When One Business Model Isn’t Enough
How LAN’s Three Models Interrelate
Maximal use of physical assets.
Reduction of the break-even load factor (BELF).
Diversification of revenues and profits.
Reduced threat of entry by other airlines.
One-stop shop for cargo in Latin America.
The Challenge of Managing Multiple Models
Broader organizational skills.
Greater employee flexibility.
No two business models share all resources, of course. In Miami, for example, where LAN’s cargo operations are headquartered, the company has almost 500,000 square feet of dedicated warehouse space and other cargo facilities that its passenger competitors do not need. Furthermore, to serve Latin America comprehensively, regulatory constraints preventing non-national companies from operating within certain countries have impelled LAN to create a series of separate companies for its no-frills short-haul passenger service: LAN Peru, LAN Ecuador, LAN Colombia, and LAN Argentina. It has also set up additional operating structures through alliances in Mexico and several other countries.
Distinguishing Complements From Substitutes
LAN teaches its crews to provide award-winning passenger service while training employees to care for pigs and horses on its cargo-only planes.