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The vertical relationships literature has considered situations where both producers and retailers have a degree of market power. On one hand, retailers may have certain freedom in deciding what price to charge to the final consumers. On the other hand, large retailers may also pressurize producers (Wal-Mart is a classic example; see also Comanor and Rey (2000) for a formal treatment of this topic). At the same time, producers may pressurize retailers via resale price maintenance. The interplay of producers' and retailers' bargaining power, in addition to the structure (both horizontal and vertical) of product and distribution markets, eventually determine the sticker price faced by an unsuspecting consumer.

Platforms in two-sided markets are known to provide subsidies to either buyers or sellers, in order to take advantage of cross-group externalities inherent in such industries. Online travel agents can be thought of as platforms facilitating trade between passengers and travel service providers (airlines). This chapter evaluates the effects of a buyer subsidy provided by one major US online travel agent – a low-price guarantee offered by Orbitz. We find evidence consistent with increased airline participation with this travel agent upon implementation of the low-price guarantee policy. Our results also confirm the theoretical claims that most-favored customer low-price guarantee policies are procompetitive.

As airports strive to attract new carriers, a new strategic direction is necessary to address the differing needs of the two main types of airline – network carriers and low‐cost airlines. The problem for the airport’s manager is compounded by the different management styles and philosophies that operate within the carriers themselves, meaning that the requirements of each airline may be subtly, or even fundamentally, different from one which might be expected to be placed in the same category. For strategic reasons, the facilities manager must understand the fundamental differences that exist between the two types of carrier. Examines the strategic response of Dublin airport to the presence of the two types of carriers requiring different services, and the difficulties faced by airport managers in the provision of the differing levels of service required by different customers. Sets out the strategic differences and suggests the resultant implications for facilities requirements. Shows that, in most cases, the provision of differing levels of “side by side” service to airlines is not possible with the existing strategic direction and that new directions are needed to facilitate the long‐term expansion of air transport.

The passenger air travel market has recently been impacted by two major innovations: first, in the 1990s, the rise of “low-cost carrier” (LCC) airlines offering cheap one-way point-to-point tickets, and then, in the new millennium, the emergence and enthusiastic adoption by consumers of online Internet booking systems. It has been suggested that the transparency of Internet booking would result in only the lowest fare offerings being sustainable in the market, and the simplicity and efficiency of LCCs would mean that it would be their fares that would be the lowest.

The main purpose of this paper is to create a model, which specifies the determinants of the airline business. This sector is chosen, as the airline industry is not only influenced by national characteristics, but also characterized by international standards and internationalization processes.

In this paper, a systematic analysis of the research published over the past decades is carried out. This analysis incorporates the most acknowledged concepts and works in the field of airline management.

The main determinants of the airline business are identified as: national culture, airline alliances, the implementation of the low-fare business model, the influence of the state on business, and the impact of market liberalization. The modern airline industry can be partially seen as an embodiment of the neoliberal ideas of the 1990s.

The model may be used by academics and practitioners who work in the area of airline business management. Specifically in the case of a merger between two airlines, the model might serve as a useful tool to analyze potential synergies.

Although various research has been conducted on describing the way that airline business is done, little focus has been paid on the factors that actually determine and change it. This paper analyzes the unique industry variables by which the airline industry is driven and determined.

No‐frills carriers have revolutionized Europe's aviation market and have changed the airline business in a dramatic way. Having entered most of the countries in Central Europe, the wave has also reached the Baltics. The purpose of this paper is to reveal how a Scandinavian carrier entered the market with a subsidiary airline, by combining elements of low‐cost and traditional carriers.

The paper starts by giving a brief overview of the different airline operating philosophies. It is followed by an introduction into the Nordic airline market. The main focus will be on the operating strategy of Air Baltic and its relation towards the extension policy of Scandinavian Airlines.

The paper provides an independent and structured analysis about the strategy of Air Baltic. Theory was applied to determine how much the airline was influenced by the “low‐fare wave” of the aviation branch and its implications. The hybrid character of Air Baltic reflects the Central European/Baltic business environment.

Research is partly limited to the information published by the airline itself. Because international aviation journals have not yet covered Air Baltic, newspapers and popular journals were used as a base of information. To fill this gap, two semi‐structured interviews with Air Baltic executives were carried out.

The study is a useful source of information for scientists and managers dealing with the airline industry or/and the Baltic Sea region. Lecturers might use the paper for case‐based courses.

This paper is one of the first comprehensive publications in the English language about Air Baltic and the Baltic aviation market.

Marketing.

This case can be used in a principles of marketing course, at Introductory, Executive or MBA level, it is particularly suitable as a case on promotions policy as one of the 4-P's, to illustrate the role of marketing communications as part of an integrated marketing strategy, or to illustrate the building of a service brand.

The case illustrates a number of practical marketing issues: the marketing challenges of launching a budget airline: gaining high visibility and awareness with a relatively low share of voice; the relationship between an organisation and its advertising agency; the requirement to maintain a consistent marketing strategy over time, but to adapt the execution as market dynamics impact the consumer. Given the dynamics of most industries, kulula.com cannot afford to be complacent, as new entrants are always on the horizon. The dilemma facing Gidon Novick and his team is to rethink the sustainability of its current strategy, how to grow and protect its position, as well as the relationship with its advertising agency and its communication strategy – is a more relevant campaign or a new agency required to keep the marketing communications interesting and current?

The expected learning outcomes are: to analyse the success of communications campaigns; to explore the issue of client/agency relationships; to understand brand building strategies, how to create a distinctive position, and how to build a services brand; To understand the key success factors for a low-fare niche positioning strategy, and to examine the sustainability of this low-fare strategy; and to identify some product line extension opportunities for kulula.com.

Teaching note.

This case outlines the history of JetBlue Airways from its inception in 2000 until 2004. The case provides details of JetBlue's business model and reasons for success. It can be used in a course on service operations or strategy.

Southwest is the world’s fourth largest airline and has consistently been one of the most admired organisations in the USA. Its founder and Chairman Emeritus, Herb Kelleher, attributes much of this success to the use of strategic principles. This gives a guiding framework for employees within the company but allows them leeway to make their own decisions. The result is greater employee engagement, a more efficient organisation that is adapting to the needs of its major stakeholders and greater customer satisfaction.

The article analysis of the use of the strategic principle methodology at Southwest Airlines. It focuses on the position of Southwest as “THE low fare” airline and the use of humour and different working practices within the airline.

The article shows that If this can be done in an industry as heavily regulated as aviation, it can be applied with the same success to many other business sectors and organisations.