The transformation of airline business models in the twenty-first century

Fecri Karanki

Chapter 10 in Research Handbook on Air Transport Management, 2026, pp 127-138 from Edward Elgar Publishing

Abstract: In the early twenty-first century, the airline industry was reshaped by a series of profound challenges, particularly highlighted by events such as the Great Recession 2007–09 that led to new operational and financial strategies. These crises underscored the industry's vulnerability to economic and social upheavals, leading to fluctuations in demand and input costs. These challenges prompted airlines to rethink their traditional business models, resulting in a noticeable convergence between FSAs and LCCs in terms of cost structures and operational practices. This chapter provides a comprehensive review of these industry transformations, identifying the determinants of convergence by synthesising the research on evolving airline business models. The findings suggest that the Great Recession acted as a catalyst for a gradual blurring of distinctions between FSAs and LCCs. FSAs have been adopting elements of LCC business models, while LCCs faced challenges in maintaining their cost advantages.

Keywords: Airline business models; Convergence; Determinants; Post-Great Recession period (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035336272
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