Thinking about Systems

Deciding when to expand a business is difficult in any industry. For the airline industry, there are both large investments and long delays involved in expansion, making it important to test your assumptions as you go.  

This model uses a Bass Diffusion model to start and then expand an airline business. Expansion occurs when the predicted market share exceeds a specific threshold, which provides some headroom for additional growth in existing markets as expansion takes place. This simple model does not look at the impact of competitors, but rather sets the number of potential passengers to those the airline can expect to win over time. There is a limit on the number of routes that can be added before saturating the market.