Airlines are adjusting their 5-STAR Business Networks to the new economic reality

03 Jul 2020

As the economic centre of the world moves more and more towards its more populous nations in Asia, a number of businesses are realising that they must adjust their business models, as well as their 5-STAR Business Networks to this new reality. Take the example of airlines industry. A recent recent article in Bloomberg  explains

Seven of the world’s 10 busiest routes by passenger volume are in Asia, according to the report, with the globe’s busiest link being between the South Korean island of Jeju and Seoul, followed by flights between Sapporo, Japan, and Tokyo.

There is do doubt then that the airlines in rest of the world will have to move to get a piece of action in this growing market. Not only is the market penetration much lower in Asia than it is Europe and the US, but also lack of surface infrastructure makes it doubly attractive to fly over all those bad roads and railway tracks. The two major alliances of the airlines – Oneworld and Star alliance – are a result of an old business model which is now struggling to adjust. Qantas found a way around by making a an alliance with Emirates that could hugely benefit both the companies on trans-continental flights to and from Australia, via Asia to Europe. Lufthansa is talking about starting a low cost carrier focused on Asia. Bloomberg reported:

Air France, Lufthansa and Iberia of Spain are among former flag-carriers revamping short-haul operations in an effort to end losses and stave off the advances of Ryanair and its peers. Cologne-based Lufthansa said last month it might also establish a low-cost operation to Asia in response to airlines that have exploited the Gulf’s geographical position to grab a growing share of lucrative inter-continental transfer traffic.

As I noted in my book The 5-STAR Business Network, the changing economic reality always creates an imperative for newer business models – to survive and thrive. There is no doubt airlines will need to create much more robust and engaging business models in coming years.
What is your view on the emerging business models in the airlines industry? How can the airlines ensure their survival amid the current turmoil? Please comment below.

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