LAN LANPASS - Interesting HBR article about Lan and its Business Model

http://hbr.org/2012/01/when-one-business-model-isnt-enough/ar/1

interesting in theory, as long as you do not let the facts get in the way of a good theory. How would the author put Premium Economy in his theory... a fifth business model? And equating lan with ryanair model.... pleeease, show where lan cbarges for luggage, for drinks, for seats, for checkin... totally different.

interesting in theory, as long as you do not let the facts get in the way of a good theory. How would the author put Premium Economy in his theory... a fifth business model? And equating lan with ryanair model.... pleeease, show where lan cbarges for luggage, for drinks, for seats, for checkin... totally different.

It is different, but LAN introduced totally different fare structures for national flights. Flying within Chile used to be a luxury, price-wise. Now, while it doesn't match the price of the bus, it makes it at least a consideration for those with modest means. My first trip to PMC and PUQ were in row 1 of a 767 (with a full flat seat), where I received an extremely nice snack service on the SCL/PMC segment and a full hot meal on the PMC/PUQ segment that would put most domestic US F meals to shame. This was 2001/2002.

Compete with the bus, yeah... when Lan sells LIM-CIX for $48 all in, ida y vuelta, they are competing with the bus-camas!
The author's suggestion that one of the business models for Lan is LLC for domestics is a real stretch. LCCs sell by the internet with few offices, offer no amenities and nickel and dime the customer for everything. How is that like Lan domestics? Sure you can buy by Internet, Lan is a modern company, but you buy by web, phone, and fully staffed offices. You get full service, on a clean modern fleet, free luggage, no nickel and diming. Yes, no kitchens, of course not, these re 1-1.5 hour flights, but they give service, snack boxes, free drinks... on what LCC do you get free beer? LCCs cut back on staff to reduce costs. Lan has a surfeit of staff at offices, check in, gates, luggage etc. And what LCC has a full FF program? The author need to look at the facts. Lan domestics is not a LLC model, it is simply one arm of the company that offers good service at a low cost because the clients can chose a bus-cama.

Interesting fact: LP has a fleet of 20 A319s for domestics. All return to LIM for the night to be serviced. All are fully used the next day, only one has a slightly reduced schedule to be there for IRROPS. Lan knows they make no money when a plane is on the ground.

Compete with the bus, yeah... when Lan sells LIM-CIX for $48 all in, ida y vuelta, they are competing with the bus-camas!
The author's suggestion that one of the business models for Lan is LLC for domestics is a real stretch. LCCs sell by the internet with few offices, offer no amenities and nickel and dime the customer for everything. How is that like Lan domestics? Sure you can buy by Internet, Lan is a modern company, but you buy by web, phone, and fully staffed offices. You get full service, on a clean modern fleet, free luggage, no nickel and diming. Yes, no kitchens, of course not, these re 1-1.5 hour flights, but they give service, snack boxes, free drinks... on what LCC do you get free beer? LCCs cut back on staff to reduce costs. Lan has a surfeit of staff at offices, check in, gates, luggage etc. And what LCC has a full FF program? The author need to look at the facts. Lan domestics is not a LLC model, it is simply one arm of the company that offers good service at a low cost because the clients can chose a bus-cama.

Interesting fact: LP has a fleet of 20 A319s for domestics. All return to LIM for the night to be serviced. All are fully used the next day, only one has a slightly reduced schedule to be there for IRROPS. Lan knows they make no money when a plane is on the ground.

Remember, LCC is not a 4 letter word, even SQ is now starting Scoot. And there is a market out there for LCC's with no frills, these people are just concerned about getting from Point A to B, even though they might not have offices to serve clients, they hire people in their call center's instead. What is wrong with choosing a bus-cama??

Oh, not being critical of LCCs, am criticizing author's contention that Lan operates on the LCC model for domestics. His proof: no kitchens for more seating (of course not, these are 1-2 hour flights - for long hauls there are kitchens) and sales by internet (LCCs insist on this, Lan alternatively offers call centres and fully staffed offices). FFs and Premium Economy, no surcharges, lots of staff... exactly how is this an LCC model, I ask?

Nothing wrong with bus-camas... lets see, LIM-CIX 1 hour by plane, 11 hours by bus-cama at about the same price as flight (when on sale).

I agree with b22 - the article seems more of a gushing 'Look how well LAN' has done.
I don't think market segmentation is the same as operating different business models. And there are other airlines that run successful cargo operations.
That is not to say LAN has indeed done exceptionally well.

Oh, not being critical of LCCs, am criticizing author's contention that Lan operates on the LCC model for domestics. His proof: no kitchens for more seating (of course not, these are 1-2 hour flights - for long hauls there are kitchens) and sales by internet (LCCs insist on this, Lan alternatively offers call centres and fully staffed offices). FFs and Premium Economy, no surcharges, lots of staff... exactly how is this an LCC model, I ask?

Nothing wrong with bus-camas... lets see, LIM-CIX 1 hour by plane, 11 hours by bus-cama at about the same price as flight (when on sale).

Interesting article in Peru's "El Comercio" on how airlines are competing with bus lines.

http://elcomercio.pe/economia/1370621/noticia-crece-guerra-entre-aerolineas-empresas-transporte-captar-pasajeros

Yes, interesting, gracias. The idea that LAN is flooding some routes to get high volume on low cost and push out the competition is intriguing... and that the competition can only survive on routes that can't provide high volume is equally interesting.

As is their strategy to compete with the omnibus:

“Apostamos por una estrategia distinta en el negocio. Esperamos captar mucho más volumen de clientes con precios más baratos, con márgenes más chicos de ganancia por asiento y con una alta rotación de nuestras naves”, explica Van Oordt.
¿Cómo reducir los costos de operación para poder vender tarifas que bordean los US$50 por un pasaje de ida y vuelta al interior del Perú? El ejecutivo detalla que los aviones de LAN, los Airbus 360 y los Boeing 767 en los que ha invertido US$3.000 millones, permiten ahorrar hasta el 40% del gasto en combustible, algo valioso si se toma en cuenta que en la aviación comercial la nafta representa el 50% de los costos operativos de una empresa.
El resto de la fórmula es mantener las naves en el aire el mayor tiempo posible (en el caso de LAN vuelan 11 horas al día) y tardar no más de 40 minutos en la pista de aterrizaje, además de hacer uso del Internet para reducir el tiempo de espera del pasajero en el terminal. “El 80% de nuestros clientes usa el chequeo a través de la web”, apunta Van Oordt.

Finally, to the OP reference, the kind professor from Harvard might want to have a chat with Star Peru's Curti about his view LCC model does not work in Peru!