ARTICLE IN PRESS

Journal of Air Transport Management 12 (2006) 40–46

www.elsevier.com/locate/jairtraman

Air transport and tourism—Perspectives and challenges for

destinations, airlines and governments
Thomas Biegera, Andreas Wittmerb,
a
Institute for Public Services and Tourism, Dufourstrasse 40a, CH-9000 St. Gallen, Switzerland
b
HSG-Center for Aviation Competence, CFAC-HSG, c/o Institute for Public Services and Tourism, IDT-HSG, University of St. Gallen, Dufourstrasse 40a,
CH-9000 St. Gallen, Switzerland

Abstract

Air transport and tourism are interlinked. Tourism is a driving factor for and, in some cases, a stimulator of change in air transport;
most notably the development of new business models such as charter airlines. On the other hand, air transport opened new destinations
and tourism forms such as long-haul excursions. Here these interlinks are analyzed in a system model. For the strategic development of
destinations, a clear airline policy and air access strategy seems to be necessary. For airlines an assessment and understanding of the
business models of destinations is essential. By shaping the external regulative environment of air traffic, government may influence air
traffic as well as tourism.
r 2005 Elsevier Ltd. All rights reserved.

Keywords: Tourism; Air traffic; Business models

1. Introduction  derive conclusions for airlines destinations and policy

makers.
It is too short-sighted to just consider a uni-direction
influence from air transport as a driving factor of tourism.
Developments in tourism, especially new forms of tourism 2. Framework
and new destinations, also affected air transport by
influencing demand. The emergence of attractions such as The interactive development of air transport and tourism
theme parks or the requirements of second home owners for can be separated into a number of overlapping phases:
flexible travels to their secondary property have been
important in creating large and regular traffic streams that  Tourism as a neglected business. Scheduled and regular
in Europe are now supporting some low-cost carriers. New air transport began following World War I with postal
forms of leisure breaks, like short vacations, visit friends and services and services for business people. But very early,
relatives (Bieger and Laesser, 2001), have introduced the in the 1930s, with the emergence of bigger planes such as
need for greater flexibility in the transport system. Here we: the DC2 and DC3, leisure and tourism traffic became an
element of the traffic carried.
 develop a systems model to analyze the interrelation  Tourism as a secondary activity. In the aftermath of
between air transport and tourism, World War II, with the abundance of large airplanes
 develop an analytical framework to analyze these available, network and flag carriers relied more on
interrelations based on the most important influential passenger revenues from tourist traffic. Swissair even
element of this systems approach, operated in the 1960s, e.g., a winter link from London
directly to the upper Engadin to St. Moritz. New type of
Corresponding author. airlines also emerged. Charter carriers, often operating
E-mail address: [email protected] (A. Wittmer). with DC4, DC6 and similar aircraft opened new

0969-6997/$ - see front matter r 2005 Elsevier Ltd. All rights reserved.
doi:10.1016/j.jairtraman.2005.09.007
 ARTICLE IN PRESS
T. Bieger, A. Wittmer / Journal of Air Transport Management 12 (2006) 40–46 41

destinations for traditional markets in the US and 2500

Europe such as the Canary Islands, Hawaii and 2000
Barbados. Tourist Arrivals in Mill.

Million
1500
 Specialization in tourism. With the development of wide- Int. Air Travels in Mill.
body planes, a fresh dimension of tourism and air traffic 1000
emerged. The new generation of aircraft reduced costs 500
and stimulated even cheaper fares and airlines had to
0
rely more on the leisure and tourism markets to fill the

90
91
92

93
94
95
96
97
98
99
00
01
02
additional capacity available. New fare categories, such

19
19
19

19
19
19
19
19
19
19
20
20
20
as Apex and Superapex fares, laid the grounds for long- Year
haul intercontinental tourism.
 Tourism and business traffic combined. The latest Fig. 1. International tourist arrivals and air travels; source: World
Tourism Organization, 2002.
developments have been stimulated by the deregulation
of the air transport industry in from the late 1970s in the
US and from the late 1980s in Europe. New business
models emerged to compete with the flag and network  In well-developed travel markets air transport is now the
carriers—the low cost carrier (LCC). With their point- main travel mode for overnight stays of more than four
to-point services, often involving peripheral airport and nights. The share of charter flights, however, has been
very cheap prices, this new of air transport has attracted decreasing. This is seen, e.g., in the Swiss travel market,
significant traffic volumes. New forms of tourism, such which is an affluent country that has a well-established
as short-stay city tourism and ‘‘residential/second home travel industry (Fig. 2).
tourism’’, have ermerged and traffic involving visiting
friends and relatives has fed this new type of air service. The structure of tourism, in terms of type of destinations or
LCCs have in some cases replaced traditional charter nature of travels, has also been influenced by air transport
services on many shorter haul origin–destination pairs. development. The introduction of LCC services, e.g., has
considerably enhanced transport quality to many destina-
This short chronological analysis shows the strong inter- tions. In northern Italy, e.g., the advent of low-cost airlines
links between the development of tourism, especially has opened new tourist markets (Signorini et al., 2002). The
specific forms of tourism and destinations, air transport emergence of long-haul charter flights allowed the devel-
and different models of air service supply. Air transport opment of ‘‘exotic’’ destinations such as the Caribbean
has a major quantitative influence on tourism: Islands, the Maledives and Seychelles (Kaspar, 1993). This
trend has brought with it a significant growth in ‘‘winter
 Air transport is the main form of transport to many tourism’’ as individuals who have in the past simply seen
tourist destinations in some cases it constitutes up 100% skiing as the only available winter option have now
of the international tourism arrivals (Table 1). brought warmer, if more distant, destinations into their
 The availability of cheap air transport can also be vacation portfolios.
considered as one of the main driving forces in
international tourism growth. There is a strong correla- 3. Systemic models of air transport and tourism
tion between the number of air travels and the
international arrivals of tourists (Fig. 1). Tourism can be characterized in more than one way:

 Tourism includes all activities that result when people

Table 1 travel to, or stay, at a place that is neither their main and
Air transport’s share of international tourism in specific places for the year permanent domicile nor their place of work (Kaspar,
2000 1996).
Air transport’s share
 The World Tourist Organization (WTO) defines inter-
Air transport’s share
Country of arrivals (%) Country
of arrivals (%)
national tourists as persons who visit another country
than the one that is their usual residence for any other
Japan 100 Cyprus 84 reason than for working (Inskeep, 1991).
Taiwan 100 India 83
Australia 99 Thailand 80
New 99 Modern tourism research analyses the interrelation of
Zealand Greece 79 different spheres of tourism and embraces the study of such
Philippines 98 Egypt 76 things as demand, supply and transport within the relevant
Korea 95 Singapore 74 environment. The methodology underlying the system
Dominican 94
Puerto Rico 73 analyses applied to tourism has changed during the last
Republic
30 years and followed the developments of system analyses
Source: Keller, 2002 (based on World Trade Organization, Madrid, 2000). in general (Bieger, 2004) (Fig. 3).
 ARTICLE IN PRESS
42 T. Bieger, A. Wittmer / Journal of Air Transport Management 12 (2006) 40–46

56%
Car, motor home,rental car

Means of transportation to destination

60%

15%
Railway 2001
14%
1998
12%
Scheduled flight
13%

6%
Charter flight from Swiss airport
6%

1%
Boat/ ship
0%
8%
Bus
5%

2%
Other means of transportation
2%

0% 10% 20% 30% 40% 50% 60% 70%

Shares with regard to all trips

Fig. 2. Means of transportation to Swiss destinations (all trips); source: Laesser and Bieger (2001).

Example of Examples of tourism

Level Type of relationship authors systems
Closed systems Simple, linear causalities, Implicitp
→ suitable for simple Hunziker/Krapf
problems 1942

Open Systems: Causalities as structural model

basic configuration which is open to other systems Ulrich 1968 Kaspar 1975

Open Systems Consideration of interactions, • gen.Vester1986 Krippendorf 1986

with interactions f
feedback,intensity, etc., to manage
complicated problems (e.g.paper • Gomez/Probst1996
computer)
→ complicated problems

Self referring Consideration of system • gen. a.o.Luhmannn Bieger/Von Rohr

systems transformation 1984 2000
→ complex problems • Rüegg-Stürm
1999

Fig. 3. Development of system analyses in tourism; source: Bieger, 2002. (Bieger and von Rohr, 2000; Gomez and Probst, 1997; Hunziker and Krapf,
1942; Kaspar, 1975; Krippendorf, 1986; Luhmann, 1984; Rüegg-Stürm, 1999; Ulrich, 1968; Vester, 1986).

Fig. 4 shows the connections and interactions between Tourism demand can be divided into the pure quantity
air transport and tourism as they are now generally of demand, the quality of demand in terms of visitor
understood. structure and the structure of visits in terms of length, goal
The attractiveness of tourist destinations often stems of visits, etc. There are also important interlinks. The
from their natural resources such as their intrinsic natural structure of visitors, e.g., heavily influences the atmosphere
beauty or the local culture combined with the man-made of a certain place.
infrastructure that is available—including hotels, restau- The likely nature of tourist visits influences the types of
rants, shopping centres and entertainment venues. The infrastructure that are built. Further, there are external
elements are often interlinked. Natural resources can make effects if there are so many tourists that they reduce the
an excellent basis for the development of infrastructure; intrinsic quality of the tourist experience; Disneyland, e.g.,
beach resorts, skiing centres, or ecotourism. Infrastructure limits entry to ensure lines do not become too long and
can be integrated with the natural resources or local culture many resort areas limit hotel rooms to ensure beaches or
to generate synergies that stimulate demand from tourists other natural attractions are not overcrowded or damaged.
even further. In terms of air transport, some island destinations limit the
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T. Bieger, A. Wittmer / Journal of Air Transport Management 12 (2006) 40–46 43

network/alliance regulative environment social environment

environment
ecological
technical environment
environment
quant ity of visitors Destination
economic environment political
Attraction
of homemarket environment
type of aircraft
economic
airport environment

quality of visitors
Destination Destination
frequencies
Atmosphere Infrastructure

airline
business model
structure
network strucure of visits
Destination
revenue model/
businessmodel
price level

air transport destination

Fig. 4. System model of air transport and tourism.

number of flights and their arrival and departure times to regional turboprops and more recent regional jets, allowed
both ensure the local ‘‘environment’’ is maintained. The for a new network structure that also included smaller
‘‘quality’’ of visitors, often measured in terms of their airports. Regulatory policy towards alliances and cross-
spending power, is also important and this links in with air border access has also played an important role in the ways
transport provision. The timing and frequency of flights, in which airlines have developed in many tourist markets.
together with the nature of the airlines offering services, There are additional considerations. An airport too close
can affect the quality of the tourists arriving. On the air to a destination is often afflicted by excessive noise that can
transport supply side, the network structure of the airlines reduce the attractiveness of local hotels and beaches and is
and especially the position of the destination airport within hardly conducive to ecotourism. Within our framework,
these networks can influence a market’s accessible and with links between tourism and air transport can be shown
this the fare structure and the types of tourists who will easily. Development of a new attraction based on infra-
travel. structure such as a theme park leads to additional short
Airports, and especially airport infrastructure and visits to the area, but this in turn adversely affects the
strategy, as well as airlines are important within this type quality of the facility for visitors. Airlines might react by
of framework. Destinations in reasonable proximity of an increasing the frequencies or changing the type of aircraft
airport with high-quality infrastructure—e.g., runway of used. Tourist infrastructure of this type might also attract
more than 3000 m, comfortable departure and arrival new types of airlines—e.g., low-cost carriers—that in turn
services, etc.—tend, for economic reasons, to attract bigger add even more visitors. On the other hand, the inclusion of
airplanes at lower frequencies. The smaller airports, and an airport into a strategic alliance network, e.g., as with
those with lower quality services, tend to offer feeder Bozano a few years ago, can affect the quality of visitors.
services by the major carriers and point-to-point services In general, an improvement of an attraction at a
from LCC and charters—smaller aircraft are the norm. destination draws forth developments of the local airport
Whether an airport is served by purely with LCCs point- that can in turn stimulate multiplier effects that attract
to-point services or develops to become a hub (or base in more air services; the airport may even develop into a hub
the radial network structures that many LCCs now favour) for a traditional airline or a base for an LCC. As the
largely depends on its location, infrastructure and its home multiplier develops, the additional visitors can generate
market. The regulatory environment in which it is provided more local revenues for further tourist infrastructure; Las
as well as technical developments also heavily influence air Vegas is perhaps the most pronounced example. Virtuous
transport supply. For example, the development of efficient circles can develop. Vicious circles may, however, develop
 ARTICLE IN PRESS
44 T. Bieger, A. Wittmer / Journal of Air Transport Management 12 (2006) 40–46

if a tourist destination is in decline as it loses its with hotels rooms at low prices and the profit being made
competitiveness. Network carriers may then be replaced from supplementary services such as transportation or
by LCCs carrying lower quality tourists. Any subsequent local amenities. Decentralized management generally
deterioration in the tourist attractions will add to this means independent small companies. A third type of
downward spiral. destination can involve an even higher level of commodi-
tization; e.g., a lot of second homes may dominate,
4. Business models as a key factor implying a decentralized ownership structure. These
destinations can be seen as individualistic and atomistically
The destination subsystem is largely driven by the organized.
configuration of its attractions. Attractiveness in this There also further differences in this final category, e.g.,
context is based on a combination of the general atmo- between the centralized forms of destinations where there is
sphere in the location and quality of accommodation and no active management of the second homes and situations
services and by the natural resources and social environ- where there is central professional management and renting
ment in the area; the strategic success factors of the out of second homes (Bieger et al., 2005a, b). Typically,
destinations (Pümpin, 1986). It is essentially these features North American resort destinations can be considered as
that attract tourist expenditure and, with it, local incomes. largely centrally organized, but there are some that rely
There are destinations that rely heavily on their basic mainly on traditional hotel business and others on private
resources, especially places of natural beauty such as the second homes. There are, in other words, a variety of
Iguac- u Waterfalls. Very often there is a large variety of business models.
tourist service offered to exploit such resources and the A business model is a simplified plan of how companies
resultant incomes are widely spread across a range of create their value added in networks (Bieger et al., 2002a, b,
tourist services. c) and there exist different types of structural approaches
A second type of destination relies more on the quality of to business modeling (Amit and Zott, 2001). Bieger
the man-made services themselves with the natural features et al. (2002a, b, c) differentiates the two extreme types
being exploited more as a commodity; beach and ski of destinations using an eight-dimensional classification
resorts may be seen to fall into this category. This type of (Table 2).
resort usually gets most of its revenues through accom- These business models of destination behaviour rely on
modation, entertainment and activity facilities. There are assumptions about different structures of visitor streams.
two different subtypes of these destinations. There are Decentralized destinations dominated by second homes,
more centrally managed destinations where a company is e.g., produce steady visitor streams spread throughout the
given legal rights to control and coordinate the whole week because they often embrace short-time holidays.
service chain; it is thus possible to have an integrated Centrally managed hotel-dominated destinations, on the
service chain that allows for coordinated revenue systems other hand, often still rely on traditional week-to-week

Table 2
Different business models of destinations

American ski resorts; the example of Intravest Traditional destinations

Customer groups benefit High-income, wealthy babyboomer Wide target group

Sport resort with focus on golf, ski and nature Wide definition of the benefit of nature experience,
experience recovery, sport and culture
Communication Clear establishment of the single local brand like for Decentralized, fragmented marketing
example
Whistler, the brand of single mountains like for example
Blackcomb for ambitious snowboarder and skier
Revenue model Consequent internalization of indirect returns; up to Classic, particular allocation of partial benefits (hotel
50% of consolidated group return from sales of prices, mountain railway prices)
property
Model of growth Creation of customer-relation programs; purchase new Decentred regular customer programs of individually
destinations and mountains companies
Core competence Design of resorts, promotion of innovative forms of Partially local culture
property (time share)
Useful networking partner Tour operators, travel agencies; airlines as feeder Strong dependence on internal and external network
partners
Coordination model Internal network through hierarchy/ownership (all Internal network through market or partially implicit
essential suppliers of hotels, cable cars and ski schools contracts, external network through market or partially
are in possession of a company); external network on explicit contracts
the basis of clear negotiated contracts

Source: Bieger, 2002.

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T. Bieger, A. Wittmer / Journal of Air Transport Management 12 (2006) 40–46 45

organized inclusive tours for their business. Large inter- subsets; main or core carriers of alliances, and regional or
mediaries, mainly tour-operators, have a heavy influence sub-regional carriers), charter airlines and LCCs, as well as
on this type of tourist structure. Attraction-based destina- newly developing special segment carriers cater, e.g.,
tions also rely on strong visitor streams but also flexibility exclusively business travelers.
throughout the week; the large increase in international Different types of airline business models lead to a
‘‘conferencing’’ adds to this when destinations are also difference in the traffic carried, and ipso facto to the nature
important business locations. The tourist industry in such of the visitor stream (Fig. 5). Network carriers usually lead
places relies on this mixed business and leisure traffic. cater to large numbers of average-paying customers with a
The air transport subsystem of the tourist industry can mix of business and leisure travellers in their hubs. They
also be structured according to business models of the often rely on strong inbound or outbound home markets,
airlines. In general, airline business models can be divided although there are exceptions to this such as KLM.
into network carriers (which may be broken down into Regional carriers often serve more remote midsize or
smaller destinations using smaller planes that provide less
capacity, but because of their relatively high fares they
resort
re destination
generally move higher income (better quality) passengers.
degree of network complexity/

low cost
se
second homebased Charter airlines, increasingly because of competition from
LCC on short-haul routes, operate on medium- and long-
commodidization

resort
re destination

commoditization
charter hotel
hot based degree of haul routes. The nature of their product often leads to
decentraly
d managed quantitatively large, but relatively inflexible, traffic
resort
re destination
re
regional carrier hotel
ho based
streams. The emergence of new quality classes on charter
cetraly
ce managed planes can be explained as an attractive new segment to
attraction
a based
their type of service. LCCs attract a mixed traffic; low fares
network
n carrier being important to many tourists with high price elasti-
destination
de
cities, but high frequency also being important to business
travellers with high travel time elasticities.
strong fit
Comparing business models of destinations and airlines,
Fig. 5. Matching business models of airlines and tourist destinations. it seems feasible that in not all cases is there a synergy

Table 3
Business models of airlines and their impact on tourism flows

Business model Network/hub airlines Regional airlines Low-cost carriers Charter airlines

Success factors Extensive market coverage/ Serving niches Simple processes Tour operation relation/
market share and growth (due integration
to network effects)
Alliances Flexible cooperation with Cost efficiency Cost effectiveness
alliances
Ability to adopt good and Cost efficiency Strong traffic flows Integrated capacity
homogeneous processes and Domination of regional management
quality markets
Driving factors at the Search for markets and Search for niches Driven by search for routes Driven by tour operators
moment market share with self-generating, strong interest in markets and
traffic flows integration of the value
chain
Weight of tourism Tourist flows as a secondary Regional tourism flow (in the Tourism just part of general Tourism flows (mass
product to get market share upscale segment) as traffic flows, no special tourism) as main and
and size important part of the business attendance often only product
Perspective of business Consolidation, division of Concentration of business to Own structures of airports, Concentration on strong
model markets leads to a reduction niches routes and markets tourist destinations
of services to peripheral
destinations
Concentration on best-paying Closer cooperation with
segments alliances
Better fit of capacities to well-
paying segments (smaller
planes, more frequency)
Perspective for tourism Side product for small groups Close cooperation with Maybe in the very long run Individually marketed
of tourists regional incoming operators blocked space for marketing seats
and marketing organizations through tour operators

Source: Bieger et al. (2002).

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between them. Table 3 provides an overview of some of the Geschäftsmodell. S. In: Bieger, T., Bickhoff, N., Caspers, R.,
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