Wednesday, September 27, 2006

The importance of business any industry

There are some industries that are profitable and others that are less profitable. However, within any industry there are the upper echelon of successful companies, the middle-road, and the laggers. The question that many observers attempt to answer is: Why are some companies successful and others less successful? Sometimes it is access to specific assets, a patented technology, or an important network. Much research is beginning to indicate that a company's chosen business model has an enormous impact on its level of success.

The aviation industry, as a whole, has its fair share of sub-industries. There are full-service carriers, low-cost carriers, charter airlines, regional carriers. Within these sub-industries there are a range of business models. I will follow conventional wisdom and tend to focus on full-service and low-cost carriers as these are the most visible to the general public. Most research indicates that there are two types of business models in the scheduled-passenger industry, full-service and low-cost, however this is an over-simplification of the industry. There are many low-cost airlines that do not adhere to the conventional definition or follow the supposed low-cost airline business model, while the same holds true for full-service carriers. Numerous distinct business models are sprouting up across the globe within these two aviation sub-industries. Some passengers are flying with true low-cost carriers, such as Ryanair, some with low-cost carriers offering a slightly greater level of service, such as JetBlue, some with full-service carriers offering less-than-ideal full-service, many North American carriers, and finally others are flying with carriers that set the standard in service offering, such as Singapore Airlines. The business models are really a continuum stretching from pure low-cost to pure full-service, and the spectrum is populated from one extreme to the other.

No comments: