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

M.Comm. / The development of aviation in the 20th century presented a new mode of transportation within South Africa. Soon it was recognised that air transportation would play an important role in the development of South Africa, as the country was ideally suited to it due to favourable weather conditions and relatively long distances between larger community settlements. Air transportation also presented a new form of competition to an existing mode of transport - railways. The interest of the public in air transportation was soon recognised and control applied in various forms. These included legislation, regulations, conditions to licenses as well as contractual provisions of agreements. Two forms of control over air transport developed, namely: air navigational (or technical and operational) aspects; and economical / commercial aspects.

Thesis (MBA)--Stellenbosch University, 2001. / ENGLISH ABSTRACT: This study is concerned with the analysis of the factors that contribute to the viabililty of the airline industry. The viability of the airline industry in Africa is the subject of debate amongst African airline executives, governments and potential investors. The debate is a complex one because of the lack of reliable financial data from the airlines themselves. Governments are still financing airlines and it is therefore difficult to assess and evaluate airline viability on the basis of available financial information. This study project describes the industry as a whole, assesses the current situation and identifies an airline statistic that is closely related to airline profitability. The macro economic factors, social and political factors set the framework for the industry. The current situation does not look positive for Africa at that level. African governments, executives and airline organisations are aware of the problems, but an approach to addressing them is still the subject of discussion. The critical success factors of an airline revolve around the management of the balance between revenues and costs. In this case, the load factor was found to be a critical variable. The role played by the load factor in profitability is modelled using correlation and regression techniques. It could be established from the USA data that high regulation distorts the relationship between the load factor and profit. However, when the industry is deregulated and market forces determine the product, price and demand, the load factor has been found to play an important role. A break-even load factor was computed using the statistical techniques. This was then used as a basis for analysis. Although Africa meets the break even load factor, the trend is not improving in line with the America and Europe. It is recommended that the African airline industry need to improve its viability by deregulation, privatisation, forming strategic alliances and product development. / AFRIKAANSE OPSOMMING: Hierdie studiestuk behandel die oorsig van die faktore wat bydra tot die lewensvatbaarheid van die lugdiensbedryf in Afrika tans 'n onderwerp van bespreking tussen Afrika-Iugdiensverteenwoordigers, regerings en potensiele beleggers. Die debat word bemoelik as gevolg van die gebrek aan betroubare finansiële inligting van die lugdienste self. Meeste lugdienste in Afrika word deur regerings finansiel ondersteun en bedryf met die gevolg dat bedryfsresultate moeilik bekombaar is. Dit is dus moeilik om lugdienste se lewensvatbaarheid te bepaal as gevolg van die gebrekkige finansiele inligting. Hiedie studiestuk beskryf die lugdiensbedryf as 'n geheel, ontleed die huidige omstandighede en identifiseer lugdienstatistiek wat lugdienswinsgewendheid similleer. Die makro ekonomiese -, sosiale - en politiekefaktore wat die raamwerk vir die bedryf uitmaak, lyk op hierdie vlak nie positief vir Afrika nie. Regerings in Afrika, uitvoerende besture en lugdiens-organisasies is van hierdie probleem bewus, maar die aanspreeklikheid van hierdie probleem is steeds 'n onderwerp van bespreking. Die kritiese sukses faktore van 'n lugdiens rus om berus op die bestuur van 'n balans tussen inkomste en uitgawes. In hierdie geval is bevind dat die sitplekbesettingsfaktor die kritieke variant is. Die rol wat die sitplekbesettingsfaktor in winsgewingheidsmodelering speel, word deur korrelasie en regressie tegnieke weerspieël. Dit is uit Amerikaanse data vasgestel dat die mate van regulering van lugrederye in Afrika die verhouding tussen sitplekbesettings en wins, verwring. Sodra die bedryf gedereguleer word en markkragte die produk, prys en aanvraag bepaal, is bevind dat die sitplekbesettingsfaktor 'n meer verteenwordigende aanduiding van winsgewindheid weerspieel. Met die gebruik van statistiese tegnieke is 'n gelykbreek sitplekbesettingsyfer bepaal, wat hierdie grondslag van die analise is. Alhoewel lugrederye in Afrika die gelykbreek sitplekbesettingsyfer behaal, verskil dit van die verbeterende tendens in Amerika en Europa. Dit word aanbeveel dat die lugdiensbedryf in Afrika sy lewensvatbaarheid verbeter deur middel van deregulering, privatisering, vorming van strategiese bondgenootskappe, en die ontwikkeling van 'n beter produk.

The study involves, describing the nature of the airline industry, especially in the African situation with some of its problems being high airfares and inaccessibility within the continent. In order to address these problems an analysis of the minimal operating costs and challenging factors affecting route costs needs to be carried out. The aim of the study was to develop from first principles, a cost model to calculate operating costs along any route in the African continent. The costing of an airline service is reviewed through existing literature and a compilation of the structure, components and their equations and default values was done. A model structure to calculate these operating costs on a route is set up, while data is analysed to provide inputs to the model. The model is then applied to carry out an analysis of the type of service provided in terms of costs and service quality. Africa specific data is then included in the model in terms of passenger trips and sector distances and these are embedded into the model. The main conclusion drawn from the study was that this model could be used to design optimally an airline service based on operating costs using existing passenger demand and sector distance. The model was applied to a route within Africa and results showing how smaller capacity aircraft even though limited by maximum range are the most economical to run along routes when the frequency of flights is high. / Dissertation (M Eng (Transportation Engineering))--University of Pretoria, 2006. / Civil Engineering / unrestricted

Thesis (MBA)--Stellenbosch University, 2003. / ENGLISH ABSTRACT: The emergence of low cost airlines (LCAs) has attracted attention from passengers, competitors, the public, and researchers alike. It seems prodigious that LCAs prosper in today's time of economic downturn and are therefore able to counter the industry's trend. lATA's member airlines have accumulated losses of $31 billion since the beginning of the new millennium. Furthermore, industry icons such as American Airlines and British Airways are fighting for survival while some, namely Air Canada, are on the edge of bankruptcy: a fate which others, like Sabena, have not been able to escape. However, the low cost business model has triumphantly entered the aviation market since the deregulation of the markets in the U.S. in 1978. Low cost airlines like Southwest Airlines and Ryanair not only achieve double-digit profit margins, but also have the highest market capitalisation of the industry. This thesis examines the reason for the success of LCAs in the U.S. and EU. LCAs operate with a much lower cost base than most carriers, especially the major hut-and-spoke (H&S) airlines. The low cost business model aims at increasing both aircraft and staff productivity. It also simplifies the sequence of operations workflow and pricing structure. The thesis gives special consideration to the cost structure of LCAs. The advantages of LCAs lie within the areas such as labour, seat density, and distribution. The second objective of this thesis is to evaluate the development of LCAs and consider the implications for the European transport industry. Whereas American LCAs have operated for more than twenty-five years, the boom of their European counterparts did not commence until the end of the 1990s. Ryanair and easyJet have growth rates of more than thirty percent. The author agrees with the expectations of aviation experts that LCAs will grow until they serve approximately a quarter of the market; hence, the business model of low cost is sustainable. However, only three to four low cost airlines will survive the fierce competition in Europe. / AFRIKAANSE OPSOMMING: Die dringendheid van lae koste lugrederye (LKL'e) het die aandag getrek van passasiers, mededingers, die publiek en navorsers. Dit is vreemd dat LKL'e floreer in die huidige ekonomiese afswaai en gevolglik die tendens van die industrie teenwerk. Lugrederye, wat lid is van "lATA" , het sedert die begin van die eeu verliese gelei van 31 biljoen dollar. Daar teenoor is industriele ikone soos die Amerikaanse en Britse lugdienste (American Airlines and British Airways) besig om te veg vir oorlewing, terwyl ander soos die Kanadese lugdiens (Air Canada) op die grens van bankrotskap is: 'n ramp wat sommige soos Sabena nie kon vryspring nie. Sedert die deregulering van die lugvaart in die VSA in 1978 het die lae koste besigheidsmodel egter die mark triomfanlik betree. Lae koste lugrederye soos SuidWes lugdiens en Ryanair ervaar nie alleen dubbel-syfer wins-marges nie, maar het ook die hoogste mark-kapitalisasie in die industrie. Hierdie verhandeling ondersoek die redes vir die sukses van LKL'e in die V.SA en E.U. LKL'e werk teen 'n baie laer koste basis as die meeste vervoerders, veral die belangrikste "hub-and-spoke" lugrederye. Die doel van die lae koste besigheidsmodel is om beide die vliegtuie en die personeel se produktiwiteit te verhoog. Dit vereenvoudig ook die volgorde van prosedures, werkvloei en prysstruktuur. Hierdie verhandeling gee spesiale aandag aan die kostestruktuur van LKL'e. Die voordele van LKL'e lê op die gebied van arbeid, sitplekplasing en verspreiding. Die tweede doel van hierdie verhandeling is om die ontwikkeling van LKL'e te evalueer en te kyk na die invloed op die Europese vervoer-industrie. Die Amerikaanse LKL'e word reeds vir meer as vyf-en-twintig jaar bedryf terwyl hulle Europese eweknie nie 'n opswaai voor die einde van die 1990's ervaar het nie. Ryanair en easy Jet het 'n groei getoon van meer as 30%. Die argument is dat volgens lugvaartkundiges die LKL'e sal groei totdat dit ongeveer 'n kwart van die mark bedien; daarom sal die lae koste model die beste oorleef. Nogtans sal slegs drie of vier van die lae koste lugrederye egter die hewige kompetisie in Europa oorleef.

The airline industry has grown rapidly over the past few decades, recording a ten-fold rise in passenger numbers and a fourteen-fold increase in cargo volumes. This growth has created overwhelming value to airline passengers, employees, suppliers and the broader economy. Unfortunately, this industry has been affected by terrorism attacks, wars, revolutions, pandemic fears, earthquakes, volcanoes, failing economies and skyrocketing fuel prices all of which have negatively impacted on profitability and resulted in intense competition. Consequently, airlines have spent the last decade in survival mode having to adapt to harsh changes. Air Zimbabwe, a state-run organisation which operates in this highly regulated and turbulent industry, is faced with numerous micro and macro environmental challenges and has been purposively selected for this study. According to company statistics, the airline’s annual passenger uplifts have declined from a peak of over 1 million in the 1990s to less than 200 000 in 2011, with revenue generation declining in correlation. Whilst Air Zimbabwe has experienced depressed demand for its services, competitor airlines are recording brisk business. The aim of this study was to investigate how a struggling organisation, which operates in a turbulent environment, can improve its competitiveness and profitability by better understanding the impact of industry role players and adapting organisational strategies to industry variations. This study examined, from the point of view of the industry players themselves, the extent to which customers, suppliers, competitors, regulatory authorities, substitute products and new entrants have impacted on the competitiveness and profitability of the airline. Major findings reveal that an organisation cannot operate in isolation and be competitive or profitable, but constantly needs to analyse the industry environment in which it operates in and to amicably interact with other industry role players. The research outlines the need for competition in certain areas and cooperation in others. / Business Management / M. Com. (Business Management)

Doctorat en sciences sociales, politiques et économiques / info:eu-repo/semantics/nonPublished

The US airline industry is going through a period of consolidation through mergers between leading airlines. A number of recent mergers have been approved by the Antitrust Division of the Department of Justice (DOJ) based on the presence of Southwest Airlines in merger-affected markets. In doing so, the DOJ makes a key assumption that Southwest is unresponsive to the reduced competition when its competitors merge. We find that Southwest raised fares more in markets where Delta/Northwest and US/America-West used to operate jointly between 2005-2010. However, Southwest's fares either decreased or rose by less if facing direct or adjacent competition from a low-cost carrier (LCC). Furthermore, Southwest is now merging with AirTran Airways, its biggest LCC competitor. This implies that the DOJ should not rely on Southwest Airlines as a post-merger deterrent to fare increases. / Graduation date: 2012