| Summary: | Since deregulation in the Unites States most jet operating new-entrant carriers have failed.
Theories on competition had been put to the test and reality turned out to be different to the
vision. The new-entrant airlines were to challenge the inefficient incumbent carriers and
provide lower fares for the benefit of the public. To begin with they were successful, but
were not able to create sustainable strategy to survive when the incumbents had adjusted to
the new operating environment.
The background to the failure predicament is examined in the thesis in considerable detail, in
order to give a fairly good overview of the characteristics of new-entrants and the
environment they existed in. Much attention is given to the new-entrants' strategy in order
to explore past deficiencies and pave the way for successful alternatives.
The European liberalisation is examined in order to contrast it with the US deregulation.
The purpose of such contrast is to examine whether the lessons learned in the United States
will apply to European new-entrants, both at the present and in the future.
The literature on the causes of corporate failure is examined in detail in order to discover
some underlying traits. Success is examined as well in order to identify whether success
mirrors failure. In addition, the role of success in causing failure is highlighted.
Statistical failure prediction models are explored in order to cast light on the present status
of the failure prediction methodology. That overview explains the foundation for selecting
the Logistic Regression statistical methodology for the thesis.
Results of a questionnaire survey performed on new-entrant airlines, is introduced in terms
of the dichotomous failure and distress variables. On the grounds of that qualitative survey
and a new-entrant airline quantitative data-base, a number of failure prediction and distress
models were developed. Finally, the best failure prediction models of these different sources
are combined in order to examine whether such combination enhances prediction quality.
The main conclusion of the thesis is that the combination of quantitative and qualitative data
sources for failure and distress prediction of corporations, in this case new-entrant airlines,
enhances predictability. Furthermore, the general conclusion is that no single prescription
exists for success or avoidance of failure due to the dynamism of the corporations and the
environment they operate in. However, few prerequisites of success and non-failure were
found to be: (i) high relative quality; (ii) dominant market share on routes and airports; (iii)
high relative aircraft utilisation; (iv) high relative employee utilisation; (v) controlled growth
in terms of maintaining item (ii); low cost in terms of achieving items (iii) and (iv); and (vi)
resourceful innovation without going into the extremities.
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