Identifying the drivers of profitable airline growth

Maung, Yun Shwe Yee; Douglas, Ian; Tan, David

doi:10.1016/j.tranpol.2021.11.007

Cited by 17 publications

(4 citation statements)

References 32 publications

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“…Another study has examined whether an airline's business model affects the trade-off between growth and profits. It found that while low-cost carriers can pursue growth-oriented strategies while improving profitability, full-service network carriers face a tradeoff between growth and operating profits (Maung et al 2022). Another study evaluated whether airline business model hybridization has led to a homogeneous economic performance in Europe by comparing business models.…”

Section: Methodsmentioning

confidence: 99%

“…This article adds to a series of studies that, with different approaches, have helped shed light on the effects of liberalization in Europe. To name a few, previous studies have examined how European airline incumbents have responded to liberalization (Chang and Williams 2002); the trade-off between the growth and profits of different carriers (Maung et al 2022); whether airline business model hybridization has led to homogeneous economic performance features (Chiambaretto and Combe 2023); which parts of Europe airline and airport competition are most intense (Lieshout et al 2016); and the changes in output, structure of supply, yields, business models, and performance of flag carriers (Burghouwt and de Wit 2015). We have investigated incumbent airlines' strategies that have been presented in the literature and have tried to understand them by considering political science theories, inadequate management practices or strategies, the spatial dimension, and other contingent causes (Daglous 2021;Ciliberto and Schenone 2012;Bock et al 2020).…”

Section: Introductionmentioning

confidence: 99%

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Strategic Response of European Airlines to Market Dynamics: A Comparative Analysis

Arrigo,

Beccarello,

Di Foggia

2023

Administrative Sciences

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The airline market is constantly evolving and requires managers to adopt strategies to meet the changing demands and organizational requirements of the sector. As a result of its liberalization, the European market has transformed from a set of national protected sectors to a single sector. Although the market has grown over the last two decades, the industry has faced difficulties due to various economic, safety, environmental, and health issues, which have recently emerged. This study analyzes the airlines’ strategic responses to increased competition from the turn of the century to 2019, excluding the pandemic period, to focus on market dynamics driven by European competition policy. A five-pillar strategic framework highlighting common strategies and divergences between major European network carriers is outlined through a multi-case analysis of major European markets. The sample includes France, Germany, Italy, and Spain. Results have managerial implications that highlight the importance of strategic adaptability in an industry landscape that continues to evolve. Managerial implications fall into the following three categories: strategic positioning, cost optimization, and business diversification.

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Section: Methodsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Strategic Response of European Airlines to Market Dynamics: A Comparative Analysis

Arrigo,

Beccarello,

Di Foggia

2023

Administrative Sciences

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“…The doubling of the world tonnage from just before the Lehman Brothers crisis to the present decade (UNCTAD, 2007; well-illustrates this point. Equally impressively-before the COVID-19 shock-the number of airline passengers had doubled between 2010 and 2019 (Maung et al, 2022), while the increase in urban mobility followed demographic trends and the formation of more and ever larger big cities.…”

Section: General Drivers Defining the Future Role Of Transport Workforcementioning

confidence: 99%

Adapting to the future: examining the impact of transport automation and digitalization on the labor force through the perspectives of stakeholders in all transport sectors

Polydoropoulou

Thanopoulou

Karakikes

et al. 2023

Front. Future Transp.

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Automation in transport and digitalization will affect both transport users and its workforce. Focusing on the latter, this paper aims at analyzing barriers, gaps, opportunities, and success and failure factors of transport automation on the labor force, through the perceptions and contributions of employees and employers, as well as of stakeholders from the private, public, and private–public sectors. In a nutshell, the study aims to understand workforce-related barriers and facilitators associated with the implementation of automation. This has been achieved through input derived from the organization of five focus groups, one poll and one extensive questionnaire survey administered to the participants of the 2nd WE-TRANSFORM EU H2020 funded project Workshop, and to project partners’ stakeholder contacts. The analysis of the results indicated that the transport sector’s automation has been evolving at a different pace per sector. An interesting conclusion is that the challenges do not concern all categories among the workforce in the same way. Challenges related to loss of jobs and related repercussions are bound to affect groups within the workforce, which may be constrained by regulatory age limits, or vulnerable, if in part-time employment without access to retraining, which may be the case of workforce members near retirement age or of women limited due to family obligations to part-time employment. The study’s limitations are related to the size of the sample and how representative it is of all stakeholders in the transport sector, including policymakers, regulators, and unions. Future directions should focus on exploring the long-term impacts of automation on the labor force and identify strategies to mitigate the negative effects on vulnerable groups.

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“…Insights are that aggressive use of yield management - varying prices to ensure high load factors (capacity utilization) - may have the unintended effect of increasing earnings variance. More recent work adds dynamic complexity to an understanding of niche contexts, including short-haul vs. long-haul business models (Urban and Hornung 2021 ); Covid-19 impact (Renold et al 2023 ); low costs vs. full service business models (Maung et al 2022 ) and airline capacity discipline (Hazel 2018 ). Various modeling approaches for capacity planning in transportation systems are compared (Cunha et al 2022 ).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Beyond Just Talking Strategy: Using Gaming Simulations to Catalyze Airline Managers’ Buy-in to Novel Strategies that Can Shape or Adapt to Profit Cyclicality

Langley

2023

Syst Pract Action Res

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This empirical qualitative study explores the role of gaming simulations in catalyzing changes to organization-wide management’s perspectives on a novel strategy for aircraft orders and retirements. A large US airline developed the new strategy to tackle the pervasive problem of profit cyclicality, driving poor average profit performance across the cycle. Based on the dynamic model used to develop the strategy with senior management, a gaming simulation workshop was designed and delivered in groups of 20 to over 200 organization-wide managers. They tested various strategies for aircraft orders and retirements, under scenarios for market demand and conduct for competitors and regulators.A qualitative methodology was used to capture the workshop participants’ perspectives on the efficacy of various capacity strategies, before, during and after the workshop. The findings are that managers experiment risk-free with innovations in strategies for capacity orders and retirements and they do indeed discover for themselves that there are counterintuitive alternatives that can achieve large and stable profitable growth. These strategies depend on competitors (role-played by workshops participants in the simulation) cooperating to create a win-win equilibrium. Performance far exceeds the industry benchmark profit cycle.The contribution is the empirical evidence of the effectiveness of gaming simulations to catalyze managers’ shared beliefs and buy-in to a new strategy or business model. There are implications for practitioners in airlines and other sectors on the use of a gaming simulation workshop toolset, to help create such buy-in for an emerging strategy or business model. Protocols for best practice gaming simulation workshop design are discussed.

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Identifying the drivers of profitable airline growth

Cited by 17 publications

References 32 publications

Strategic Response of European Airlines to Market Dynamics: A Comparative Analysis

Strategic Response of European Airlines to Market Dynamics: A Comparative Analysis

Adapting to the future: examining the impact of transport automation and digitalization on the labor force through the perspectives of stakeholders in all transport sectors

Beyond Just Talking Strategy: Using Gaming Simulations to Catalyze Airline Managers’ Buy-in to Novel Strategies that Can Shape or Adapt to Profit Cyclicality

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