The Role of Secondary Airports for Today's Low-Cost Carrier Business Models: The European Case

One of the core characteristics of Low-Cost Carriers (LCCs) is their use of secondary and regional airports. However, nothing is fixed as the market constantly evolves and carriers modify their strategies in order to achieve growth. This paper uses the examples of Ryanair, easyJet and Norwegian to show how changes to LCC business models are affecting secondary airports across Europe. Using a content analysis, this paper first describes how airport choice factors for LCCs have evolved over the last 10 years. This is followed by a data analysis of historical and current airline network capacity to identify how LCC traffic at secondary airports is developing. The paper finds that cost, demand and efficiency are still the most important criteria for LCCs when choosing an airport to operate from. However, it also identifies that LCCs have become more interested in serving business passengers, which is why they are increasingly using primary airports (accounting for 58% of their recent capacity growth). Through the use of a selection of case airports it is finally concluded that the evolution of LCCs increases competition between primary and secondary gateways. In most cases, secondary airports are losing a significant amount of LCC traffic and only sustain flights to less important destinations. This research puts into question the future importance of secondary airports for LCCs. As not all airports have been impacted by the hybridisation of LCCs to the same extent, the results are not equally applicable to the whole European airport industry

Stepping Up and Stepping Out of COVID-19: New Challenges for Environmental Sustainability Policies in the Global Airline Industry

The allure for businesses to jettison short-term costly processes, regulatory demands and green business practices (GBPs) in the turbulent times of COVID-19 remains sky high. Although GBPs and eco-friendly policies deliver results in the long term in terms of market competitiveness (MC), in many industries firms have sought to jettison well-rooted practices in the face of the existential threats stemming from COVID-19. In this paper, we examine the new contemporary challenges of adopting and implementing environmental sustainability policies in the global airline industry in the wake of COVID-19. The analysis sheds light on firms’ level sustainability initiatives such as upgrading to environmentally friendly aircraft and offsetting emission footprint, and institutional initiatives such as the European Union Emissions Trading System and the Carbon Offsetting and Reduction Scheme for Aviation. Our analysis demonstrates that some airlines and industrial bodies sought to sidestep environmentally friendly commitments and practices to overcome new challenges such as cost pressures, survival threat and deprioritising environmental sustainability initiatives. We establish and examine the implications of the analysis

Research Report

This paper discusses the issues facing Philippine Airlines in its ever evolving and changing landscape in the domestic, regional and international markets. The Philippine aviation industry had its safety status downgraded to Category 2 for six years by the International Civil Aviation Organization and the US Federal Aviation Administration. This downgrading of the status severely limited Philippine Airlines from expanding internationally, but its reinstatement provides huge opportunities for the incumbent. However, in the domestic and regional markets it faces a threat from rapidly encroaching low-cost carriers. The Philippines has the highest domestic low-cost carrier penetration rate in the world, while the incumbent has rebranded its low-cost subsidiary, AirPhil, to a full-service carrier, PAL Express, which has impacted its ability to compete in short-haul markets. Philippine Airlines' new routes to the Middle East and Europe have the potential to be profitable, but their success is hampered by the lack of domestic connectivity and no feeder traffic from partner airlines

The rationale for implementing a premium economy class in the long haul markets – Evidence from the transatlantic market

The premium economy class is fast becoming an embedded and valued product that is being incorporated into the long haul fleets of the world's flag carriers. The premium economy unique proposition positions itself mid way between economy and business class with enhanced leg room as its primary attribute. It targets the price sensitive business traveller and the comfort seeking leisure passengers. This study contains an insight into the unit cost of production of economy, premium economy, business and first class seats and their potential to generate revenues on the lucrative London Heathrow to New York JFK route using a British Airways 747-400 aircraft. The main findings show that the rationale for implementing a premium economy seat is justified as it is only 1.6 times more expensive than an economy seat to produce, but it generates revenues that are 2.3 times higher than its cost of production - spawning the highest marginal returns from the four cabin hierarchy. The research reinforces the assumption that premium economy class cabins could very well become an embedded and sustainable product in the landscape of long haul travel in the near future