LCC's Flying High
ARLINGTON (theHub.com) - Airline industry analysts predict that several years of brisk expansion and retaliation from mature network carriers will not deter growth from low-cost carriers. If anything, rising customer loyalty, coupled with cheap fares, efficient operations and creative marketing, should accelerate growth of low-cost carriers over the next several years, while protecting them from counterattacks by traditional airlines, according to a report in The Chicago Sun Times.
There is no near-term indication that growth of low-cost carriers is decreasing as Southwest prepares to expand its fleet by 14 percent in the next two years. JetBlue, which just took delivery of its 50th Airbus A320, plans to grow by 72 percent and AirTran Airways by 44 percent, according to J.P. Morgan.
“An endless supply of future market opportunities†exists for U.S.-based low-cost airlines, which will have more than 1,000 aircraft and account for about 40 percent of domestic flights by 2006, says J.P. Morgan analyst Jamie Baker. Between now and then, Baker expects the overall fleet of low-cost airlines to grow by a third, while the domestic fleet of mature network carriers will stay essentially flat, according to the report. Virgin Atlantic, Atlantic Coast and others have also announced interest in creating new low-cost airlines.
“We’re gaining at their expense†was the message from Southwest CFO Gary Kelly about traditional airlines and the marketplace as the carrier continues to move into markets with widening reach. “Low-cost carriers seem to have models that really work, and they have captured not only market share but loyalty from … customers,†said Blaylock and Partners Analyst Ray Neidl.
ARLINGTON (theHub.com) - Airline industry analysts predict that several years of brisk expansion and retaliation from mature network carriers will not deter growth from low-cost carriers. If anything, rising customer loyalty, coupled with cheap fares, efficient operations and creative marketing, should accelerate growth of low-cost carriers over the next several years, while protecting them from counterattacks by traditional airlines, according to a report in The Chicago Sun Times.
There is no near-term indication that growth of low-cost carriers is decreasing as Southwest prepares to expand its fleet by 14 percent in the next two years. JetBlue, which just took delivery of its 50th Airbus A320, plans to grow by 72 percent and AirTran Airways by 44 percent, according to J.P. Morgan.
“An endless supply of future market opportunities†exists for U.S.-based low-cost airlines, which will have more than 1,000 aircraft and account for about 40 percent of domestic flights by 2006, says J.P. Morgan analyst Jamie Baker. Between now and then, Baker expects the overall fleet of low-cost airlines to grow by a third, while the domestic fleet of mature network carriers will stay essentially flat, according to the report. Virgin Atlantic, Atlantic Coast and others have also announced interest in creating new low-cost airlines.
“We’re gaining at their expense†was the message from Southwest CFO Gary Kelly about traditional airlines and the marketplace as the carrier continues to move into markets with widening reach. “Low-cost carriers seem to have models that really work, and they have captured not only market share but loyalty from … customers,†said Blaylock and Partners Analyst Ray Neidl.
