Originally Posted by
DrJekyll MrHyde
Today, we compete against Spirit and a subsidized Basic Economy product sold by legacies. Southwest is far more expensive on average, they also need legacies to pull capacity and raise the ticket price A LOT to become strongly profitable again. If Spirit folds will legacies continue to lose money on their Basic Economy strategy? Kirby admitted they’re already losing money on domestic. We and the other small carriers can only grow so fast. Why wouldn’t they pivot when our order book isn’t large enough to pose a threat? They only need to temper any raises in ticket fares to not give a leg up to Southwest (and maybe JetBlue). If Spirit folds Kirby can be half-right about ULCCs and they’ve effectively trimmed the weeds and can rest easy for a while about that segment of the market.
One of the things that Kirby has mentioned is how basic economy attracts the price focused consumer, but the other options keep them coming back and they frequently spend more. They see drastically improved frequency, reliability, WiFi, in seat entertainment, “free” drinks etc, and then frequently upgrade into economy plus with a “free” checked bag, more room, and a higher boarding priority. It’s the old bait and switch. It doesn’t generate the revenue of a Polaris seat to Europe, but it definitely adds to total revenue, and in this market they’re going to chase every dollar they can.