The End of Low-Cost Fundamentalism - The COVID Interruption

We review pre-COVID-19 trends (like the convergence of low cost and full service products; the re-segmentation of the market, and changing demands from increasingly digitalized consumers). With that data in mind, we then discuss the pandemic's main impact on existing models, and provide the likely new post-COVID-19 trends in the airline sector. There will be new developments, yet we conclude that the fundamentals of the democratization of air travel, particularly in the short-haul segments, remain untouched. After a brusque interruption, it will remain a cost-based game in which high return, agile, low-cost carriers compete with typically less-profitable legacy airlines that leverage their long-haul network and loyalty platforms. We offer strategies for all industry players to get back up to speed (re: product proposition, pricing, levers for financial recovery, among others), and narrow the strategies down to several recovery-building actions.

Collection: IESE (España)
Ref: M-1382-E
Format: PDF
Number of pages: 13
Publication Date: Mar 16, 2021
Language: English, Spanish

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Description

We review pre-COVID-19 trends (like the convergence of low cost and full service products; the re-segmentation of the market, and changing demands from increasingly digitalized consumers). With that data in mind, we then discuss the pandemic's main impact on existing models, and provide the likely new post-COVID-19 trends in the airline sector. There will be new developments, yet we conclude that the fundamentals of the democratization of air travel, particularly in the short-haul segments, remain untouched. After a brusque interruption, it will remain a cost-based game in which high return, agile, low-cost carriers compete with typically less-profitable legacy airlines that leverage their long-haul network and loyalty platforms. We offer strategies for all industry players to get back up to speed (re: product proposition, pricing, levers for financial recovery, among others), and narrow the strategies down to several recovery-building actions.
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Year: 2020

Learning Objective

The case invites the reader to examine various business innovation concepts both as they mature and under a disruption, as well as how disruptions sometimes accelerate preexisting trends (i.e., climate consciousness, digitalization, personalization).

The End of Low-Cost Fundamentalism - The COVID Interruption

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"The End of Low-Cost Fundamentalism - The COVID Interruption"