Article at a glance:

A new organizational model for airlines

• Over the past decade, traditional airlines have responded to heightened competition by diversifying, which makes them more complicated to manage.
• A good way to make these diversified companies more agile and competitive is to adopt a new organizational model: semiautonomous business units that are responsible for their own profitability.
• The transition is tricky, however, and companies that get it wrong will miss out on the advantages of the new organization.
• To get the greatest benefit from the new model and maximize overall profitability, a company must balance the autonomy of the business units with the need to coordinate some of their activities.