Are African Low-cost Operators on the Trail of Ryanair? How is their Business Model Structured with Regards to Costs, Connectivity, and Fleet Structure?

Curso: 

  • MPGI

Área de conhecimento: 

  • Gestão de Operações e Logística

Autor(es): 

  • Christopher Robert Nowak

Ano: 

2019

This paper examines the business models of Sub-Saharan African low cost carriers with regards to costs, connectivity and fleet structure in an effort to find out to what extent they exhibit the peculiarities of a classic-case LCC business model within these three dimensions. This is done through a comparison with other airlines from the Southern Hemisphere and with Ryanair as prime example for a ‘pure LCC carrier’. In total, nine airlines from four continents have been examined by using an exploratory framework that builds on the Business Model Canvas and the Product and Organisational Analysis. The central challenges of LCCs in Sub-Saharan Africa remain the strong presence of nonAfrican airlines on the continent, a relatively small middle class, high cross-border tariffs and regulation, rapid and uneven market shifts, a poor safety record, as well as a weak state of the general infrastructure. The sampled African airlines tended to perform similarly to classical LCCs in terms of fleet structure, but exhibited higher costs and a lower degree of connectivity. These peculiarities could indeed give reason to the coining of the term ´African LCC business model´. Sub-Saharan African airlines should pursue a slow and organic expansion strategy that includes improving their seating density, having a lean, but modern distribution system, and choosing routes where the level of regulation is low. They have the potential to fill gaps that other transport providers previously failed to close. Similarly, it is of great importance for international and African academic institutions, think tanks and research organisations alike to generate grand-scale cross-country socio-economic and transportation data. This will give decision makers an overview of structural realities and enable them to begin to seek environmentally friendly on-ground solutions that might not be visible at first.

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