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you will duplicate a portion of airline economics research conducted by Klophaus, Conradly, & Fichert (2012) who compare the business models of several low-cost carriers to the archetypal low-cost carrier business model originally developed by Southwest Airlines. They find considerable deviation from this model concluding that some airlines have incorporated aspects of the full-service, network carrier (FSNC) business model making these carriers a hybrid of the two models. You will choose a U.S. low-cost carrier (LCC) and conduct a similar analysis. (The restriction to U.S. airlines is due to the limited financial and operational data available for many foreign carriers.) From your research, you will determine if your selected airline closely follows the archetypal LCC business model or is more of a hybrid carrier incorporating aspects of both the LCC and FSNC business models. Klophaus et al. (2012) utilize several criteria that characterize the LCC business model. Table 1 below draws from their research but has been revised for this assignment.

As with every academic paper, begin with an introduction that tells your reader the subject of the paper, explicitly states the objective, and lists the topics covered.

Next, concisely compare and contrast LCC and FSNC business models. You may wish to present your findings in a table, but provide sufficient information so that your reader can understand the comparison.

Then, for each of the criteria in Table 1, assess your airline’s adherence. Rate the airline on a scale of 1 to 3 where 1 is strict adherence to the criteria and 3 indicates the adoption of the FSNC model. Cite the sources of all information and data used in the analysis. Summarize your findings in a form similar to Table 2 in Klophaus et al (2012) so that your reader can easily see the results of your analysis.

Finally, use the data from the Aviation Week Intelligence Network (AWIN) to compare your chosen airline with a competing FSNC. AWIN is available in the Hunt Library Research Databases. See the last section of this assignment for guidance on using AWIN.

Compare the CASM. The LCC should have significantly lower CASM (otherwise it is not a low-cost carrier). If you wish to compare by size or scale of the airlines, ASM, RPM, departures, and fleet size are appropriate metrics. Be certain that you understand the definition and computation of each statistic. Several online glossaries are available.

In your conclusion, review your research findings. Did you find that your chosen airline closely follows the archetypal LCC business model or is more of a hybrid carrier incorporating aspects of both the LCC and FSMC business models?

Much of the required information for the assessment, such as fleet composition, route structure, product offering, etc. is available on the airline’s website. Airline websites contain lots of facts but are also intended to market the airline. Be careful to distinguish fact from marketing hype. Aircraft cabin configuration is available at Seat Guru (SeatGuru.com) (Links to an external site.) (Links to an external site.) Wikipedia may also be used for this assignment. Of course, you may also use any other authoritative sources you find helpful.

Table 1. Low-cost carrier business model characteristics

• Low average fares with a strong focus on price competition.
• A fleet consisting of a single aircraft type (there are several models of the A-320 and B-737, but all are the same type).
• Point-to-point route structure offering no passenger connections to other flights.
• Single class of service with high-density seating.
• Serving short-haul routes, often to/from regional or secondary airports (some major cities are served by more than one airport. Midway Airport, for example, is a secondary airport for Chicago).
• High aircraft utilization rates.
• Limited passenger services with additional charges for some services (e.g. onboard catering).

Follow these steps to utilize AWIN:

1. From the Hunt Library, select Research Databases and then Aviation Week Intelligence Network. Select ‘Log In’ and allow several seconds for access.
2. Select Companies and use the search block to find the airline of interest (if you should choose Delta, search using Delta Air Lines – no airlines). Select the airline. When it is returned, notice how it is classified under Business Type. Also, note the several categories of information and data available.
3. Select or scroll to ‘Financials’ to see several years of financial results.
4. Cost per Available Seat Mile (CASM) must be computed (it’s easy).

a) Copy Expenses from a chosen quarter and paste the Expenses into Excel. You may want to go back to 2019 so that the results are not skewed by the Pandemic.

b) Go to Traffic and copy ASKS (Available Seat Kilometers) for the same quarter. Paste into Excel.

c) Multiply the ASKS by 0.62 to convert to miles.

d) Divide the Expenses by miles to obtain CASM. The result is in dollars; multiply by 100 to obtain CASM in cents. The CASM should be between 5 and 20 cents.