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Warning About Low-cost-carriers  
User currently offlineCapt078 From United States of America, joined Jul 2003, 421 posts, RR: 1
Posted (10 years 11 months 1 day 16 hours ago) and read 2834 times:

i live in boston and usually only fly to large cities, so for me, low-cost-carriers are a wonderful thing. this is the case for the majority of american travelers, as lcc's have brought fares down and choice up. but for those of you who fly out of small towns and cities with only a prop flight or two a day, lcc's are endangering your commercial service.

the smallest aviation markets, like those of northern michigan, wyoming, and the dakotas are often funded by the profits of larger, high demand routes. this subsidization (in addition to gov't subsidization) was successful for the larger hub-and-spoke carriers, because there was demand on larger routes to justify high airfares, whose profits were then passed on to the lower margin commuter routes. this is one reason why, even with deregulation, each of the majors has its own sphere of influence (ual the rockies, nwa in michigan, co in eastern texas, and aa in western/northern texas, delta in the southeast and so on). because these routes are not profitable on their own, competition does not arise. with the rise of low-cost-carriers, the profits made on the high demand routes are decreasing as yields decrease. as a result, there is less revenue to be passed onto the commuter routes and in turn, these commuter routes are losing their subsidies. subsequently, those of you who fly from those small strips are losing a lot of your service.

so what is the answer? certainly the rise of low-cost-carriers is a good think, especially on the national scale. but are we to lose service to these smaller markets, or are low-cost-carriers going to grow to the point that they take on these smaller markets and in turn become high-cost-carriers? while i understand the problem, the solution is mirky at best. i'd love to hear your suggestions.

9 replies: All unread, jump to last
 
User currently offlineDelta777 From United States of America, joined Mar 2000, 656 posts, RR: 0
Reply 1, posted (10 years 11 months 1 day 15 hours ago) and read 2715 times:

If There is money to be made from those small cities then someone will start flying. There are still a few airlines like BigSky and Great Plains That fly mostly to smaller cities. In My case, Our Local airport had Continental Connection, US Airways Express, United Express and Northwest Airlink a few years ago. Now we have nothin. All commercial airlines are gone. But the main reason is we are 45 mins away from Akron/Canton, 1 hour away from CLE and 1 hour away from PIT. Most people drive to CAK to get AirTran, or CLE to get Southwest.

D E L T A 7 7 7


User currently offlineLuv2fly From United States of America, joined May 2003, 12090 posts, RR: 49
Reply 2, posted (10 years 11 months 1 day 15 hours ago) and read 2690 times:

Time will tell, tho look at some of the most popular cities served by low cost carriers, like MDW was almost nothing before the LCC's revived it. So if small secondary markets are losing service who says it will be permanent?


You can cut the irony with a knife
User currently offlineWorldTraveler From , joined Dec 1969, posts, RR:
Reply 3, posted (10 years 11 months 1 day 15 hours ago) and read 2647 times:

Capt078,
you are correct in seeing that unbridled competition will force network carriers to abandon less profitable (or money losing spoke cities). These cities are totally dependent on being a part of a large network in order to survive. Even AMA recognized they needed a network carrier (AA) in there even though they have WN and were willing to subsidize AA. Eventually, many cities will realize that they will come out on the short end of the stick when unbridled competition dictates that they are no longer big enough to pay the cost of providing air service. It's going to be a hard lesson but we are likely to see it happen.


User currently offlineJjbiv From United States of America, joined Jan 2001, 1226 posts, RR: 5
Reply 4, posted (10 years 11 months 1 day 11 hours ago) and read 2477 times:

No need to worry, Capt. The smallest commuter routes are subsidized courtesy of your federal government.

joe


User currently offlineLufthansa From Christmas Island, joined May 1999, 3204 posts, RR: 10
Reply 5, posted (10 years 11 months 1 day 11 hours ago) and read 2412 times:

Its called inefficiency.

Its inefficient for ppl to subsidise a service. If you fly NYC - LAX regularly why should u be paying for somebody who lives in whop whop?
You shouldn't.....The thing is a LCC needs to be extended to these cities too...And that's the next step. LCC- regional. Did you know that the dash 8-400 (Q400) only costs a few hundred dollars more to operate on most routes than the -300, but its got a good 25 extra seats? Do the math....With the right Aircraft, its a possibility. I think as long as there is some demand, sooner or later an enterprising person will fill the void...Particularly if they've got government dollars to help meet their operating costs!
(which I don't like because its inefficient! And not fair. If you choose to live
in whop whop, your going to be inconvenienced!)


User currently offlineSrbmod From , joined Dec 1969, posts, RR:
Reply 6, posted (10 years 11 months 1 day 11 hours ago) and read 2352 times:

With LCCs like AirTran and Frontier now having RJ services (JetConnect and Jet Express), eventually small markets will start seeing LCC services. Add to this the fact the Frontier does do codeshares with Great Lakes into smaller towns in the west. Some smaller markets that are loosing commerical service is mainly because their airports cannot support the a/c the regionals fly. With more and more of the smaller turboprops being retired from many regional carriers, some markets are being dropped because those airports do not have runways long enough to allow RJ operations. A case in point is Killeen, TX. When ASA retired the last Brasilia out of DFW, ILE was dropped as an ASA destination. Some airports may be able to fill an RJ, but the a/c can't operate out of them. Smaller airports will see the loss of airline service because they have not upgraded their facilities, not because of LCCs. Other smaller airports will see the lose of service because of the close proximity of a larger field. ASA used to fly ATL-AHN, a really short hop. With the extension of GA-316 up to Athens, the time to drive to Hartsfield from Athens was shortened enough for people to drive to Atlanta from Athens then to fly it. AHN now only has three flights a day to CLT using B-1900s of US Airways Express.

User currently offlineCapt078 From United States of America, joined Jul 2003, 421 posts, RR: 1
Reply 7, posted (10 years 11 months 1 day 3 hours ago) and read 2117 times:

i think that a few of you are missing the point. i was talking about the smallest markets; markets that do not have any significant demand; markets that cannot support regional jets. yes, the federal government subsidizes some markets, but not all. the federal government uses a rubric (along with the lobbying power of local business interests and politicians) to determine which routes to subsidize, but there is certainly not enough federal money dedicated to subsidize all markets. i was merely putting on the table that there exist certain markets subsidized primarily by the profits of larger-demand markets, and with the rise of low-cost-carriers decreasing the yields on these routes, the low-demand markets are jeopardized. this is not a matter of economics, as we all know that subsidized intervention effects the market demands of an industry, and in this case, i am talking about larger airlines superceding market forces to lure customers onto their larger demand, higher-yield routes.

User currently offlineAA717driver From United States of America, joined Feb 2002, 1566 posts, RR: 13
Reply 8, posted (10 years 11 months 1 day 2 hours ago) and read 2060 times:

Capt078--I think that cost cutting, not the LCC's(well, I guess the LCC's necessitated the cost cutting...) will doom air service to backwater towns.

Cash is king and if the gov't. doesn't subsidize service and they can't charge big enough bucks, the writing is on the wall.TC



FL450, M.85
User currently offlineCapt078 From United States of America, joined Jul 2003, 421 posts, RR: 1
Reply 9, posted (10 years 11 months 1 day 1 hour ago) and read 2006 times:

AA717driver: you said it man. thanks for being brief instead of verbose like i am.

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