Originally Posted by
full of luv
I don't know, much more so in the 80's/90's as everybody grew during profits for "market share" only to shrink during the downturns.
If 1/4 of Delta gets furloughed, it will be tough for the whole industry.
What will kill the ULCC's is an oil price spike or sustained price raise because as oil becomes a bigger and bigger part of the casm, then the ULCC CASM get's closer and closer to the legacies as labor becomes more insignificant factor.
Hopefully this discussion is academic.
Our CASM EX-FUEL will still be an equal amount lower than others and with more seats on the airplanes it's easier to spread "the luv" without a dramatic change in ticket price. The CASM would rise at a lower rate than our competitors due to the efficient airplanes and the additional seats for a comperable aircraft. Although our load factors are already high in soft oil pricing environment, historically we do even better when the economy sucks and oil is high. Remember the "rise of spirit' as an ulcc came during a really bad time in the US economy. Our RASM is not a direct reflection of profitability, like it is for a legacy, with such a large portion on the income returns from ancillary products. This makes traditional means of comparing RASM/CASM metrics to analyze the impact of changing fuel CASM does not work. Take home message: We'll be just fine regardless of fuel...
You want academic? Take a look at James Carville's response to Frank the Tank in the debate competition, Old School (circa 2003): I have no reply, that was perfect!