A dissertation presented to the School of Economic and Business Sciences (SEBS) University of the Witwatersrand in fulfillment of the requirements for the Master of Commerce Degree (MCom) June 2017 / Based on the significant amount of entries and exits of low-cost airlines in the commercial airline industry within South Africa, this brought on the question of whether such business models are sustainable in an emerging market. Incidents such as the exits of 1time and Velvet Sky brought about a high degree of concern. Analysts have suggested that the main reasons for airlines departing are the global financial crisis in 2009 which led to a decrease in passenger numbers, decreasing market size, the volatility of the fuel price, route density on major routes, market size and currency risk. (1time Holdings, 2010; South African Airways, 2014; Comair Limited, 2014; Hedley, 2012). These factors are all external and indicate possible reasons for low-cost airline market exit. However, the business model of the airline is not considered as a possible reason for a low-cost airline’s exit from a market. Johnson, Christensen and Kagermann (2008) stated that the business model has four key components and, when these components are combined, they deliver value. These components are customer value proposition, profit formula, key resources, and key processes. Using the components provided by Johnson et al (2008) as a basis for the theoretical model, the study aimed to investigate key factors that enable or inhibit a disruptive innovation, such as a low-cost airline, in an emerging market like South Africa, and propose a conceptual model (that will be empirically tested in a subsequent study) for sustainability within the context of disruptive innovations, such as a low-cost airline, in a developing country setting. Five managers of leading low-cost airlines and airline consulting firms in South Africa were selected using judgmental sampling method and were requested to participate in separate individual in-depth interviews. The data from the interviews was analysed using the Glaserian coding method. Based on the data analysis, three themes were developed. These themes were: the business model, business model evaluation and external factors. From the themes, a conceptual model was developed. The model alleged that specific elements of the airline business model (the organisation, the product, costs and cash sources) have a possible influence on the competitive advantage of an airline while the competitive advantage of an airline has a possible contribution to its sustainability. / MT 2018

Thesis (MBA)--Stellenbosch University, 2004. / ENGLISH ABSTRACT: This qualitative study is anchored on Jim Collins' business bestseller entitled, "Good to Great: Why Some Companies Make the Leap ... & Others Don't". It draws on its main business paradigms and models designed to help firms to make the quantum leap from not only being "good", but to become "great" world class performers and brands if they follow his dictums and business advocacy in overcoming obstacles and archaic business thinking. I have chosen for this dissertation, South Africa's latest low~cost carrier (Lee), "I Time", which has just entered this lucrative but highly competitive aviation industry dominated by SAA and with a small market share fought over by Kulula, the very first Lee challenger. It is a 000- empirical case study as it is focused on 1 Time and with a solo interview drawn from Glenn Orsmond and augmented by research data glimpsed from the company and also the media and other sources. After the introduction and overview, from Chapter 3 onwards, in each of the chapters, my approach is to highlight the Collins key business models [and in some cases, interspersed with other models drawn from other business writers] that help companies to migrate from good to great covering such determinants as leadership, corporate culture, human asset, technology, competitive strategies and so on. This is then interwoven with the strategic thoughts of Glenn Orsmond, the CEO of "1 Time" low·cost budget carrier whom I managed to interview for this thesis and supplemented with my own research inputs and analysis. I conclude this study with highlights and recommendations as to how "I Time" can achieve this long-term objective, as it is a new entrant and challenger, hence riding the learning curve and competing with the traditional carrier, SAA as well as Kulula, the major Lee. The challenge now is for 1 Time to enter into the "Good" loop and then take drastic as well as incremental steps to migrate to "Great," the highest aspiration for companies that are prepared for long term survival built on a lasting set of strategies. Collins has termed good as the nemesis of great and thus entrepreneurs and CEOs need to have a deep understanding of the underlying principles and determinants in their great leap forward by thinking aloud that good is merely average. / AFRIKAANSE OPSOMMING: Die volgende kwalitatiewe studie is gebaseer op die topverkoper van Jim Collins getiteld. "Good to Great: Why some companies make the leap ... & others don't" USA: Harpers Business 2001. Die uitsprake en besigheidsbeginsels van Collins help besighede om die brug tussen "goed" en "onverbeterlik" te oorbrug. As die inhoud van bogenoemde uitsprake en besigheidverbeteringe en aanbevelings nagekom word, sal verouderde besigheiddenke en ander struikelblokke verwyder word sodat die volgende stelling van pas is. Ek het vir hierdie proefskrif "I Time", Suid-Afrika se nuutste lae koste vlug vrag draer gekies. "1 Time" het so pas hierdie winsgewende en hoogs kompeterende mark betree, wat tot dusver gedomineer is deur SAL, en 'n ander klein vlugvragdraer, naamlik Kulula, wat die eerste lae koste vlug vrag draer was. Die gevalle studie is nie gebaseer op absolute besigheidsteorie nie, maar fokus sIegs op " I Time", met 'n persoonlike onderhoud wat met Glenn Ormond gevoer is en uitgebrei is deur navorsings data wat aan my voorsien deur "1 Time" asook deur die media en ander bronne. Die benadering wat deurentyd gevolg word, vanaf hoofstuk 3, is Collins se sleutel besigheidsmodelle uit te lug en te koppel met [in sommige gevalle, ander besigheidsskrywers se modules] wat maatskappye help om te migreer van goed na uitsonderlik en determinante soos leierskap, korporatiewe kultuur, menslike hulpbronne, tegnologie, kompeterende strategie dek en so voorts. Dit is dan geinterweef in strategiese denke van Glen Orsmond, die Hoof Uitvoerende Beampte van "1 Time" lae-koste begroting draer waar ek die kans gehad het om 'n onderhoud te voer vir hierdie proefskrif ondersteun deur my eie navorsing en analise. Ek sluit die studie af met uitgeligte punte en aanbevelings hoe "1 Time" hulle langtermyn doelwitte kan bereik, siende dat hulle die mark as nuweling betree en bekend wil wees as die nuutste aanspraakmaker in die lae-koste vlugvrag draer industrie, sal hulle bereid moet wees om die lae kurwe te moet deurloop terwyl hulle kompeteer met SAL en Kulula, die huidige hoof kompetisie in die lae-koste draer bedryf, Die ommiddellike uitdaging vir "1 Time" is om die "Goeie" situasie te betree en dan met inkrimentele stappe te migreer na die "Onverbeterlike" vlak, die hoogste aspirasie vir maatskappye wat voorbereid is om hulle lang termyn bestaan wat op volgehoue besigheids strategie gebaseer is te behou. Collins bepaal dat die "Goeie" vlak die wraakgodin is van die "Onverbeterlike" vlak en dat CEO's en ondernemers moet waak om 'n diep verstandhouding van die grondbeginsels en beslissende faktore in hulle tog in hulle groot sprong voorentoe en dat die "goeie" vlak moet gesien word as 'n onaanvaarbare gemiddelde prestasie.

This dissertation reports on the factors that contributed to the successful entry strategy of 1time Airline, a low cost carrier, into the South African airline industry as well as its competitive strategies within this context. Research interviews were conducted in November 2005 and research material gathered until end January 2006. Key issues include an evaluation of 1time's business model in relation to other low cost entrants as well as against material sourced through interviews with 1time Airline management, employees and consumers of the airline's product. Porter's Generic Strategies and Five Forces model are used as a framework in evaluating the airline. It is found that Nohria, Joyce and Robertson's "4+2 Formula" is effectively implemented at the airline, but that further implementation of Game Theory in terms of alliances should be investigated for continued success and sustainability.

This study attempted to establish the travel behaviours and choice criteria of the South African domestic air passenger and how they differed between low-cost carriers (LCCs) and full-service carriers (FSCs). The study was quantitative and used structured questionnaires to collect data via personal interviews. Descriptive and inferential techniques were used to analyse the data, including a binomial logistic regression to identify predictors of model choice. Analysis This study attempted to establish the travel behaviours and choice criteria of the South African domestic air passenger and how they differed between low-cost carriers (LCCs) and full-service carriers (FSCs). The study was quantitative and used structured questionnaires to collect data via personal interviews. Descriptive and inferential techniques were used to analyse the data, including a binomial logistic regression to identify predictors of model choice. Analysis showed that passengers had a limited understanding of the functioning of the models. This results in consumer perceptions and expectations being discordant with the true differences. In distinguishing between models, LCC passengers rate LCCs more favourably than FSC passengers, but both rate FSCs higher than LCCs. This shows the need of consumers to have the features and services of the FSCs. Amongst the key findings was the absolute importance of price to the passengers on both models when purchasing the ticket. The analysis showed that LCC passengers are highly price sensitive and show loyalty to the lowest price (not airline model). It was apparent that frequent flyer programmes (FFP), or linkages to 3rd party loyalty programmes, for LCCs need to be reconsidered. Younger LCC passengers especially, indicated a need for a simple FFP to receive some form of ‘reward’, as well as benefits traditionally only offered by FSCs. FSC passengers show a greater degree of loyalty and less fare sensitivity. This provides the FSCs with a degree of fare flexibility and the opportunity to move their loyal, less price-sensitive consumers up the price curve to maximise revenue. It was shown that, in distinguishing themselves from FSCs, it is important that LCCs are perceived as being more affordable than FSCs and are offering a value-for-money service. In essence, LCCs have to defend their positioning by (i) ensuring that their fares are not perceived to be as high as a FSCs and (ii) watching that the FSC fares are not declining to a level where FSCs are perceived as being as cheap as a LCC. For LCCs, brand building strategies around issues other than fare need to be devised, with attention paid to identifying determinant factors. / Business Management / D. Com (Business Management)