Originally Posted by
DAL 88 Driver
sailingfun,
Pull your head out of the spreadsheets for a moment and realize that there is a lot more to a successful business than just whoever has the most competitive cost structure. Do you have any education or background in business? I'm guessing no, but I'd really be interested to know where you came up with the notion that the most important thing to business success is cost structure. There is SO much more to it than that. You haven't scratched the surface.
I ran a business for a long time as a backup to Delta. I will however quote a business class professor on the subject. "Give me a 5% cost advantage over a competitor and I will crush them every time".
SWA should serve as a excellent example of this. When they held a significant cost advantage they could go into virtually any market in the US at will and run everyone else out. They lost that advantage in the mid 2000's and have ceased to grow since despite the fact that year over year growth was a cornerstone of their business plan.
We sell a commodity or consumable depending on how you view it. Both always trade in a narrow price range.
That's quite different then most products where you take it home and own it. I purchased a IMAC for my wife because I was fed up with the performance of windows products. I paid almost double what a windows system would have cost. I used to purchase tickets in conjunction with the business. I did like 99 percent of travelers and took the lowest cost ticket since the product is about the same and once the flight is over I don't get to keep the seat!