Airline Proposal: Designing Business Model, Route Network & Fleet

This report outlines a proposal for designing a new legacy airline, focusing on key aspects such as the choice of business model, advantages and disadvantages of legacy airlines, the main base of operations, route network and destinations utilizing models like hub and spoke, fleet composition, use of ancillary revenues, and the importance of schedules. It highlights the characteristics of legacy carriers, including their global route networks, broad hubs, diverse fleets, and sophisticated product offerings like first-class cabins, club lounges, and in-flight entertainment. The report also discusses the evolution of legacy airlines in response to low-cost carriers and the impact of the pandemic on business and leisure travel. The proposal considers the need for efficient route planning, cost management, and service differentiation to compete effectively in the airline industry.

AIRLINE PROPOSAL

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
1. Choice of business model........................................................................................................3
2. Main base of legacy airlines....................................................................................................4
3. Route network and destinations...............................................................................................5
4. The airline’s fleet.....................................................................................................................6
5. Use of ancillary revenues.........................................................................................................7
6. Schedules.................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
The airline industry includes the diverse range of the businesses which are known as the
airlines that provides the sir transport services for the purpose of the payment to customer or the
partners of the business. These kind of the air transport services are offered for the cargo as well
as the human travellers and are the most popularly used and provided with the help of the jets
while some of the airlines also used the helicopters. The airlines may provide the chartered or the
scheduled services and the airline industry creates the significant portion of the enlarged travel
industry offering its customer with the facility to buy the seats on flights and to travel to multiple
parts of the world (Heshmati, and Kim, 2018).
This report will discuss the type of the business model, the pros and cons of it, the main
base of the airline, the route network and the destinations, the fleet of the airline, the use of the
ancillary revenues, the importance of the schedules and their impacts and all these factors are
related with the design of the new airlines.
MAIN BODY
1. Choice of business model
Legacy Airlines
The aim of the report is to design a Airlines in which the preceding national airline that has
almost become privatized from the past years. Developing this kind of the airline model have a
large fleet that is quite multiplied as they are travelling at all kind of routes beginning from the
long haul to the short one and also including the regional flights. These business models also
have the advantage of share and also other aviation services like catering companies,
maintenance facilities and the hub airports (Hunter, 2019). The legacy airlines have several
advantages such as
 Better reputation that offer the good business with the governmental and the corporate
clients.
 Long haul journeys with a large set of connecting flights.
 Enhanced comfort with the help of baggage charges and board meals that are involved in
the airport lounges and the main fare for the first class passengers and the business.
 Very differentiated fares beginning from the low cost and ending with the costly business
class and the first class seats.

 The loyalty programs that provides the reasonable rewards for the travelling which is also
convenient.
 The slowly modifying and the reliable timetable that offers the passengers with better
level of security along with the flight connections that they need (Parker, 2020).
The legacy airlines are also known as the standard of service and the amenities. These are also
known as the full service carriers and provide more full and enhanced service that the low cost
carriers. The legacy carriers are the members of the airline alliances that execute over the
transoceanic global route structure and the domestic one also, provide improved cabin services
consisting of meal service along with in-flight entertainment along with their own airport
lounges. The legacy carriers will also provide various classes of service such as the business,
economy and the premium class service and likely to offer the developed flyer programs that
happen frequently .The legacy carriers will also utilise the hub along with the spoke route
network and then will have a differentiated and large fleet with numerous kind of aircraft.
Although the legacy carriers are modifying their structure and also their fleet to move into the
competition that the low cost carriers came into the industry. The definition of the legacy is
having to perform something especially which is something undesirable and is being carried over
from the earlier system and business operation. This model of airline revolves around the hub
and the spoke network along with the corporate structure. These kind of the airlines most
importantly includes the lounges, business class, first class, alliances, perks in the cabin such as
food, better service and beverage, frequent flyer programs, limited manufacturers out of which
majority of the air crafts are being manufactured by The Boeing company and the Airlines
Industries (Wensveen, and Leick, 2019).
2. Main base of legacy airlines
These kind of the airlines have the full service and are also known as the legacies. Most of the
legacy airlines have its brand recognition across the globe due to their vast network. These
legacy carriers are based in big hubs and are geographically located in order to increase the
efficiency in providing the route maps for interacting with the passengers from one particular
location to another one. Having multiple hubs is offering benefits to the operations of the legacy
carriers and also it provides various range of alternatives for the travellers. With increased
number of the hubs, these legacy airlines provides an increased robust schedule with different
alternatives of flight for the passengers. The legacy carriers provides complete service consisting

the regular flier programs which consist the upgrades and the access of the lounge on the basis of
status(Jarach, Zerbini, and Miniero, 2020). Moreover, these airlines also have the business or the
first class seating, in-flight entertainment, in-seat power ports and also Wi-Fi for the purpose of
charging the personal devices. Meals are also being provided on the longer flights though this
kind of the service is decreased because of the pandemic on a temporary basis. The passengers
who travels through the legacy carriers get the advantage from the extra or the additional
amenities that are being provided in those cabins.
The large companies are in the favour of the legacy carriers because of their expanded
networks and the ability to improve and emphasize on the frequency. As the business travel
decreased at the time of pandemic the legacy carriers also have adapted to the networks to take
into account more leisure travellers. In the year 2005, there were about four legacy airlines and
as of year 2020, there were five airlines that included the Alaska airlines, American airlines,
delta air lines, Hawaiian airlines and the united airlines. In the mid of the 20 century, the main
four domestic airlines were the TWA, united, eastern and the American. The major trend which
is being emerging in the legacy airlines is that of the outsourcing of the short haul and the
medium haul flights along with the regional airlines. The legacy carrier is not generally used
outside the United States and they offer the increased and the efficient quality services as
compared to the low cost carrier. Most of the legacy carriers are also the part or the members of
the airline alliance by which they are ready to offer the services to the passengers of each other.
The legacy carriers are also included the cabin services, meal services and the entertainment in
flight. After the deregulation act, most of the legacy carriers have been merged with the some
other kind of the carriers and those that existed now have the advantage from the fact that the
low cost ones do not have the advantage of the large cost as compared to other big legacy
carriers.
3. Route network and destinations
In the designed airlines the route network and distribution system in the airline industry is
defined as the network system which consists of route which helps in showing the spatial
distribution of air transformation. A route network consists of various nodes which are called
airports and there are edges which connect the two different airports. The airline industry is
basically divided into three categories which are legacy airlines, low cost carriers and the last one

is ultra-low cost carriers. Route network and distribution system plays a very important role in
making the new airlines as it helps in identifying the routes and will also able to find the airports
which are connected with one another(Lohmann, and et.al , 2020). For this there are many
models which are used in the industry like hub and spoke model, point to point model, W pattern
etc.in the hub and spoke model is a types of distribution model which consists of a centralized
“Hub”. Everything has been sent to the hub or received from the hub for distributing anything to
the consumers. The airline operates out of a centralized hub and use regional airports named as
spokes from which the flights have been offered. The airports with smaller regions like the
sponsors transport the passengers to the large region centralized airports and from there a
connecting flight is there who take them to the another airport and the point to point model is
quite opposite of this model as in point to point model there are multiple roots and flights are
gone from point A to point B but the transportation cost of this model is much higher as compare
to the spoke and hub model. There are many benefits of using these model in designing a new
airlines and hubs like it provide economies of scale on connections, economies of scale on the
hub and the last one is economies of scope in the use of shared transhipment facilities. Similarly
the UNWTO/IATA destination tracker is one of the tracker used in the airline industry and it is
the one of the first global dashboard on air travel restrictions and health related travel
requirements at the destination (Berechman, and Shy, 2021).IATA is an affiliated member of the
world tourism organization. The tracker includes many things like health indicators, current
travel regulations, destination specific restrictions like attractions, events, facilities,
accommodation, food and drinks , transit through the country, public transport and stay at home
requirements and also the health requirements like providing the health protocols and mask
policies. Basically it is responsible for the promotion of responsible, sustainable and universally
accessible tourism.
4. The airline’s fleet
In the report the business model which have been used for designing the new airlines is legacy
airlines business model and this type of business model is also known as network airlines. This is
one of the mega brand that have been there in the industry since the beginning of profitable
flying. There are three types of network airlines which are American, delta and united and these
three are available in the United States. This is one of the most evolved airlines and have a global

route networks, broad hubs, huge feet’s and various types of aircrafts (Clark,2020). This network
airlines offer many sophisticated products to the guests and also to the international travellers.in
this there are many facilities that have been provided to the guests like providing first class
cabins, club lounges, in-flight entertainment and also Wi-Fi facility have become one of the core
product for this type of business model. The main characteristics of legacy airlines is they
provide a wide range of services for instance they provide first class and business class seating, a
frequent flyer program and also provide very exclusive facility of airport lounges. Many legacy
airlines are connected with the other airlines and are the member of an airline alliance by which
they provide a service of connecting the passengers of their flight with the other flight’s
passengers. There are multiple ranges of seats in the airlines which ranges from 50 to nearly 400
seats and also in just one stop they provide a facility of Asheville to shanghai. There is a new
common in the legacy airlines which helps in providing short and medium haul routes so as to
adopt low cost features. This is a type of price discrimination adopted by the airlines which
aimed in segmenting the market according to the needs and requirements of the customer to pay
for the airlines. Also the legacy airlines deals with the establishment of subsidiaries for the low
costs effect (Díaz-Ramírez, Huertas, and Trigos, 2018.). Some of the airlines are also setting up
the partnership with the low cost operators in order to reduce the cost of the airlines. Earlier there
were five legacy airlines but at present since 2020 there are five airlines which are present in the
legacy airlines and these are as follows Alaska airlines, American airlines, delta air lines,
Hawaiian airlines and the united airlines.as compared with the low cost carriers the legacy
airlines have more and higher revenue per RPOM , load factor and average length of flight
stage .at present for attracting the passengers the legacy airlines is advertising things like
providing a facility of “basic economy” fare that is even more comfortable to tickets as
compared to the low cost carriers. All these are some facilities provided by the legacy airlines for
customer satisfaction and can be used in making the new airlines for making it more significant.
5. Use of ancillary revenues
In designing the new airlines the ancillary revenue is defined as the revenue or profit earned by
the non-ticket sources such as baggage fees and also from on board food and services.it has been
estimated that the ancillary revenue in 2018 was $92.9 billion across the world. The newly
designed airlines can use the method of product differentiation and therefore increase the

revenue by “unbundling” the experience of the travel by charging separate fees for the service
provided by the airline industry .the revenue generated by the airlines is not the core product or
service of the company and this is the revenue earned by the company which is different from
the main services or products provided by the company(Hao, 2019).in the airlines which is in the
designing phase the ancillary revenue has been categorised into three important components
which are attached products, partnerships and the last one is loyalty. The first one is baggage
from which the industry earn the ancillary revenue as now a days most of the airlines are
charging for the overweight bags. In 2010 the spirit airlines also start charging for the carryon
bags followed by the allegiant airlines and frontier airlines in the coming years. The next one is
seat selection as it includes premium type of tickets for the selection of seats. Also the airlines
will provide branded seat zones like lie flat, business class, first class, front of aircraft and many
more.
The ancillary revenue in the newly designed airlines also includes the charges of changes and
cancellation like flight modifications, flight cancellation and name change , also the booking
changes come under the ancillary revenue like call centre, award redemption fee charged by the
passengers, group booking fee, web booking fee and many more and the last one is additional
charges which include the priority boarding, priority security, priority bag drop , priority check
in and priority bag return facility(Waguespack, and Curtis, 2019).all these are the factors which
are charged by the passengers in order to earn the ancillary revenue and also the vacation
packaging, loyalty programs and other partnerships like travel insurance, in-flight entertainment
and Wi-Fi , food and beverages comes under the ancillary revenue and this also provide a great
flexibility in making a good journey for the traveller as well as to the airlines.
6. Schedules
In designing the airlines the flight scheduling is one of the most important and central element
process in planning the airlines strategy and the aim of this concept is to optimizing the
deployment of the airline’s resources for meeting the demands and providing maximum
profit(Yu, and Yang, 2018). Basically it is a structured planning procedure in which all the parts
of the airlines comes and participated in the construction and evaluation of the schedules by the
help of applying exact mathematical programming alogorithms.the scheduling process makes the
flight timing more volatile and also helps in making the passengers to arrive on time or early for

the flight . The reason behind scheduling in making the new airlines is to provides proper timing
to the internal departments for doing their work as due to weather changes and climate issues
they have to face issues and due to which the flight gets delayed.it has been observed that
average flight arrives systematically on the schedules time after using the concept of scheduling
in the legacy network airlines. Similarly crew scheduling is the process in which crew members
are assigned into the flights as high level of skills and experience is required to run and maintain
the aircraft. The design of new airlines also cover the flight crew scheduler and he is the one who
is responsible for developing and communicating the schedule to the passengers for all the
flights(Barnhart, Jiang,and Marla, 2020). In designing the new airlines there are 50 to nearly 400
seats so in total four or five crew members are required for managing all the operational work
within the flight.in the airline scheduling there are many internal factors that have to considered
like the equipment maintenance, crews, facilities, marketing factors and also include some
external factors like the variation in the weather pattern which affect the timing of the flight.

CONCLUSION
The report consists of all the necessary information required in designing a new airlines like it
provided the background of the strategy.ne of the very famous business model used in the airline
industry have also been discussed in the report which is legacy network airlines and the benefits
of the model and the airline’s fleet s well. The ancillary revenue earned by the legacy network
airlines is also elaborated in the report and the scheduling concept including the crew member
and seasonal changes in the airline industry.

REFERENCES
Books and Journals
Heshmati, A. and Kim, J., 2018. Introduction to efficiency and competitiveness of International
Airlines. In Efficiency and Competitiveness of International Airlines (pp. 1-14).
Springer, Singapore.
Hunter, L., 2019. Low Cost Airlines: Business Model and Employment Relations. European
Management Journal, 24(5), pp.315-321.
Jarach, D., Zerbini, F. and Miniero, G., 2020. When legacy carriers converge with low-cost
carriers: Exploring the fusion of European airline business models through a case-based
analysis. Journal of Air Transport Management, 15(6), pp.287-293.
Wensveen, J.G. and Leick, R., 2019. The long-haul low-cost carrier: A unique business
model. Journal of Air Transport Management, 15(3), pp.127-133.
Lohmann, G., Albers, S., Koch, B. and Pavlovich, K., 2020. From hub to tourist destination–An
explorative study of Singapore and Dubai's aviation-based transformation. Journal of Air
Transport Management, 15(5), pp.205-211.
Berechman, J. and Shy, O., 2021. The structure of airline equilibrium networks. In Recent
advances in spatial equilibrium modelling (pp. 138-155). Springer, Berlin, Heidelberg.
Clark, P., 2020. Buying the big jets: fleet planning for airlines. Routledge.
Díaz-Ramírez, J., Huertas, J.I. and Trigos, F., 2018. Aircraft maintenance, routing, and crew
scheduling planning for airlines with a single fleet and a single maintenance and crew
base. Computers & Industrial Engineering, 75, pp.68-78.
Hao, E., 2019. Ancillary revenues in the airline industry: Impacts on revenue management and
distribution systems (Doctoral dissertation, Massachusetts Institute of Technology).
Waguespack, B.P. and Curtis, T., 2019. Ancillary revenue and price fairness: An exploratory
study pre & post flight.
Yu, G. and Yang, J., 2018. Optimization applications in the airline industry. In Handbook of
combinatorial optimization (pp. 1381-1472). Springer, Boston, MA.
Barnhart, C., Jiang, H. and Marla, L., 2020. Optimization approaches to airline industry
challenges: airline schedule planning and recovery. In Dagstuhl Seminar Proceedings. Schloss
Dagstuhl-Leibniz-Zentrum für Informatik.
Vancouver