Originally Posted by
El Peso
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.
All true, and ultimately to continue the Ponzi scheme, to continue to grow faster than costs, you have to continually find new markets that support ULCC service, consistently, or if seasonal, enough seasonal markets to keep the planes busy most of the year.
I do not believe the ULCC model has shown that it can do that, in the US, on any large scale. That's why you see such dramatic changes in schedule, opening and closing of bases, moving resources around etc ... MCO/LAS have shown near year around ULCC demand, and Florida to a large degree, but otherwise the model has not scaled as planned, and with more traditional airlines offering basic economy... it's really hard to scale beyond those markets I mentioned, and no ULCC has yet to get a commanding share, or be on a trajectory to get a commanding share in any large metro areas where most of the money/travelers are.