New Breakthrough in the Airline Industry: Business Model Based on Sharing and Membership Economy
by Gamze ÖZDEMİR
Did you know that in the ever-evolving airline industry, airlines are trying to take steps such as developing different airline business models to respond to the layered needs of customers and the changing demands in the competitive landscape? These business models include traditional airline carriers (FSNC), regional airline carriers (RAA), low-cost carriers (LCC), and charter carriers that operate for tourism purposes. Airlines have focused on a specific business model as part of their strategies, which differ in terms of flight range, price, comfort, and cost. In this context, it is possible to explain airline business models as follows: Traditional airlines, also referred to as full-service carriers, operate globally and cater to a wide range of geographies. Low-cost airlines, as the name suggests, are carriers that focus on cost and serve price-sensitive customers. The aspect that distinguishes them from traditional carriers can be described as providing additional services, such as in-flight catering, separately from the ticket price for a fee. Charter Airlines are typically businesses that offer package or single services between two tourism regions for tourism purposes, either to a designated tourism center. Finally, regional airlines can be defined as carriers that have aircraft with a capacity of 9-99, providing transportation from smaller settlements to larger centers.
A New Business Model in Aviation and Its Development During Covid-19
Thanks to innovations rapidly entering the dynamic aviation sector, passengers can easily access services that meet their demands. Over time, different business models have emerged to respond to various demands. The best example of these innovations has started to be based on sharing and membership economies. This innovation, which follows a strategy similar to Blabla Car, aims to develop a platform that enables passengers and suppliers to connect at a reasonable price, facilitating their operations and fostering a common ground. The first and best example of this business model is NetJets, established in the United States in 1964. NetJets, which emerged to provide private jet services to customers for the first time, brought along VistaJet, allowing the first and only global aviation company to give business people a significant advantage. It is believed that this type of business model, which saw an 82% increase in Turkey in 2018, will continue to grow, and Turkish business people will make a significant contribution to its development.
Similar to these platforms, a step was taken in Turkey in 2016, and the Jetforme platform was established. This platform connects passengers and jet owners, offering the opportunity to create a new flight or join an existing flight with the participation of 1,000 jet owners for passengers in over 40 countries. At the same time, with the Jetforme application, users can earn points and use the points they earn as discounts to participate in events organized by Jetforme. Looking at the development of the industry over time, the “The Road To 2025” report published by Cognizant in 2017 indicates that sharing economy-focused models began in the aviation sector with companies like “Jettly and JetSuite,” and examples of membership economy emerged with initiatives like “Surf Air and Airly.” Furthermore, the report predicts that by 2025, the membership economy will be utilized much more effectively in the aviation sector than the sharing economy.
During the Covid-19 period, it is clearly observable that demand for this type of business model increased as people tried to maintain social distance from those around them. The virus, which was first seen in China, led to the cancellation of most flights to China during this period, causing many high-income individuals to turn to the jet sector. Similarly, during the early 2000s when a pandemic occurred, it is noted that travel was easier due to governments implementing less strict policies than they do now for this rapidly developing sector. According to a statement made by a senior executive from Paramount Business Jet in an interview regarding the pandemic period, there is an insufficient number of employees alongside the increasing demand, which is attributed to the restrictions in China during the Covid-19 period. This is because China banned flights in an effort to change the course of the pandemic, and people began to meet their flying needs through the emerging business model of private jets. Considering the innovations made in this field and the development of the sector, it can be said that the sharing and membership market will grow in the coming years. However, the extent to which government restrictions will affect this will be seen in any potential future pandemic situation.
References
Kuyucak Ş. F., & Şengür Y. (2017) Havayolu İş Modelleri: Kavramsal Bir Analiz https://www.researchgate.net/profile/Ferhan-Kuyucak-Sengur/publication/309533631_Havayolu_Is_Modelleri_Kavramsal_Bir_Analiz/links/5fad508ca6fdcc9389ab717e/Havayolu-Is-Modelleri-Kavramsal-Bir-Analiz.pdf
Yavaş, V., & Dedeoğlu, A. Ö. (2021). Hava Taşımacılığında Değişen İş Modelleri. Akıllı Ulaşım Sistemleri ve Uygulamaları Dergisi, 4(2), 120-133.
Duncan, A., & Natarajan, B. (2017). The future of air travel: Eight disruptive waves of change: The road to 2025. Cognizant. https://www.cognizant.com/whitepapers/the-future-of-air-travel-eight-disruptive-waves-of-change-codex2566.pdf
BBC News (2022). https://www.bbc.com/turkce/haberler-dunya-51544392
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