Originally Posted by
F15Cricket
You do realize your post doesn't make sense, don't you? In the first paragraph, you use your trademarked "endless growth capacity dumpers" comment, disparaging other airlines that are making a profit ... Then you conclude by saying "we're headed for some brutal capacity/yield wars in the not too distant future." Does that mean the legacies will now, in your opinion, join the ranks of the "capacity dumpers"?
Is that why SWA immediately back-pedalled after the backlash against their increased capacity comment a couple of weeks ago? ... Or are they in that EGCD ("Endless Growth Capacity Dumpers" [TM pending]) group?
And as to your premise that the EGCDs are about to find out they are wrong--is that why so many passengers don't care what airline they fly on, they just look for the cheapest ticket they can find?
Finally, btw, you didn't address the question I asked--how much profit would the legacies be making now if they hadn't flushed your pension? I would bet very little. So, my point is I don't think most airline managements have really figured out how to run a profitable airline, do you? EGCD or not ....
What I said makes perfect sense. You just can't see it because you are spring loaded to hate all things legacy (and especially DL because you think they are the scourge of your world and the "opsfor" of your new beloved squadron…LOVE your school spirit BTW, and I mean that).
The EGCD's are on the march especially because of the profits that the entire industry is seeing due in large part to broad capacity dicipline by the biggest players.
In fact, its been more than dicipline, its been shrinking to profitability, which obviously isn't sustainable and is only a temporary stratedgy. The whole "burning the furniture to heat the house" thing.
I'm not disparaging airlines for making a profit. Its (incredibly) easy to make a profit right now though, in large part because of legacy capacity dicipline. But the EGCD's are locked on to the temporary unsustainable stratedgy because they have no other plan. They think the formula is, and always will be, to add capacity into the system as legacies pull down. Since they typically have lower CASM they feel the legacies will cower to them and not want to fight a fare/yield war. This has the double whammy effect of lowering their unit costs through growth and raising the costs of their competitors through shrinkage.
We saw this a lot in the first 3-5 years following the start of major consolidation. We really saw a lot post 9-11 when the so called "LCC's" and start ups went ballistic. Also, I think you think that you are a David LCC in a world of evil Goliaths, and that's just funny. While there may be a few limited parallels, AS is very much a legacy and will continue to face the pressures of the EGCD's into your core markets, including from those with lower CASMs. You are blinded by that because of the DL/AS battle in SEA, but the big picture is about way more than that.
And SWA's announcement barely rolled back capacity from 8 to 7% or so. They are the biggest domestic airline in the country. Bigger than DL, UA, AA and AS of course. That is a LOT of capacity they intend to bring on line still, and that's going to hurt everyone.
What you seem to be sticking on as contradictory in all this is the inevitable capacity war that will have to be fought. The legacies are more than content to stay "diciplined" to squeeze revenue and drive up yields. This helps everyone. But if they do that while others keep barfing capacity into either the demand growth that they somewhat underserve or into the shrinkage they often do to shore up the foundation, it becomes counter productive.
The only way to combat that, however, is to do the same thing. If your smaller and more vulnerable competitors keep poaching the capacity you are keeping offline to help your numbers, you have to go after them by adding capacity. It will be brutal and bloody financially for a while, but it is required because the ADHD CEO's of the EGCD's (of which AS has never been, and its funny you think the LCC/ULCC's are somehow your allies in any of this) is to fight fire with fire, especially to burn the ones that are far far more vulnerable to the very tactics they are pursuing.
BTW, what's going on in SEA has nothing to do with DL and DALPA, and everything to do with BT choosing AA/EK instead. DL/RA were more than content to farm out the entire west coast to AS, all day every day. They just wanted some assurances that their growing dependance on AS wouldn't turn into a giant vulnerability that they has no say over. BT said pound sand, and then "acted" suprised that DL got upset. Even our current TA (which you will make fun of despite it being far, far better than your PWA) refuses to offer us the zero cost item of calling SEA a DL hub for the purpose of limiting Alaska. Your CEO, and your CEO alone, can singlehandedly transfer all the future and recent narrowbody growth from DL to AS/Horizon. DL, inc isn't your enemy or even your rival. They stand ready to bow down to your airline and surrender everything to you. Your CEO just doesn't want that (and I'm very glad for that by the way).
Meanwhile AS still has some very, very high yield routes with very little competition. Markets that for them are very profitable, yet extremely vulnerable to any competition. SW/JB/VX and probably soon Spirit and maybe others will continue to penetrate those markets with a scorched earth policy on yields and capacity. They are not your friends and they are certainlly not your allies just because they are doing the same thing to DL and others.