New routes to profitability

Reinventing the airline business model with creative leadership, focused experimentation and industry innovation.

The global airline industry is always so near the breaking point that it seems that just one more crisis or one more downturn is sure to set in motion a cascade of changes that will bring substantial transformation to the industry. Yet, somehow airlines have managed to navigate these events and land gear-down – if only marginally – through a series of cost-cutting measures and mergers that address the symptoms of business-model malaise – but leave the more serious underlying issues unresolved.

Experts have long predicted that the innumerable bumps and bruises suffered by the industry will eventually lead to wholesale industry transformation. And today, after decades of churn and countless significant crises, it can be argued that the first steps of this transformation are underway, led by a few outperforming carriers that are flourishing by entering growth markets, focusing on new traveler needs and seeking to reinvent the customer experience.

Can the lessons of these top performers catapult the industry into a new, more profitable era? The answer is a resounding "yes" – as long as these tactical improvements are implemented through one of three business models that will define the industry over the next decade.

To capitalize on the potential of these new business models, airlines must understand how their current capabilities fit within the context of their desired trajectory and business model.

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About the author

  • Steve Peterson

    Steve Peterson

    Travel and Transportation Lead, IBM Institute for Business Value

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