Inderscience Publishers

Long-haul market entry by value-based airlines: dual business models support product innovation

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Courtesy of Inderscience Publishers

Airline innovation is often driven by external factors. Evolving aircraft technology opens markets, while information technology reshapes distribution. New entrants in deregulated markets often adopt short-haul low-cost operations, where network connectivity is less important, and traditional costs can be converted to revenues. Buoyant conditions in 2005 saw new airlines serving long-haul routes. The survivors avoided competition in highly contested markets, and followed low-cost concepts. Carriers with large premium cabins had to compete in key markets and failed. Porter's (1980) generic strategies, Markides and Charitou's (2004) dual-business model study and Yoffie and Kwak's (2002) judo strategy help explain this failure.

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