Originally Posted by
MasterOfPuppets
that is a good point. The first one into Bankruptcy could just chum the waters. Everyone else could just go into a frenzy scooping up all of their slots, planes and market share, basically making it impossible to survive.
Hunter didn’t say if one goes we all go but he did say one bad player can bring down the entire industry. How far down will an airline that keeps prices low and floods the market bring everyone else? That length of time and the damage inflicted may leave the others without a choice.
Normally BK is used to address a cost issue, not a revenue issue - I still wonder what levers would be used to further reduce cash burn without shrinking into oblivion. Also Wall Street has been obsessed the past few years with capacity discipline - thinking it creates pricing power. Unfortunately in the leisure space, you still have to compete against your irrational competitors (NK/F9/Norwegian...). In that world, market share / size is key, because you can’t just charge more in economy because DL/AA are ‘full service.’ AA tried that when NK was aggressive in DFW, and AA was taken to the cleaners.
I still thought it was a good presentation, and helpful to hear the other side.