There are more than one thousand four hundred airlines in the world, yet no two are alike: some carry only passengers, others only cargo; some serve a single region, others the whole world. So how do we group so many different businesses? In this lesson we start from the definition of an airline and examine, step by step, why classification is difficult and which criteria countries, the International Civil Aviation Organization (ICAO) and service-quality ratings use to distinguish airlines.

Note on the period: The country classifications, legal regulations, institutional structures and industry figures described in this lesson belong to the period in which the source was published; the current situation should be followed through the official sources of the relevant authorities.

What will you learn in this episode?

• Define an airline and explain why classification is difficult
• Compare the classification criteria used in the USA, Canada and Australia
• To explain the regulation on which classification in Türkiye is based and its four groups
• To list ICAO's seven classification criteria and the airline types linked to them
• Distinguish between major, regional, feeder, commuter and mega airlines
• To explain how star rating differs from the other classifications

Summary of this episode

1. What is an airline?

Definition: An airline is a for-profit business that offers public mass transport services, uses aircraft for this service and operates on a relatively large scale. Airlines are the main actors of the airline transport industry.

Explanation: The four elements of the definition are considered together: profit motive, service open to the public (anyone can buy a ticket), use of aircraft and large scale. If any one of these four elements is missing, the business is not counted as an airline; for example, a corporate aircraft that carries only its own staff does not offer a service open to the public.

2. Why is classification difficult?

Explanation: Airlines operate over different distances, with different aircraft types and with different approaches to operations and marketing. That is why the literature contains many classifications, and the same type of airline (for example a regional or low-cost airline) can appear in more than one classification.

Consequence: There is no single, universal classification. Airlines are classified according to three main sources: the civil aviation authority of the country in which they operate, international organizations (ICAO) and rating organizations.

3. Classification by country

USA — criterion: annual operating revenue. The Department of Transportation classifies airlines by their annual operating revenue; this classification is in fact a by-product of the process of collecting airlines' financial data. According to the source:

• those with annual revenue above 1 billion US dollars are major carriers (major carriers),
• those between 100 million and 1 billion dollars are national carriers (national carriers),
• those below 100 million dollars, which usually serve small communities, are regional carriers (regional carriers).

The Department also distinguishes network carriers, low-cost carriers and regional carriers by operational business model. Network carriers use the traditional hub-and-spoke (hub-and-spoke) network structure on scheduled flights.

Canada — criterion: aircraft in the fleet and type of operation. Classification is carried out by the transport authority under the Canadian Aviation Regulations. There are three groups:

• Major airlines: operate aircraft carrying 20 or more passengers or with a maximum take-off weight above 19,000 pounds.
• Commuter (commuter) operations: operate multi-engine aircraft carrying 10–19 passengers.
• Air taxi operations: operate aircraft carrying 9 or fewer passengers.

Australia — criterion: aircraft size and route type. Classification is carried out by an official statistics and research unit in the field of transport and regional economics:

• those whose fleet consists only of aircraft with 38 seats or fewer (or a payload of 4,200 kg or less) are regional,
• those operating larger aircraft are domestic,
• those operating on international routes are international airlines.

Comparing the three countries: In the USA the basic criterion is annual revenue, which is financial in nature; in Canada and Australia the type and characteristics of the aircraft in the fleet and the nature of the operation are the basis. In all three countries classification is carried out by the ministry responsible for transport or a unit attached to it. In terms of purpose, collecting financial data stands out in the USA and grouping airlines in Australia, while in Canada classification rests on an economic regulation.

4. Classification in Türkiye

Responsible authority: In Türkiye, the Directorate General of Civil Aviation (SHGM) is responsible for regulation, compliance oversight and enforcement in airline transport.

Legal basis: Turkish Civil Aviation Law No. 2920 does not make a classification; it sets the general rules for granting operating licenses to commercial airlines. With the private sector's entry into aviation, the Regulation on Commercial Air Transport Operators (SHY-6A) was issued on the basis of the relevant ICAO annexes. SHY-6A is an economic regulation.

Four groups: Through its license types, SHY-6A divides airlines that carry passengers with aircraft of 20 or more seats, or that carry only freight, into four groups:

1. those carrying passengers and freight on scheduled and non-scheduled flights,
2. those carrying passengers and freight only on non-scheduled flights,
3. those carrying only freight on scheduled and non-scheduled flights,
4. air taxi operators.

Comparison: In terms of criteria (aircraft and type of operation), classification in Türkiye resembles that of Canada and Australia; in being based on an economic regulation, it resembles Canada.

5. Classification according to ICAO

What is ICAO? The International Civil Aviation Organization (ICAO) is an international organization founded in 1947 under the United Nations, aiming at the safe, secure and orderly development of international civil aviation. ICAO classifies airlines according to seven criteria.

Criterion 1 — Type of operation:

• Scheduled airlines: announce their flight schedule in advance and rarely change it.
• Non-scheduled airlines: their primary business is operating non-scheduled flights.
• Charter airlines: operate only charter flights; their customers are firms that organize travel, such as tour operators, rather than individual passengers.

Criterion 2 — Type of traffic carried:

• Passenger airlines: their primary business is carrying passengers.
• Cargo airlines: their primary business is carrying freight and mail.

Passenger airlines also take a significant share of world air cargo thanks to their wide flight networks and frequencies; in other words, “passenger airline” does not mean the airline carries no cargo, it shows its primary business.

Criterion 3 — Role in the market or size of operation:

• Major airlines: serve with a developed network spread over a wide geography.
• Regional airlines: mostly connect small and medium-sized communities to large centers with turboprops or small jets.
• Feeder (feeder) airlines: feed other airlines' flights by carrying passengers from small points to large hub airports.
• Commuter (commuter) airlines: usually provide point-to-point service with aircraft of fewer than 30 seats.
• Mega airlines: have global networks and very large numbers of aircraft and employees.

Comparison (regional and feeder): Both serve small points. A regional airline aims to connect small communities to large centers; the distinguishing feature of a feeder airline is that it transfers its passengers to another airline's flights at the hub airport.

Criterion 4 — Market status and economic importance:

• Niche airlines: specialize in particular routes or market segments.
• Start-up airlines.
• New entrants: airlines, whether newly founded or not, that try to enter a market already served by other airlines.

Comparison: “Start-up” describes the airline's age, while “new entrant” describes entry into a market; an established airline is also counted as a new entrant when it enters a new market.

Criterion 5 — Business model followed:

• Full-service (full service) airlines: offer a wide range of services to different cabin classes on a wide network.
• No-frills (no-frill) airlines: offer very limited in-flight service.
• Low-cost airlines: can offer low fares thanks to their low cost structure.

Criterion 6 — Membership in trade associations: Airlines that are or are not members of the International Air Transport Association (IATA), which is headquartered in Montreal, Canada, and of which only airlines can be members.

Comparison (ICAO and IATA): ICAO is an organization of states attached to the United Nations; IATA is a trade association that only airlines can join.

Criterion 7 — Ownership structure and control:

• State-owned airlines: all or most of their shares are held by the state.
• Private airlines: most of their shares are held by the private sector.
• Joint venture airlines: a partnership of two or more main investors from the same or different countries.
• European Union airlines (community carriers): established under European Union legislation.

6. Classification by rating organizations

Definition: Airlines are also subject to non-regulatory classifications based on service level. The best known is the world airline rating carried out by a UK-based consultancy.

What is the difference? This classification is not based on economic regulation, aircraft type or type of operation, but is a perceptual evaluation based on the scores passengers give to their past flight experiences.

Dimensions evaluated:

• pre-flight dimensions: website, online booking, online check-in,
• in-flight product dimensions: cleanliness of cabin and lavatories, quality of catering,
• staff dimensions: staff language skills and behavior.

Stars: The system ranges from one to five stars. Five stars indicate the highest quality standard, four stars a good level, three stars the acceptable industry average, two stars below average and one star the lowest performance. Airlines outside the rating are counted as unclassified.

Example: An airline whose cabin cleanliness and staff communication are highly appreciated may see its stars rise; this is independent of whether the airline is large or small, scheduled or charter.

In short

Airlines cannot be classified by a single criterion. The USA uses annual revenue, Canada and Australia use fleet and type of operation; in Türkiye classification is based on the license types in the SHY-6A regulation. ICAO distinguishes airlines by type of operation, type of traffic, size, market status, business model, trade association membership and ownership structure. Star rating is a different approach based on passenger perception.

Key concepts

• Airline: A for-profit business that offers public mass air transport services, uses aircraft and operates on a relatively large scale.
• Directorate General of Civil Aviation (SHGM): The body responsible for regulation, oversight and enforcement in airline transport in Türkiye.
• SHY-6A: The regulation setting the market entry and exit conditions and license types for commercial air transport operators in Türkiye.
• ICAO: The international civil aviation organization founded in 1947 under the United Nations.
• IATA: The international trade association headquartered in Montreal that only airlines can join.
• Scheduled airline: An airline that announces its flight schedule in advance and rarely changes it.
• Charter airline: An airline that operates only charter flights, usually for tour operators.
• Feeder airline: An airline that carries passengers from small points to large hub airports and feeds other airlines' flights.
• Commuter airline: An airline that provides point-to-point service, generally with aircraft of fewer than 30 seats.
• Mega airline: An airline with a global network and a very large-scale operation.
• Niche airline: An airline that specializes in particular routes or market segments.
• New entrant: An airline that tries to enter a market already served by other airlines.
• Star rating: A perceptual quality classification based on passenger experience, ranging from one to five stars.

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Sources used:
Gerede, E. (2016). Havayolu işletmelerinin sınıflandırılması ve konumlanmaları [Classification and positioning of airlines]. In E. Gerede and A. E. Demirci (Eds.), Havayolu Yönetimi [Airline Management] (Unit 2). Eskişehir: Anadolu Üniversitesi Yayınları.

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