"FLYING HIGH" or The Successful Take-off of airBaltic:

University essay from Handelshögskolan i Stockholm/Institutionen för marknadsföring och strategi

Abstract: This is a case study of a Latvian airline airBaltic that despite the tough characteristics of the airline industry has been able to grow steadily and compete side-by-side with the aggressive low-cost competitors. We explore how the company has managed to transform from a full service airline with a home base in a small and unrecognized destination to a competitive hybrid carrier that is able to follow the industry price pressure by simultaneously expanding its route network and uncovering the hidden potential of the market. The main purpose of this thesis is to indentify the critical factors behind the successful development of airBaltic. During the two stage analysis, based on Porter Five Forces and Resource Based View of Strategy, we have identified several success factors. The Rolling stage with its weak market competition, government support and strategic partnership with SAS formed the competitive base for airBaltic, and allowed the company to meet the fierce competition during Take-off stage which came with substantial market changes and required flexibility and solid base of experience in order to be able to compete with the aggressive low-cost carriers. The route network developed during the Rolling stage served as a strong weapon for airBaltic in this competition. We believe that our thesis will give researchers additional insight of how reconciliation between outside-in and inside-out perspectives in strategy formulation can be reached, and inspire managers of small regional airlines to use their potential and follow the market changes.

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