Corporate diversification within the airline business has a long history. Many of the first airlines were initiated as related sub-ventures by existing transport-focused organisations. The overriding aim of the study is to investigate how the present state of airline business diversification has been achieved at both Lufthansa and Emirates using a mix of qualitative and quantitative methodologies. This study investigates two of the largest diversified airline groups, Germany’s Lufthansa Group and Dubai’s Emirates Group, each adopting a distinct approach towards diversification that may serve as a model for airline groups worldwide. The areas investigated were Cargo, Maintenance, Catering and Travel Services. The research found that whilst diversification may not always present the most attractive option financially, strategic factors can often outweigh such concerns. Business units studied were found to have variable prospects; particularly in the case of Catering, a sector on the rise – versus in-house Maintenance, which for airlines, is likely to see decline. The pursuit of third party revenue streams to offset weak internal trading and growth in competencies were found to be the key drivers of success. Interplay between segments was also apparent, showing that a well-organised diversification strategy can achieve robust cross-functional benefits and deliver significant value to the parent organisation.
Both airline groups operate their business units as Profit and Loss centres, Lufthansa exercises a decentralised structure, positioning its business units as standalone companies focused on financial health. Conversely, Emirates Group’s business units draw upon a centralised resource pool, with managerial autonomy and an emphasis on strategic positioning.
Collected and summarized from the source below by Giang Tan
https://db.vista.gov.vn:2095/science/article/pii/S0969699716303350