RowUnderDCA
Veteran
- Oct 6, 2002
- 2,123
- 1
If he is, it's poor composition.
More Competition
- Thread starter 700UW
- Start date
If he is, it's poor composition.
ClueByFour
Veteran
- Aug 20, 2002
- 3,566
- 37
The bad news is that LCC's burn rate (due largely to the fact that virtually every aircraft on the property is in hock) is a lot higher than Southwest. LUV only pays on brand new aircraft. US pays on every aircraft.
Yeah, If everything is so great at Southwest, Why are they forced to raise their fares ?
I know it irritates some people that LCC is still in business.
SoftLanding
Senior
- Jul 25, 2005
- 255
- 1
Burn rate, might well be...
However, to compare apples to apples, we most likely have to wait at least a year, possible longer, to get an accurate comparison between LCC & LUV. In other words, until the merger is complete, it's mostly academic.
No getting around the fact that LUV is looking for higher yields, though, with service to DCA & LGA...The Allentown's of the world is becoming less interesting for LUV.
Must tick them off immensely that LCC is still around
(And DAL likewiseSoftLanding
ClueByFour
Veteran
- Aug 20, 2002
- 3,566
- 37
Yeah, If everything is so great at Southwest, Why are they forced to raise their fares ?
I know it irritates some people that LCC is still in business.
That one is fairly easy, actually. Since they (LUV) set the bar at the low end, they can raise their fares when needed to ensure they continue to make money. As I've pointed out on other threads, they tend to raise fares preemptively.
You will note that their fare increases also stick, whereas when a legacy (or former legacy tries it), it sticks about a third of the time.
As to SoftLanding's point, I don't think LUV cares whether LCC is still around. They seek overpriced and underserved markets these days. Which is why you get PIT, PHL, DEN, etc--they figure that by breaking the monopoly back they can make enough revenue to offset their operational cost. It seems to be working alright for them.
You can tap dance all you like about Southwest raising their fares.
The bottom line is they HAVE to, if they want to stay in the black.
And it will not get easier for them as their fuel hedging advantage continues to erode. Actually, You're right, It IS Fairly easy..
ClueByFour
Veteran
- Aug 20, 2002
- 3,566
- 37
Point being? They still enjoy north of a 10% cost advantage on every current and former legacy. ex-Fuel, their CASM has dropped year over year, despite increased labor costs. If every other airline is somehow hoping that LUV's eroding hedges are going to be the end of the line, it'll be a long wait--they made money for 30 years without the hedging advantage they currently enjoy.
US won't have a dog in the hunt until the product differentiation and value proposition over the LCCs (LUV, B6) are meaningful and when none considers that the combined U CASM is not competitively less than the remaining healthy legacies (who do offer better product differentiation) it does not look good.
The "Point Being" Southwest is slowly losing it's pricing power it has over the industry.
The rise in fares that Southwest has initiated has given some breathing room to some of your "evil" legacy airlines.
I have not read anywhere that anyone is predicting the "end of the line" for Southwest.
I hate to "CLUE" you in on a couple of Facts, LCC has had some very good Load factors and people are starting to see improvement in the overall product, [There is Still room for improvement],
I take your "opinion" on product differentiation with a grain of salt. [Know what they say about opinions, Everyones got one].
.I see you like to harp on CASM, while ignoring the other side of the coin, RASM.
One of the main reasons Southwest has a CASM advantage is due to one fleet type.
Having a fleet of only 737's is fine, if you do not intend on flying over the pond and other international destinations out of a 737's range.
Since LCC operates A330's, B767's, B757's on these Lucrative international routes, LCC has the opportunity to overcome it's CASM disadvantage by gaining REVENUE from these intl. routes.
LCC does not have to match Southwest's CASM numbers to be profitable.
ClueByFour
Veteran
- Aug 20, 2002
- 3,566
- 37
Load factor is meaningless if the company is still losing money. (or, if you really want to get scared, consider that LUV only runs 65-70 percent loads today. Wonder how that would be at 80 percent).
I take your "opinion" on product differentiation with a grain of salt. [Know what they say about opinions, Everyones got one].
In the past 5 years, I've had no less than US2 on US (3 years as a US1). During that timeframe, I've been Platinum on AA, BA Gold, and either Premex or Premier on UA. I've done everything from weekly transcons to bi-weekly pond hops, to shuttling up and down the east coast. With that in mind, the US F product is currently bottom of the traditional legacy barrel, and the Y product (particularly on the east side) is actually worse than LUV and B6.
If you don't believe me, perhaps the fact that at least half of the VFFs who post here also feel this way. It's not a coincidence.
Product differentiation. Why in the world would I choose US to anywhere UA flies if I'm in back. Anything versus E+?
Why would anyone wanting true premium service take envoy these days? The rest of the domstic flag carriers are better over the pond, and BA has the US product crushed.
On the strategy--running and hiding in Europe and the islands will only work until the LCCs get there. The islands are already being invaded, and it's only a matter of time until somebody starts running Laker II over the pond.
No, but it has to have a reason for people to pay more. Right now, that reason is sorely lacking.
OP
700UW
Corn Field
- Nov 11, 2003
- 37,637
- 19,369
- Thread Starter
- Thread starter
- #42
Low-fare JetBlue on way to Charlotte
Carrier's flights to N.Y. may prompt lower fares
JetBlue Airways, one of the country's largest low-fare airlines, plans to announce today that it will start flying this summer between Charlotte and the most popular destination from the city: New York.
The move could cut airfares between Charlotte and New York in half.
Beginning July 12, the airline plans four daily flights between Charlotte and New York's John F. Kennedy International Airport aboard new 100-seat Embraer 190 aircraft, with introductory sale fares as low as $138 round-trip, company officials told the Observer on Wednesday.
JetBlue to CLT
Carrier's flights to N.Y. may prompt lower fares
JetBlue Airways, one of the country's largest low-fare airlines, plans to announce today that it will start flying this summer between Charlotte and the most popular destination from the city: New York.
The move could cut airfares between Charlotte and New York in half.
Beginning July 12, the airline plans four daily flights between Charlotte and New York's John F. Kennedy International Airport aboard new 100-seat Embraer 190 aircraft, with introductory sale fares as low as $138 round-trip, company officials told the Observer on Wednesday.
JetBlue to CLT
Hey, now!
Whether you meant US as in US Airways or US as in all US flag carriers, to be fair BA's product always has made the rest of us look like Greyhound in comparison.
On the last cruise my late wife and I took before she died, we flew BA from Houston to London to Athens. We made no special requests. However, my wife had had chemo the week before and was sick as a dog. The BA crew treated us as if we were the only passengers on board.
Even though we had not requested it, the crew radioed ahead for a wheelchair and escort for my wife. We had a 2-hour sit in the transit lounge in London. The escort stayed with us the entire time, got us coffee and sodas, newspapers. We never had to get out of our seats until we went to our flight to Athens.
Now, that's service.
LCC announced that total cash was nearly $2.6 billion, however, that includes restricted cash. Dunno how much restricted cash at the end of Q1, but it was $800 million at the end of last year. Still, $1.8 billion of unrestricted cash is a lot better shape than either HP or US has been in for a long time.
Don't squander it.
