What's your opinion of LCC's??? (low cost carriers)

[biochemtine]

Do you think they are good for the airline business??

Bad for the airlines??

Neither, but will totally change airlines??

They'll be gone in about 10 years??

any opinions at all???

And if you don't currently work for an airline where you get benefits (which most of you do), what do you choose to fly?

[roz]

Well, since DH works for one, I think they are great. Remember, they are low cost because they are more efficient, not because employees earn poverty wages. They fly more in each day of work than most pilots with the majors because their schedules are more efficient. It results in better schedules and more hours flown per month that results in overtime pay. It's true that they don't have defined benefit plans, but most businesses in the US have long since abandoned them. Their 401(k) match and stock options are very generous--much more so than the rest of the business world. Their health insurance is low cost compared to the rest of the business world (remember I am a Human Resource Director--so I know how benefit plans are evolving as costs escalate). Oh, and they get nice bonuses. Charlie gets little bonuses every month (as do all the employees in the company) for things like on-time performance, etc. In January they all got huge checks as a reward for the large profit the company made last year. Other than Continental, which other major does that?

The LCC's have already changed the airlines. The majors have realized that their business models were set up to fail. How can an airline with 279 aircraft have the same number of pilots as one with more than 400 aircraft and make money? Can you guess which one is teetering on the brink of extinction and guess which one continues to make money? And remember, the LCC's only have one type of aircraft. That makes training, maintenance and inventory control so much more efficient. At some of the majors, a senior pilot retirement will cause 12 moves--all with training and down time costs.

Ten years ago, the LCC's had a small percentage of the market (about 10%). Now that percentage is four times what it was. They create demand. For example, a professional group I belong to was thinking of a gathering this summer in Maine. I never would have attended because I refuse to drive that distance for a short period of time. Southwest came to town and viola--I'm going! Charlie's company emails the flow sheets everyday, so one can see the loads. They say they make money at less than a 50% load factor. They are averaging high 80's now.

And people are getting tired of being gauged because they are on a route that is a monopoly. Check out flyertalk sometime. Just today people were wondering when Southwest was going to fly from BWI to DTW because Northwest has the monopoly into DCA and the fares are outrageous. Well, that will end really soon because the DOT just awarded DCA to DTW slots to Spirit last month. In Philly the only flights to Cancun used to be over $1,000 on USAirways. That was until last December when Spirit started flights to Cancun from Atlantic City. Now they are $400. Northwest also has the DTW monopoly to Cancun. Spirit has applied for that slot as well. Transcon fares have been impacted by the LCC's. Now SWA, AirTran, JetBlue, AWA, ATA, Spirit all serve cities like LAX, SFO, DEN, LAS and more. Again, they create demand with reasonable fares.

People say the LCC's aren't flying international routes. Well, ATA will soon. And JetBlue and Spirit are going to the Carribean (beyond Puerto Rico which they both already serve) and South America soon. And Virgin America will be here shortly.

And people say the LCC's don't have first class. Well, who pays for first class anymore? Few people do. But America West, AirTran and Spirit have walk-up upgrades that can be purchased for about $35-$40. Guess what, people pay it! The front cabin is always full. What the majors don't get is that customers want reasonable fares. They don't want to see a flight priced at $214 roundtrip PHL to MSY one day and $1200 the next. That's what the majors did to me, so I booked on AirTran. I'll upgrade at the ticket counter.

Do we need both? Yes, because the LCC's still aren't serving many of the smaller markets. But who knows what the future will bring.

And don't ignore what is happening at MESA. If they take over PSA, they will have their RJ's and 170's. If they take over MAA, they will have their aircraft. And rumor has it they are acquiring or have already acquired 737's. They follow a different model than the LCC's. They are low cost and low wage, from what I hear. I don't hear anything good about Johnny O.

I fly a lot for business. I don't care what airline I fly. I pick the flights with the best times and fares. If I have a choice, I avoid the RJ's because of all the on-time, weight and other issues associated with them.

Other than that, I have no opinions!

[biochemtine]

I just skimmed your post for right now, I'll read it better later (but have to go). I wanted to just make one quick comment.

I wasn't thinking at all from an employee standpoint (mostly because we aren't yet), but from a consumer standpoint.

Thanks for your opinions and thoughts. I will read it later, I promise.

[Barbara]

I think Roz did comment from the consumer standpoint. Excellent post - very enlightening.

[MQAAord]

The LCCs are, well, they are what they are.

Their business structure is quite different from the legacy carriers, and it is not necessarily better or worse, it is just different. The LCCs fly the most profitable routes, and don't serve small, or unprofitable markets. Imagine a gas station operator who owned 59 gas stations in the United States, maybe throw in a select carribean station or two, and then imagine a gas station operator with over 200 gas stations around the entire world! Their business structure is very different!

There are times when a ticket on JetBlue actually costs [i:c51a6fef39]more[/i:c51a6fef39] than a ticket on Delta! If and when the time ever comes when the LCCs fly to hundreds of cities all over the world (and time only will tell if that will happen) the LCCs will cease to be a "LCC"! They have a great niche, and I have nothing bad to say about LCCs. The legacy carriers will survive because the LCCs can't serve small cities with their business plans. I think the legacy carriers need to get back to being top-notch in service, and we've saved all the money we're going to by slashing labor and amenities. The fat needs to be trimmed from the management/upper ranks now. 10 years ago Delta had 17 executive vice-presidents, now there's like 50-something. That's ridiculous.

So, sorry for the rambling of thoughts, it's early and I need coffee. But LCCs will not take over the world, if they did, they wouldn't be LCCs anymore. The legacy carriers have survived for 70+ years because of their ability to adapt & carry people [i:c51a6fef39]everwhere[/i:c51a6fef39] they need to go. As long as they continue to adapt, they will survive.