Explore the next generation of airlines with new Airline Business Model Framework tool

Low-cost fares with premium services? The traditional boundaries between airlines are becoming increasingly blurred. Lufthansa Consulting and its cooperation partner, the Center for Aviation and Space Competence at the University of St.Gallen (CFAC), are convinced that the existing classification of airline business models is outdated and requires a fundamental revision to reflect current market conditions and trends.

Lufthansa Consulting’s experts Vincent Hütte, Florian Erbach, Marc Gebler, Robin Unger, Pascal Gervais and Malte Schillmann together with CFAC’s Managing Director Dr. Andreas Wittmer conducted an empirical study on the global airline landscape with more than 110 airlines by using the “Airline Business Model Framework” (ABMF). This new tool, jointly developed by Lufthansa Consulting and the CFAC, enables airlines to better understand their business model and strengthen their market positioning through data-driven insights ranging from network design, over customer experience to the commercial model.

Four next-generation airline business models
Historically, airlines were classified as low-cost carriers (LCCs), full-service carriers (FSCs) or niche players such as regional and leisure airlines. However, according to the new ABMF tool, this classification no longer captures the complexity of today’s market. Instead, four next-generation business models are emerging that are reshaping the future of the airline industry:

• Premium Carriers provide consistently high levels of service and comfort
• All-Rounders vary service concepts depending on specific markets and routes
• Long-Haul Value Carriers apply the value model to long-haul flights with segmented classes
• Value Carriers enhance the former low-cost model with improved services, multi-channel distribution and loyalty programs

Among these emerging models, the “Value Carrier” is a particularly important development. It combines attractive fares with enhanced services and customer loyalty features, effectively bridging the gap between budget airlines and premium providers.

The economics of ancillary revenues
Despite rising ticket prices, airline profitability remains under pressure. The study highlights that ancillary revenues – ranging from seat upgrades to travel insurance – have become essential for carriers across all business models. The unbundling of ticket sales offers a powerful lever to secure sustainable margins while enhancing the customer experience through tailored offerings that meet individual preferences.
This development is especially pronounced on long-haul routes, where new entrants are experimenting with the “Long-Haul Value Carrier” model. While not all ventures have proven successful, new players continue to explore this space – underlining both the volatility and potential of the concept.

Consequences for airlines
The study reveals that 67% of airlines have already adopted one of the next-generation business models. The remaining 33% continue to operate within niche models and should regularly assess whether their current approach remains optimal in today’s evolving market environment. In this context, the Airline Business Model Framework serves as a comprehensive, data-driven tool for navigating through the rapidly changing industry. It helps airlines identify strategic directions to continuously innovate their business models and maintain competitiveness.

Explore the full Airline Business Model Framework study for deeper insights including our related whitepaper here.