Flying high on low cost: Success in the low-cost airline industry

Abstract

Low-cost airlines have embraced diverse business models, yielding varying degrees of success. In our study, we apply a configurational approach that allows us to evaluate business models not as isolated components but as intricate business configurations. Through this lens, we identify two distinct models that successful low-cost airlines adopt: the pure low-cost model and the hybrid model. Each model has its own specific, often contradictory, attributes. Most significantly, our findings indicate that low-cost airlines must choose between offering a broad spectrum of additional services or focusing on high productivity and on-time performance. Our analyses reveal that low-cost airlines cannot sidestep this trade-off, as a simultaneous offering of both models does not lead to success.