wrong question but right idea. going head to head with LCCs if you have higher costs without a percieved difference in product means that over time the lower cost carrier would have the advantage and simply 'wait it out'. Now how can LCCs and Legacy carriers co exsist? Look to the auto industry (as one example) (whoa hold on their cowboy yes they are in a weakend condition but survival is not in the equation mearly adaptation).
case in point you can spend 12,000 on a car or 45,000 on a car. if the lowest cost were all that people wanted then there would be no SUVs nor expensive cars yet look on the roads. Similarly, if the airlines are all perceived as the same then price becomes the determining factor (with a small allowance for exact destination ((pvd vs bos as example))and times (( 8pm is ok 1am is not))). So why do people spend differently on autos? they perceive there is more than just 4 wheels and basic transportation. in otherwords product differenation. The airlines have not effectively done this.
Then the next step is if the playing field is not level (costs are significantly different) then you can 1. level it (meaning if cities provide incentives to certain carriers and not others, then you can sue the cities (ABE and BWI learned this the hard way paying 10s of millions to all carriers). 2. don't play on that field anymore.
look at the LCC model see what works (point to point, secondary airports, high frequency (meter drop) to generate more utilization which creates more ASMs while by defaults lowers costs by spreading fixed costs over more seats. (see SWA for this). Find the weaknesses and exploit them. SWA generates the most ASMs due to quick turns and high a/c utilization, they also suffer from the lowest load factor of all the majors. (interesting no?) they also only serve 61 cities while more service is provided typically by Legacys. (JB will challenge this with the upcoming e190 deployment) ie SWA would never go to a FAY or AVL or AVP. Nor will they go TransAtlantic. While they do sell seats to HNL it is by ATA are they providing SWA product? or ATA product? they wont go true transpacific NRT and the like. so there is another answer. GO where they wont or can not go.
what will the east coast look like? short term a battle between FLYI, UAIR,JBLU,DAL, AMR,CAL is about to commence FLYI is own, UAIR using more RJs, DAL comair deployment, AMR eagle deployment, CAL its express unit. AMR DAL CAL can offer fly on us and get points towards WORLD destinations. UAIR and FLYI will be more head to head but FLYI will irriated UAL more than any other player SWA will now have to figure out how to compete with JBLUs e190s.
in 5 years i suspect you will see something of a retrenchment with point to point being covered by RJs, with feeds to hubs and hubs being more for TRANSCON, TRANSAtlantic, TRANSPacific.
For US specifically? i would expect essentially the same cities to be served, more with EMBs than 737s a depletion of the 737 fleet, see the Airbii go more south to the carrib and perhaps beyond into South America. if smart the merged carrier should attempt more TransAtlantic and TransPacific than domestic US expansion. watching for Airbus orders to replace aging fleet types and elimination of fleet type. in the background i expect NWAC to increase TransPacific and become the next merger candidate perhaps finishing what they started with CAL, look for AKA to be consumed. AMR will end up leading the pack again. DAL in order to raise cash will most likely spin off comair. leaving us with UAL. UAL is now the bottom one (Fiscally speaking) inorder to exit BK they need 1. reduce debt 2. increase cash flow to support debt. bottom line just like UAIRs exit the first time and then again this time more cuts either pay and or personel could be instore. probably in the form of 10-18% fleet reduction (which sheds debt, and personal at same time) that effect along with record summer loads should allow the no more airlines to enter bankrupcty (unless in order to shed pension obligations (ie no pension reform law) DAL goes into BK post summer rush).
in otherwords a modern version of the old system where you had TRUNK carriers and FLAG carriers and REGIONAL carriers.
in this scenario, USAIRWAYs which has been written off more times than Dan Marino should have won the big one, will infact be one of the survivors.
whew if you think reading it was tough try typing it........
B)
