Quote:
Originally Posted by Aero1900
Right, no doubt. But Frontier & Spirit are making money.
My point was more so that United starting their basic economy hasn't seemed to pull customers off of our planes. I was just pointing out that the the ULCC load factor hasn't decreased with the legacies trying to play the cheapo fare game. I am more curious how it's working for the big airlines
And to your point, when Frontier went bankrupt the planes were full.
There has been margin compression throughout the industry. Prior to AA and UAL dabbling in the basic economy market, Spirit’s margins were in the high teens/low twenties. The one airline deciding not to go full bore into basic economy, Delta......Air......Lines (did I get it right?
), has the highest margins in the legacy market. Who’d of thunk that filling your planes with low yielding passengers when your costs are double that of the ULCCs would result in lower margins.
It has become kind of a MAD between the ULCCs and the legacies with basic economy. The difference is that the ULCCs are designed around low cost whereas the legacies can afford to subsidize the loss is revenue so long as their one BIG cost (fuel) is cheap. If fuel goes up, I wouldn’t be surprised to see AA and UAL dump basic economy for higher yielding fares to offset the increase in cost.