Let The LCC Games Begin.

[Big Slick]

[FONT=Tahoma, Verdana, Lucida]As The Media Parrots Will Be Headlining Soon...[/FONT][FONT=Tahoma, Verdana, Lucida]
Turbulence On The LCC Tarmac... Low-Fare Profits Not Taking-Off... Trouble In Low-Fare Paradise.. Discount Airlines Must Climb Higher For Profits...[/FONT]
[FONT=Tahoma, Verdana, Lucida]Just gotta love what's coming out of J-Schools these days.[/FONT]
[FONT=Tahoma, Verdana, Lucida]True, there are still the me-too stories in the media - including some the of the aviation media, which should know better - reporting that the low-fare airline model is the one to beat. [/FONT]
[FONT=Tahoma, Verdana, Lucida]More correctly, the fact is that it's getting beaten-up.[/FONT]
[FONT=Tahoma, Verdana, Lucida]Not that LCCs are going away... it's just that they're reaching the point that the easy, chop-the-fare, grab-the-traffic markets where 100-to-150 seat airliners can prosper, are getting tougher to find. Meanwhile, legacy carriers have shed huge cost structures, and have the ability to shed a whole lot more, helping to the make the field more level when the per-ASM bill come due. Toss in higher fuel expense, and the scorecard isn't costs any longer, it's revenue. [/FONT]
[FONT=Tahoma, Verdana, Lucida]Note that two of the largest LCCs, Southwest and jetBlue, both announced that they're planning fare increases in the near future. Both airlines are superbly-managed, and neither has a lot of excess operational-cost fat to cut. It's increased revenues that they need now. But just hiking fares is only a partial solution. The real challenge will be finding enough markets that can generate enough long green to support massive new LCC-model capacity coming on line over the next three years.[/FONT]
[FONT=Tahoma, Verdana, Lucida]It's The Revenue-Generating Machinery That Counts. Today, the usual suspects in the media, and some of the helium-weight Wall Street analysts, too, are still doing the mantra about LCCs having "one type of aircraft" which, for reasons they don't understand, nor would care to, somehow imparts a magic advantage on LCCs. (The "one-type" thing is more myth than fact. Take a look at the fleet operating under brands such as AirTran, Frontier, jetBlue, and even Southwest, which operates more than one distinct 737 variant.)[/FONT]
[FONT=Tahoma, Verdana, Lucida]But regardless of this, the fact is that legacies have the enormous advantage of superior fleet flexibility compared to LCCs. Airliners from roughly 34 to 350 seats, generally. Flexibility, say, like that of Northwest, where the airline has the ability to effectively mine cross-system revenues in markets from Bangor to Beijing - revenues which provide an on-board revenue premium in the DTW-LAS market. And the MSP-FLL market, and so on.[/FONT]
[FONT=Tahoma, Verdana, Lucida]Let The LCC Games Begin. From a competitive standpoint, the LCC segment of the industry is starting to play the airline version of bumper cars. Expansion moves seem to be aimed at countering one another, instead of taking aim primarily at legacy carriers.[/FONT]
[FONT=Tahoma, Verdana, Lucida]Example: jetBlue has announced entry into Portland, Maine, which, combined with their expansion at Boston, appears to be another encroachment on Southwest's peripheral city strategy in New England. AirTran has announced additional service at CLT, which is hands-down the most likely next expansion city for Southwest. For more insight regarding this trend, this week's Airport Forecast Flash is a must-read. Click Here.[/FONT]
[FONT=Tahoma, Verdana, Lucida]Wait and see. The rearview-mirror forecasters will "discover" these dynamics sometime later this year, and then will grandly "predict" what's been obvious for months, which is lots more 100-to-150 seat LCC airliners coming on-line, increasingly trying to grab traffic from each other. [/FONT]
[FONT=Tahoma, Verdana, Lucida]One danger sign already seen: the dreaded buzz-words. One of the investors in the proposed Virgin America operation was quoted in Forbes as stating the new carrier was planning on offering a better "value proposition."[/FONT]
[FONT=Tahoma, Verdana, Lucida]How 'bout "survival proposition."[/FONT]

 

[N7167L]

It's tough to believe the above post; it's Mike Boyd.

 

[tailhookah]

Yes, it's got boyd written all over it. We'll see who's correct. I feel that if B6 can't do it w/ lower costs and a premium product then no one can. If
this is boyd then he's contradicting himself by claiming that the LCC's are going to duke it out. He's only been recently correct on his analysis on the death of the RJ... he's also praised B6 on the acquisition of the 190... maybe he's changing his mind... we'll see. As long as fuel remains at all time highs then we're all screwed... what do you think Boyd?

Well.... Were waiting.............

Caddyshack Rules....

Tail

 

[FN FAL]

[FONT=Tahoma, Verdana, Lucida]Just gotta love what's coming out of J-Schools these days.[/FONT]

What's a J-School, is that some kind of military pay for training get an airline job kind of "gig"?

 

[737 Pylt]

Yes, it's got boyd written all over it. We'll see who's correct. I feel that if B6 can't do it w/ lower costs and a premium product then no one can.

I dunno, SWA seems to have no problem doing it. Their market corner seems to have only one thing that NOBODY else has...1 common fleet type! JMHO, but when B6 went after the 190, they broke their solid mold! Also notice that any airlines not operating rj's don't seem to be losing the $billions that the legacy rj infested airlines are!
737

 

[canyonblue]

What's a J-School, is that some kind of military pay for training get an airline job kind of "gig"?

I believe that is Journalism School. You know, where the NY Times gets its top notch info diggers.

 

[RIDETHELIGHTING]

Why do these people write this crap? The worst part is we read it.

 

[FlyBoeingJets]

[FONT=Tahoma, Verdana, Lucida]It's The Revenue-Generating Machinery That Counts. Today, the usual suspects in the media, and some of the helium-weight Wall Street analysts, too, are still doing the mantra about LCCs having "one type of aircraft" which, for reasons they don't understand, nor would care to, somehow imparts a magic advantage on LCCs. [/FONT]
[FONT=Tahoma, Verdana, Lucida][/FONT]
[FONT=Tahoma, Verdana, Lucida](The "one-type" thing is more myth than fact. Take a look at the fleet operating under brands such as AirTran, Frontier, jetBlue, and even Southwest, which operates more than one distinct 737 variant.)[/FONT]
[FONT=Tahoma, Verdana, Lucida][/FONT]
[FONT=Tahoma, Verdana, Lucida]But regardless of this, the fact is that legacies have the enormous advantage of superior fleet flexibility compared to LCCs. Airliners from roughly 34 to 350 seats, generally. Flexibility, say, like that of Northwest, where the airline has the ability to effectively mine cross-system revenues in markets from Bangor to Beijing [/FONT]

Uh, what?? Sounds like Boyd the rocket scientist again.

No kidding, its about revenue. But also about cost. You know, Boyd, one of the C's in LCC.

Einstein here forgets that multiple fleet types require training cycles. It's a common fleet type because you get one training cycle to fly all of them.

I'm sure he is equally confused by CAL's pilots ability to fly the 757 and 767.

 

[Andy]

Einstein here forgets that multiple fleet types require training cycles. It's a common fleet type because you get one training cycle to fly all of them.

One way to fix that (for airline management) is to pay the same hourly wage for different guages. United's concessionary C2003 decreased the training cycles by combining the 400 and 777 payscales and the 737 and Airbus payscales. There used to be a pay incentive for pilots to bid 737 to Airbus to 75/767 to 777 to 400. Now, there's only pay incentives to bid 737/Airbus to 75/767 to 777/400.
The flattening of the payscale alone will reduce the number of training cycles with each 777/400 captain retirement; the long seatlocks help ensure that there will be less training cycles.
I don't like this trend, but I can see why management is in favor of it. I'm sure that if they could, they'd use the same payscale for 400 crews as 737 crews.

 

[Big Duke Six]

Originally posted by 737 Pylt:

I dunno, SWA seems to have no problem doing it. Their market corner seems to have only one thing that NOBODY else has...1 common fleet type!

Sorry bud, maybe you missed it - F9 has only one fleet type. In fact there is more commonality to our A318's, A319's and (soon) A320's than Southwest's mix of 73's.

Just wanted to throw that in...