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 Introduction

 How LAN’s Three Models Interrelate
 The Challenge of Managing Multiple Models

 Distinguishing Complem...
Trying to operate more than one business model at a time
• To expand new market
• To make more efficient use of fixed asse...
Latin American Network Airlines
Latin American Network Airlines
Full service international
passenger-airline business model
Cargo-Business Model

No-frills passenger model
• Full service international passenger-airline
Two classes
• Coach Class
 Hot meals & beverages
 Multilingual personal-e...
• Cargo business model
Premium Service
• Transports high-value products
 Salmon from Chile
 Asparagus from Peru
 Comput...
• No-frills passenger model
Set out in 2007
Lower-cost Lower-overhead
No Kitchen
No meal & beverage
E-Ticket
• Maximal use of physical assets
 Increased utilization of as costly as asset as aircraft
 Change from parking to delive...
“Why doesn’t every airline do what LAN does ?”
History of LAN :
• 1994 Chilean privatized LAN -> Cueto Family
• Begun Carg...
• Additional complexity
• Complex logistic system that coordinate with cargo and
passengers.
• Additional criterion to pas...
• Greater flexibility employee
• Pilot fly even on two hours notice, more fly.
• Instituting a performance-related pay and...
Advantages using more than one business model
• Decreasing the break-even load factor
• Combining cargo and passengers
• F...
Advantages using more than one business model
• Increases barriers to imitation
• Optimizing the use of aircraft and netwo...
THANK YOU
When One Business Model Isn't Enough: LAN Airlines
When One Business Model Isn't Enough: LAN Airlines
When One Business Model Isn't Enough: LAN Airlines
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When One Business Model Isn't Enough: LAN Airlines

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When One Business Model Isn't Enough: LAN Airlines

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Transcript of "When One Business Model Isn't Enough: LAN Airlines"

  1. 1.  Introduction  How LAN’s Three Models Interrelate  The Challenge of Managing Multiple Models  Distinguishing Complements From Substitutes
  2. 2. Trying to operate more than one business model at a time • To expand new market • To make more efficient use of fixed asset and resources • To Develop new income Direct-Sell 2 Business model - DVD by mail - Streaming video services Flourishes by running 3 distinctly different operation at the same time
  3. 3. Latin American Network Airlines
  4. 4. Latin American Network Airlines
  5. 5. Full service international passenger-airline business model Cargo-Business Model No-frills passenger model
  6. 6. • Full service international passenger-airline Two classes • Coach Class  Hot meals & beverages  Multilingual personal-entertainment • Business Class  Fully flat beds Boeing 787 Dreamliner
  7. 7. • Cargo business model Premium Service • Transports high-value products  Salmon from Chile  Asparagus from Peru  Computer, Mobile phones from U.S. • Revenue 2011 Q2: 31% of total revenue
  8. 8. • No-frills passenger model Set out in 2007 Lower-cost Lower-overhead No Kitchen No meal & beverage E-Ticket
  9. 9. • Maximal use of physical assets  Increased utilization of as costly as asset as aircraft  Change from parking to delivery time • Reduction of the break-even load factor(BELF)  Combining cargo and passenger operation • Diversification of revenues and profits  Minimize risks • Reduce threat of entry by other airlines  Increased the number of routes • One-stop shop for cargo in Latin America
  10. 10. “Why doesn’t every airline do what LAN does ?” History of LAN : • 1994 Chilean privatized LAN -> Cueto Family • Begun Cargo business with Fast air since 1970’s • Combine Cargo and Passenger service Profit potential of LAN international’s route • Wide body air craft • Reputation and reliability
  11. 11. • Additional complexity • Complex logistic system that coordinate with cargo and passengers. • Additional criterion to passenger fares. • Gives priority to carrying passengers. • Broader organizational skills • Require different sale, marketing, technical skills. • Extensively training its flight and maintenance crew
  12. 12. • Greater flexibility employee • Pilot fly even on two hours notice, more fly. • Instituting a performance-related pay and bonus. • Additional investments • Invest in warehouse for each country. • Regulatory constraint prevent non-national company. • Create series of separate company : LAN Peru, Ecuador, Colombia, Argentina. • Alliance in Mexico and several country.
  13. 13. Advantages using more than one business model • Decreasing the break-even load factor • Combining cargo and passengers • Flying to more places • Better services to passengers and increase customers • Using grow revenue provided by cargo operation • Increase barriers to entry • Flying to more places make other airline harder to enter and grow
  14. 14. Advantages using more than one business model • Increases barriers to imitation • Optimizing the use of aircraft and network of route • Increases switching costs • Leading passenger airline connecting from Latin America • One-stop shop for cargo in the region
  15. 15. THANK YOU
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