Originally Posted by
Excargodog
They undoubtedly will TRY to do that, if for no other reason than it may be a couple of years before international and business travel comes back. But structurally they are at a disadvantage.
With as many as nine (9) different fleet types, and with the majority of their international flying being done by their most senior people, they have a real problem. All their furloughs are going to come from their Junior (and mostly domestic) flyers Who are flying their most junior aircraft. But before those people go someone else will have to be trained to replace them because those senior to them likely don’t have the same type ratings. Think about it - how many FOs with the seniority to avoid a furlough are going to have an A220 type? So you pay the junior people you are about to furlough to do the flying while you are paying the senior guy to learn the type. So OK, the FO you are going to downgrade to the A220 was flying the 737. You are going to have to downgrade somebody else - maybe flying the 757 - into his slot. Another type rating. The guy replacing him is An FO flying the A330. Another type rating. The guy replacing him is an FO flying the 777 or 787 whose last type rating before that was in the 727. And you go through the same thing with displaced captains. They’ll displace to the extent they can where it is monetarily or geographically best for them among the options available to them. If it happens to be most cost effective for management, that’s fine, but it’s unlikely to happen. You get a hellacious domino effect of expensive training events while you largely wind up with your most expensive equipment - equipment poorly suited for strictly domestic flying - sitting for lack of passengers and the cheapest part of your labor force furloughed, while simultaneously pi$$ing everybody off from the churn.
The /LCC ULCC starts with a less expensive labor force, can continue to utilize all their equipment, and other than the training cost of downgrading a Captain for every two or three FOs they furlough, really don’t incur a great deal of expense.
That doesn’t mean that the Big Three can’t or won’t compete, but it does mean that they are at an enormous CASM disadvantage when they do while simultaneously paying to park a whole lot of equipment poorly suited for domestic flying.
Worst case EVERYBODY loses money in a giant game of chicken, waiting for the other guy to raise seat prices first. Somebody - or even several somebodies - might go bankrupt before a winner emerges.
But it’s like the old Kipling story goes in Arithmetic on the Frontier:
I completely agree that the legacies are at a structural disadvantage, and they are going to take some serious knocks and losses along the way. But a wounded animal can still be a very dangerous one as well. They have all said they are going to emerge much smaller airlines. They are offering generous early out's for many near retirement, long term VIL's, shedding outdated fleets, and I wouldn't be surprised if one or two legacy carriers go to a two type fleet. One for domestic and one for international. I can also envision even more reliance on their code share and regional feed to maintain presence in markets that will no longer justify narrow body domestic service in order to keep the brand visible and keep competition at bay. Lastly, I can see the strategic use of bankruptcy to preserve the airline by renegotiated contracts, and protection from creditors. The last one is what I fear most when trying to compete.
I definitely think the LCC''s will have many opportunities to expand, but I think this will only happen if there are passengers to fly. If we continue to see the virus infections climb, and major destinations go back into lock down, or the dreaded 2nd wave emerging. Then only the strong are going to survive, and our industry will continue to contract, or never return to 2019 passenger levels. I just don't think market expansion will be that easily achieved by the LLC's.