Airline business models as complex systems: assessing component interdependencies through interpretive structural modelling

Abstract

Purpose: This paper explores the intricate interdependencies among core components of airline business models (BMs). In the airline industry, where BMs are complex systems, a successful BM requires an orchestrated configuration of various components. However, there is a paucity of research in BM literature pertaining to the interrelationships among key components of airline BMs. Design/methodology/approach: Employing interpretive structural modelling, we gathered input from experts in Iran to assess the driving power and dependency of elements within airline BMs. Findings: Our findings highlight the significance of operating environment conditions and competitive market dynamics as pivotal external components shaping the foundational structure. Value proposition, customer relationship management, and process monitoring are crucial linkage components that drive power and dependency. Notably, capturing value is positioned with the highest dependency. Practical implications: We utilised the ISM technique to visualize interdependencies within airline business models, aiding strategic decision-making. Our findings suggest aligning business and operational strategies with market needs ensures effective value creation and capture, maintaining competitive advantage in the airline industry. In addition, our research reveals critical factors affecting value creation and capture, emphasizing monitoring the operating environment and competitive market, and strategically managing value propositions and customer relationship initiatives in the airline industry. We advise adapting business models to external changes for sustained growth and recommend regular monitoring of industry trends and customer expectations. Originality: Framed within complexity theory, these insights offer valuable perspectives on identifying and situating critical BM components in the airline industry. The practical implications derived from this study serve as strategic tools for airline managers and potential investors to optimise the design of their airline BMs.