Originally Posted by
Andy
Excellent post.
ULCCs work for some, not for others.
What happens in the next downturn? No one knows, but I don't expect the same response (giving up market share) by the legacies as in past because balance sheets are in better shape at the big 3, including AA. And debt is CHEAP right now, as anyone who ever had a 10%+ mortgage in years past will tell you.
Why do you think what will happen in the NEXT downturn will be any different than what happened in the LAST downturn? In the last 16 years all three of the Big Three went into bankruptcy and forced bankruptcy concessions on their pilots. Yes, I know, some people believe that the large number of retirements coming at the legacies will insulate them from the (inevitable) next economic downturn, but us that realistic? No legacy is going to be retiring a thousand pilots a year. The Big Three furloughed over 8000 pilots back in the 2001-2004 timeframe and it was five years before they were recalled - and then recalled to a lower bankruptcy concessionary payscale. SWA - more of a ULCC then than it is now managed to avoid furloughs.
Some business knowledgeable people believe that today’s ULCCs may actually be more RESILIENT in a downturn than the legacies:
https://www.forbes.com/sites/deandon.../#3cc8dbf025e2
just remember, past is generally prologue, and the history of the aviation industry is littered with the wreckage of airlines like PanAm, TWA, and others that would have seemed too big to fail and the safe bet at the time.