Originally Posted by
Bluedriver
Well, let's see.
Nations largest ULCC last to profitability.
F9, can't afford jetways in it's home town, and was very late to return to profitability, and would it actually have been profitable if hadn't stolen $200+ million from it's customers?
The model in general seems to run out of steam after it saturates Mickey Mouse, Lost Wages and cheap Florida, both large US ULCCs seem to open and close bases as often as normal people change their underwear. The higher service, higher fare airlines returned to profitability much sooner (in general) and have reached higher levels of profitability than the ULCCs, and new ULCC competition is arriving rapidly...
And, the one main advantage a ULCC has is low cost and cheap tickets, but as they get older their workforce matures onto higher pay scales and new ULCC entrants on low longevity pay will take away their one competitive advantage...
There's more, but I've got other stuff to do. Good luck.
Aircraft start to age, maintenance cost goes up, including things like C checks and so on. Growth must outpace cost for a ULCC to maintain a cost advantage. It’s that simple. Although I don’t think I agree with him, Scott Kirby did just recently call the ULCC model a Ponzi scheme.
Another factor is that every legacy has now added something called basic economy to compete with ULCCs. A small portion of the cabin gets sold at an ULCC price but you get a free carry on, snack, drink, and more leg room for free. That’s got to be siphoning some target customers from ULCCs.