Icelandair (E): COVID-19

  • Reference: SM-1703-E

  • Year: 2017-2019

  • Number of pages: 3

  • Publication Date: Feb 26, 2021

  • Source: IESE (España)

  • Type of Document: Case

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Description

This five-part case series considers Icelandair at a couple of key inflection points in its recent history. Case A, set in early 2017 on the airline's 80th anniversary, the airline is faced to question its strategy after its impressive seven-year run of dynamic growth and solid returns comes to a somewhat abrupt end due to extreme pricing competition and upward cost pressure. The case delves into the development of the airline and its "hybrid" business model straddling between a full-service and Low-Cost Carrier (LCC) and specifically, how it competes against the new Icelandic LCC upstart, WOW Air. Students are asked to understand Icelandair's strategy and consider if any adaptations should be made in light of increasing pressure from WOW Air.

Learning Objective

The main purpose is to understand how a company straddling both sides of a business model - the "hybrid" between a full-service airline and Low-Cost Carrier (LCC) - can compete. Also, it provides an example of how a company navigates throughout different challenges emanating from both the competitive and macro environments.

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Keywords

airlines Competing with Business Models Competitive Strategy Iceland Low-Cost Airlines Pricing strategy tourism

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Icelandair's 80-plus-year history and hybrid business model -- straddling a full-service carrier and a low-cost carrier (LCC) model -- examined in five crucial moments. Read more (+)