I am curious what RP4242 thinks but it would seem that the negative RASM isn't sustainable beyond a few quarters, once our CASM hits bottom the negative RASM will be a big problem.
RASM doesnt fall, just like it doesnt rise consistently for decades, or even usually more than a few quarters on end.
Second thing. The RASM loss is due to a softening of the market due to a market share fight that is directly being enabled by the CASM drop across the whole industry. Once capacity re-corrects the metrics will reverse course. Its not like CASM will cease to drop and then RASM will just keep dropping indefinitely.
Third thing which also is attributing to these numbers that was not there last year even is the amount of new markets which came online in off-peak times and are taking their time to mature, mostly again because of the competitive environment. Its extremely hard to keep RASM and yield positive when you are engaging in so much growth, especially growth where you have no existing flyer base.
A follow up to that; what difference would IAH be since SWA is huge in HOB?
IAH is nothing like DFW. Lets break down the differences.
1. There is no sudden dump of capacity to the tune of 600-1500 seats in almost every Top 30 O&D out of Houston overnight. Purely due to the fact that an artificial dam has been set there on demand for a good half a century.
2. There is no additional carrier at HOU fighting a fare war with SWA.
3. While DFW and DAL are almost interchangeable due to their proximity for quite a bit of the metro area the same cannot be said of Houston. Houston more resembles the fragmented Chicago market. This is a huge advantage if you really think about it because the competition is much more shielded from the other airfield.
4. Uniteds pricing trends are not like AAs.
I believe we don't have a crap product we have an image problem. Huge image problem. All one has to do is go to Yelp and read the reviews, then you realize that probably HALF the people who have reviewed Spirit or comment on stories about Spirit have never flown Spirit. They have taken the media's word (news sites, blogs, forums, etc.) and what "my cousin's girlfriend's next door neighbor's babysitter's dad" said about Spirit. I truly believe our product is not Virgin America, but it's not the worst flight either. We are still getting bad reviews because of a $100 bag fee, seats that don't recline and no free drinks.
I think we're on the right track business model-wise, we still have an image problem.
I think this is a pretty fair assesment. While we discuss what can be done IMO on the macro scale nothing is going to work like time. The American consumer has to learn en masse not just via Spirit since we are only approaching 2% of the market but through other carriers that there are different business models. This is already happening but I severely doubt even if we took out Super Bowl Ads and put out PSA that this change would happen all that much faster. Thats not to say on the micro scale nothing can be done to help the process along of course.
As a point of comparison European ULCCs didnt grow overnight either into powerhouses, and they had a crapload of more advantages than us:
- A much poorer flying base than in the US which gave it natural tendencies to save money.
- Low hanging fruit markets all around in countries where there was only symbolic legacy presence, sometimes even zero.
- Far more flexible airport operations options when it comes to saving money.