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LCC's That Are Not Profitable!  
User currently offlineAASTEW From Dominican Republic, joined Oct 2001, 447 posts, RR: 1
Posted (10 years 4 months 2 weeks 6 days 5 hours ago) and read 2577 times:

How come Frontier and ATA can't post a profit. Aren't they LCC's? What's up with that?

AASTEW

5 replies: All unread, jump to last
 
User currently offlineStarlionblue From Greenland, joined Feb 2004, 17186 posts, RR: 66
Reply 1, posted (10 years 4 months 2 weeks 6 days 5 hours ago) and read 2559 times:

LCC does not equal profit. The problem with LCCs is that there is often less margin for a route to be profitable is the planes aren't almost full. They are volume operators. If there is a dip in demand on a route, they're screwed.

Contrast with many full-service airlines, which can afford to fly with Monkey Class half empty as long as First and Biz are full and they haul a lot of cargo.



"There are no stupid questions, but there are a lot of inquisitive idiots."
User currently offlineStevenUhl777 From , joined Dec 1969, posts, RR:
Reply 2, posted (10 years 4 months 2 weeks 6 days 5 hours ago) and read 2548 times:

I don't believe it's so much of a dip in demand, but FUEL COSTS right now. The LCC's can handle a higher price/barrell than the legacy carriers can, but now that we're at $45/barrel and approaching $50, even the LCC's are going to take a bite out of that giant shit sandwich.

There was a recent thread that proved TED was regaining market share in DEN, so that may have contributed a small part to F9's performance, but again...FUEL is the big knife in everyone's back right now.



User currently offlineCloudy From , joined Dec 1969, posts, RR:
Reply 3, posted (10 years 4 months 2 weeks 6 days 4 hours ago) and read 2524 times:

MOST LCC's are no more profitable than conventional airlines. In fact, most fail within a few years after they are launched. Many others just squeek by from year to year or until they finally die. Vanguard and National come to mind. Some have as wierd and twisted, Chapeter 11 filled histories as the majors - America West comes to mind here.

The reason that LCC's have a reputation for profitability is that the only consistantly profitable, reasonably sized airlines in the US (and increasingly, Europe as well) are LCC's. Regional operators used to be able to make consistant profits as well, but now even this is in doubt. Only some of the best LCC's seem to be able to consistantly make a profit, or at least come close to doing so.

IN SHORT......Most LCC's are NOT consistantly profitable. But those airlines that are consistantly profitable tend to be LCC's. That is the source of their reputation.


User currently offlineF9Fan From United States of America, joined Jan 2004, 703 posts, RR: 3
Reply 4, posted (10 years 4 months 2 weeks 6 days 4 hours ago) and read 2497 times:

Two words: fuel costs. Costs of jet fuel have gone up over 33% since January. F9 is also faced with the costs of converting its fleet from Boeing to Airbus, which adds training and parts storage costs as they have to operate two types of planes at once. F9 said they would be profitable this quarter if it wasn't for fuel costs. As it is, they are expected to break even.

F9Fan


User currently offlineInnocuousFox From United States of America, joined Dec 2003, 2805 posts, RR: 14
Reply 5, posted (10 years 4 months 2 weeks 5 days 17 hours ago) and read 2283 times:

In the long term, F9 is doing just fine.


Dave Mark - Intrinsic Algorithm - Reducing the world to mathematical equations!
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