Huh? Revenue has been up, but profits extremely disappointing. I believe we grossed somewhere around 1 billion last quarter, but only cleared 77 mil after expenses.

Frontier’s implementation of ULCC isn’t working very well at all. You can only **** off a finite number of passengers before the decide to pay a little more for a better experience and the gravy train dries up.

 

Rambling....Interesting how several low cost carriers are saying in the the news that the post Covid travel frenzy (=$$$) is over yet the majors are saying it's not. I haven't been a believer of a meaningful recession everyone has been talking about for over a year but aren't the LCC's supposed to do better in a worsening economy? Hard to envision that with numbers we are seeing. The economy in general is the U.S. is fairly hot or interest rates wouldn't be going up to cool it. Not sure what's going on here but it doesn't seem business as usual.

 

He was talking about Delta. They had some record profits or income. Not us

 

My comment was about frontier not turning much of a profit. Not Delta

 

I think it’s the difference in customer bases. I think our customers are essentially in a “recession”. They are the first ones that will be hit by an economic hardship. Higher interest rates, credit card debt, and student loan repayment restarts unquestionably will have a larger affect on our customers than Delta’s. The Delta customer is a higher net-worth customer who isn’t as quick to be impacted.

 

That makes sense but how to you align that with statements I've heard that LCC's do better in a "recession"? I've heard that passengers will buy the cheap tickets as affordability goes down. Good thing I just fly airplanes!

 

I agree with you. Delta’s customers are more likely to own a home vs paying rent. Rent inflation has been quite high as property values have been increasing steadily since covid. Lots of homeowners are locked in at very low rates granted the current rates are substantially higher.

 

we will all learn how they did soon enough. Oct 25

 

I think if there is a more broad recession, which is entirely possible in the next year or two, then the ULCC argument may hold water. I think the theory behind it is that when everyone is hurting, more of the traditional legacy customers will “trade down” to save money. Problem is, how bad does it need to get before that happens? And with the way our product is delivered, will that actually happen? This is when our product and our operational issues will bite us. It will keep people from trading down. If we had friendly customer service and a modicum of good operational performance it would be an easier pill to swallow for the trade-down customer. The legacies also have the advantage of loyalty programs that will highly entice people to stay with them.

I think that the truth is that we are in a period of long-term, macro-level changes in consumer behavior and industry strategies and we simply don’t know how things will play out because there aren’t many similar setups in history to look back on. This industry is completely different than it used to be based on consolidation, economies of scale, etc. that looking to the past may not be a 100% good strategy.

 

Just drop the mic, sir! You nailed it.