageing, for both the well-established airlines, such as Southwest, and the high-profile airlines, such as Ryanair. In the case of the latter, for example, the business model continues to be based around the “rock bottom” cost structure. It has not been tweaked to generate any “wow” effect with either the carrier’s traditional customers or to attract the cost conscious business travelers.
