Estonian Air - Final
Case Study:
“Estonian Air’s Big Buy”
Case Study Information:
Karen Popovich, Diane Lander, and Robert Letovsky (2011). Estonian Air’s Big Buy. Case Research Journal, 31(1), Pages 67-82.
Executive Summary
Estonian Air is a regional airline carrier headquartered in Estonia in the Baltic region of Europe. The airline’s hub of operations is located in Estonia’s capital city of Tallinn at Tallinn Airport. This airport is the largest in the country. With the state government of Estonia owning a large equity percentage of the airline, Estonian Air is the national airline of the Country of Estonia. The Company currently operates a fleet of four aircraft providing flights to sixteen destinations throughout Europe.
Within the airline industry, Estonian Air is classified as a regional carrier. Regional carriers have historically pursued business strategies of specializing on short-haul flights within a limited geographic region. Up until the early 2000’s, regional carriers’ competitive advantages were based on their ability to provide geographically focused route services to smaller, underserved markets where larger airlines had limited exposure. These types of regional carriers were historically able to charge higher ticket prices and were able to avoid price competition.
Over the past decade, competition within the European airline industry has increased dramatically. This increase is the direct result of two major factors. The first contributing factor has been the deregulation of the airline industry due to the economic integration resulting from the formation of the European Union. The second factor is the emergence of a new type of business strategy being implemented by several airlines. These airlines are known as Low-Cost Carriers (“LCCs”). They focus on providing low-cost flights to their customers. This is accomplished, by (i) simplifying fleet designs (to reduce training and maintenance costs), (ii) providing one type of class
“Estonian Air’s Big Buy”
Case Study Information:
Karen Popovich, Diane Lander, and Robert Letovsky (2011). Estonian Air’s Big Buy. Case Research Journal, 31(1), Pages 67-82.
Executive Summary
Estonian Air is a regional airline carrier headquartered in Estonia in the Baltic region of Europe. The airline’s hub of operations is located in Estonia’s capital city of Tallinn at Tallinn Airport. This airport is the largest in the country. With the state government of Estonia owning a large equity percentage of the airline, Estonian Air is the national airline of the Country of Estonia. The Company currently operates a fleet of four aircraft providing flights to sixteen destinations throughout Europe.
Within the airline industry, Estonian Air is classified as a regional carrier. Regional carriers have historically pursued business strategies of specializing on short-haul flights within a limited geographic region. Up until the early 2000’s, regional carriers’ competitive advantages were based on their ability to provide geographically focused route services to smaller, underserved markets where larger airlines had limited exposure. These types of regional carriers were historically able to charge higher ticket prices and were able to avoid price competition.
Over the past decade, competition within the European airline industry has increased dramatically. This increase is the direct result of two major factors. The first contributing factor has been the deregulation of the airline industry due to the economic integration resulting from the formation of the European Union. The second factor is the emergence of a new type of business strategy being implemented by several airlines. These airlines are known as Low-Cost Carriers (“LCCs”). They focus on providing low-cost flights to their customers. This is accomplished, by (i) simplifying fleet designs (to reduce training and maintenance costs), (ii) providing one type of class