Originally Posted by
FahQ2
The problem with your theory is mint is a niche, not a scalable brand game changer. It works on a few key routes where some people want to flex a bit, but put an American 787 first class on the same route for a couple hundred less and I also get lounge access? See ya Blue. Same with the euro routes.
I did a transcon on mint a few months ago coming from over seas on a delayed flight, missed my company jumpseat connect and it was Super Bowl weekend so it was cheaper to fly mint than a hotel in LA. Nice product, but not the wow factor of Emirates or Singapore, but much better than say a Delta 737 first class. There were some real housewives of LA types, a D list comedian, and a well off Asian couple still holding their passports.
I get that there’s a niche LAX to NY and FLL/MIA, and selling out mint makes a boatload, but mint won’t do that on 90-95% of your other routes. It’s a newish thing for a crowd that’s always looking for the next thing.
Meanwhile, there are no shortage of chubby pale midwesterner’s who want to go on a cruise, visit the mouse, or go blow their inheritance or kids college fund in Vegas. They aren’t looking for the next thing, and are happy to do the same trips year after year.
That’s why Vegas is so canned today, they learned the real money wasn’t in staying hip for the young rich singles, but roping in the families spending Disney level money, old farts who are bored, and young people with no taste trying to flex.
The Walmart people will still be taking these flights to cookie cutter vacations long after mint gets phased out.
I think you missed many points. JB has plans with high confidence that will bring it back to high margins with it's entire operation, not just Mint. The big 4, with their high fares, make up 80%+ of all domestic traffic. 3 of the big 4 have much higher CASM than JB, and the 4th has a much worse product. So some proportion of 80%+ of the US domestic market, the largest in the world, is ripe for JB's much better core product at JB's relatively lower pricing.
As for Mint, AA can't put a 787 on Mint routes for hundreds less because their costs are much higher. Despite AA, DL and UAL trying to aggressively compete with JB on Mint transcons for the last 5+ years, JB is still doing very well, and is still some of JB's most profitable flying. Europe, they say, is tracking ahead of projections and they just announced more daily frequencies. And are said to have more destinations to be announced.
As for ULCC demand, you are right, there is plenty of demand to MCO, LAS and cheap Florida. Interesting you pretty much acknowledged that was where the demand is... Problem is, that market is only so big, NK and F9 have already largely saturated it, and your costs won't stay bottom of industry forever, so ULCC 2.0 and 3.0 will beat you at your own game as NK and F9 get bigger and older (more expensive). If your only competitive advantage is cheap, you lose that advantage over time. So that chubby Midwesterner will be flying New Air 10 years from now because they will have startup 1st and 2nd year labor costs with the newest most fuel efficient models and JB will have 500+ aircraft flying to Europe and likely beyond with free internet, free drinks and snacks, free TV's and still taking market share from the big 4 via a better product and at a marginally better price. Because of JB's model JB has been under siege for 22 years. Delta created its Song subdivision and United created TED specifically to put JB out of business. Didn't work. JB has created a massive collection of unobtainium slots/gates at some of the most valuable markets in the country. Those slots/gates could never be stockpiled by a start-up again. They can/could/will expand to the Midwest/south at any time. But no start-up airline will ever again achieve the slot/gate portfolio in JFK/LGA/EWR/BOS/DCA/LAX that JB has. Maybe one or two of those airports, but not all of them. JB will within the next few years be parking the highest CASM mainline aircraft in the US industry, and replace them with the lowest CASM mainline narrow-body. And the new European expansion will be more mature, and the upfront investment phase will be at least partially replaced by the reaping rewards phase.
You may not agree, and see holes in my logic, but I see clear holes in yours. So let's agree to disagree and sit back with the popcorn and watch the clown show.