Originally Posted by
FriendlyPilot
The idea that NK and F9 are unprofitable because they aren't big enough is a myth. Both F9 and NK were profitable from 2012-2019 when both airlines were smaller. Allegiant is smaller than both airlines and they were profitable in 2023.
American only had a 2.1% profit margin in 2023. Southwest was 2.4%. If size was the main driver of profits these airlines would be wildly profitable, but they aren't. Neither NK nor F9 will ever get to this scale.
The reason that NK and F9 are not profitble has nothing to do with size. Its a failure to pivot away from a business model that doesn't work anymore.
This is 100% accurate. The only way either survives is to figure out a way to charge people more money to get on their planes. This will get harder as the legacies keep adding seats into their network with a minimal marginal cost because of upgauging their fleets and replacing RJs with mainline planes.
Being larger by itself does not equate to profitably. However, part of the reason that the legacies offer a more compelling product is the size of their network and frequency. So NK/F9 have two choices here. Option 1: Throw up the white flag and permanently relegate themselves to being a small boutique ULCC. Option 2: Shift to offering more premium products and scale to compete.