The Airline Business Model

Paul Chiambaretto and Emmanuel Combe
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Paul Chiambaretto: MBS School of Business
Emmanuel Combe: University of Paris 1 Panthéon-Sorbonne

Chapter Chapter 3 in Introduction to Air Transport, 2025, pp 41-55 from Springer

Abstract: Abstract This chapter analyzes the airline business model in detail, focusing on its structural characteristics and financial fragility. It begins by unpacking the main sources of costs, including fixed versus variable costs, and revenues with an emphasis on the role of ancillary revenues. It explains the importance of load factor and yield management in determining profitability. The chapter then contrasts different models—full-service, low-cost, and hybrid—and discusses how each adapts to market constraints. Special attention is paid to the role of fleet management, network strategy (hub-and-spoke vs. point-to-point), and partnerships such as alliances and joint ventures. The chapter concludes by reflecting on the strategic trade-offs airlines must navigate in balancing cost efficiency, service quality, and differentiation in a hypercompetitive environment.

Keywords: Airline business model; Cost structure; Yield management; Alliances; Network strategy (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:spbrcp:978-3-031-99936-9_3

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DOI: 10.1007/978-3-031-99936-9_3

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