Originally Posted by
SoFloFlyer
The profit should still be there, the margins are just extremely slim compared to the legacies. We just require more pax to break even and turn a profit
It doesn't work that way, at all.
Once the airline sets it's flight schedule for the quarter, it's variable costs largely become fixed costs, which gets added to traditional fixed costs. The main costs that are still variable are unexpected mx events and IROPs.
That's one side of the equation. On the revenue side, ticket prices can vary wildly depending on demand. It's the main reason that some quarters are traditionally higher margin quarters than others. But even beyond seasonality of demand, demand itself isn't fixed. If demand for your product is lower than expected either due to reputational stress from past IROPs, or poor customer service, or stress on the socioeconomic class your airline caters to, or even just the general economic cycle of the nation, the airline has to discount tickets to fill the seats. The average fare one month could be $140, the average fare in another month could be $90, even for the same flight schedule. In those two examples the fixed and variable costs remain very similar, but the revenue (money from fares and ancillaries) are dramatically different. So even if the load factors were the same ("my flights were full"), the difference is profitable or not profitable.
Spirit and Frontier have both made public statements recently about "heavy promotional activity and discounts" to fill the seats. That is why full flights aren't guaranteed to be profitable.
https://www.marketwatch.com/story/spirit-airlines-cuts-3q-outlook-amid-heightened-promo-activity-123dd758