Long-haul low-cost air services: revealing key competitive features of airline within airline strategy

Abstract

In this paper, we reveal which elements of business models typical for low-cost carriers and full-service network carriers were used by Norwegian and AirAsia X to enter markets with long-haul services. Our findings show that the long-haul low-cost operation which was realized as "airline within airline" strategy can be sustainable if an efficient mix of elements belonging to both low-cost and traditional airline business models is implemented. According to our analysis, traditional airlines will cope with the competition of low-cost carriers on long-haul markets mainly in the segments of less price-sensitive leisure passengers and more price-sensitive business pas­sengers in the higher fare classes. Such long-haul low-cost innovation can also generate a new demand for long-haul services supplying the market with an unbundled product for passengers in a very price-sensitive segment.

Keywords

• business model
• competitiveness
• hybridisation
• long-haul air service
• low-cost operation