Originally Posted by
Chief Brody
Then please enlighten us old wise one.
Kirby wants to play wack a mole with the ULCCs and he is gonna drive UAL/CAL holdings into the ground doing it. He ain't gonna do it with main line A319s or 737s either. He has plans to use 70-100 seat RJs. It is a one trick pony that won't work this time. The problem is Frontier and Spirit can make money on a $20 ticket. UAL, XJET, MESA and Air Whisky cannot. Period.
Pass the popcorn this is gonna be one helluva train wreck.
How much money F9 and NK can make on $20 fares remains to be seen. Well see where NK and F9 come in with oil going up so much this year. We will also have to wait and see how the new contracts goes, pay is going WAY up. NK may have no choice but to raise ticket prices. When they do that they cut the very people they rely on to run an airline, the super price sensitive, the people who will NEVER be able to afford to fly anyone but the ULCCs.
The passenger that are price sensitive but willing to pay a little more ($20) for a better experience will pick one of the legacies. It remains to be seen how a ULCC will fair in a high oil competitive market place. NK reported last quarter that basic economy has affected their numbers already. Can an airline that posts sub 100mil profits every quarter survive with current business practices?
It is very possible United will crash and burn. Its also possible NK and F9 will be forced to shrink or possibly merge and become leaner or even reorganize.