Airline Business Models and Networks: Regulation, Competition and Evolution in Aviation Markets

Abstract

This paper examines the evolution of airline business models and network structure decisions in the passenger aviation industry. The paper reviews the growth of hub-and-spoke networks as the dominant business model following deregulation in the latter part of the 20th century, followed by the emergence of low cost carriers as a global phenomenon at the end of the century. The paper highlights the link between airline business strategies and network structures, and examines the resulting competition between divergent network structure business models. In this context, we discuss issues of market structure stability and the role played by competition policy.